Sunday, January 07, 2007

Goldilocks vs. a few bears / fleckenstein

maybe flecks has his timing better this year / evtl. wird das timining ja in 2007 besser

Those who point out that housing is down, retail sales are rocky and the market is shaky are only stating facts. The real question is why so many experts are so optimistic.
... with Bubblevision and most major media outlets spewing nothing but happy endings, I feel it's important for folks to understand that all roads do not lead to nirvana.

In fact, the Goldilocks scenario that most bulls are relying on is an extraordinarily low-probability event; the high-probability event being that the economy is slipping into recession and will face the attendant consequences. ....

Deck the malls with retail jolly?
I don't think anyone can say that, economically speaking, Christmas was a success, as sales grew roughly 1.6% to 2.5%, ....) No matter what the exact percentage growth, it was in all likelihood lower than the rate of inflation -- meaning that real retail sales contracted slightly in December.

The bullish interpretation that this will magically morph into a pickup sometime soon is not supported by any facts.
News from the housing sector continues to get worse. Every time a home builder reports results, they are on the weak side, yet at the same time, folks decide that it's the bottom. ....

Empty shelving in the tax-coffer cupboards
To pass along current information, according to last week's Liscio Report, "in December, just 43% of the states in our survey met or exceeded their budget and withholding-tax collections, down from 80% in November." They go on to note that December can be a tricky month, but when they analyze the trickiness, they do not think that that number is an inaccurate indication of the trend. Further, they point out that "our contacts were concerned about the weakness, especially in states with previously hot housing markets." .....

Panglossing over the facts
.....The current optimism is unbridled. Witness last week's USA Today story that cited the uniform bullishness of 10 stock market "gurus." Their reasons, as recounted by my favorite technician, Justin Mamis, sounded mostly like fluff and hot air. Meanwhile, the bulls pretend that the inflation rate is some tiny number -- when anyone who has to write checks to pay bills knows that inflation is a real problem, even if the government is incapable of measuring it accurately. ( here one of the guys who gets way to much airtime and space in the media. / hier so ein dauerbulle der immer noch haufenweise ziteirt und im tv herumgereicht wird) thanks to http://www.wallstreetfollies.com/

So, visions of sugarplums danced in folks heads as the year began. The market action in the first day was pretty dodgy, (and it didn't get all that much better as the week wore on). .....

I'm not going to enter into all the details that made him feel that way, or that make me feel that way. But suffice to say, the action that day ought to have been a warning sign to those of a bullish persuasion, though they will likely ignore it.

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