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DAVID WOO: The 'Moment Of Truth' For The US Economy Is Approaching In Just The Next Few Weeks
TBI ^ | 2-7-2013 | Joe Weisenthal

Posted on 02/07/2013 4:29:49 PM PST by blam

DAVID WOO: The 'Moment Of Truth' For The US Economy Is Approaching In Just The Next Few Weeks

Joe Weisenthal
February 7, 2013, 12:05 PM

Yesterday at Bloomberg we got the chance to meet David Woo, BofA/ML's brilliant strategist for Global FX and rates.

The focus of our segment was on the Japanese yen, but off camera Woo had some interesting thoughts on the US economic situation, and why we're about to approach what he calls a 'moment of truth.'

He noted to us that there's been a growing divergence between the S&P 500 and consumer sentiment, and that it may be the case that the expiry of the payroll tax hike is going to have a meaningful effect on spending. This phenomenon, he noted, might not show up for a little while, because it could take time for people to realize that their paychecks have been hit. Some people who only get paid at the end of the month may have not even had the opportunity to digest or assess the new reality, as of the time of recent data.

He mentioned, for example, that when the payroll tax cut first went into effect in early 2011, it took awhile for people to react and for spending to rise. These things have a lagged effect.

But all that's coming to a head.

In a followup email today he writes:

"The divergence between buoyant risky assets and sagging US consumer confidence since October has reached a point that a resolution is now both necessary and inevitable. The catalyst or the moment of truth may be the approaching sequestration crisis. In our view, the market is too complacent about the risk of a full implementation of the sequestration that will lead to a sharp slowdown

(snip)

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: economy; finance; recession; recovery

1 posted on 02/07/2013 4:29:58 PM PST by blam
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To: blam

If I were in stocks at 14,000 I’d be jumping out.

What little I used to have I hopped out at 12,800 — 2007 was it? Can’t recall.

March, 2009 - 6,200 approx as I recall.

Perhaps someone has exact dates.


2 posted on 02/07/2013 4:35:00 PM PST by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: blam

Gee did it just occur to Mr.Woo that we have $16 trillion in Federal debt, trillions more of state and local debts, $100 trillion of unfunded entitlements, $3 billion a day of continued Federal deficit spending, a debased currency, and the Obama Administration that contracts the economy with taxes and endless anti capitalist regulations. Maybe he is just now realizing that the green energy subsidies were not going to work. The country is so fortunate to have access to such well credentialed experts.


3 posted on 02/07/2013 4:46:51 PM PST by allendale
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To: F15Eagle

The market has gained double digits in last few months. COnsidering long term gains are 6-7% yearly, that is significant rise. People are capitulating out of CD’s & Treasury bonds because the yields are ridiculously low. That money is flowing into the only game in town...stock market.

The sequester could be the catalyst for abrupt reversal.


4 posted on 02/07/2013 4:47:23 PM PST by entropy12 (The republic is doomed when people figure out they can get free stuff by voting democrats)
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To: entropy12
"The sequester could be the catalyst for abrupt reversal."

Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days

5 posted on 02/07/2013 4:51:48 PM PST by blam
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To: F15Eagle
I've been out forever.

But as a Wall Streeter who lost big in 1987, I get the same feeling now.

Obama is poison to the economy.

The real economy starts at the grass roots (i.e. small business)...Obama hates it because it cannot be unionized...he hates it because it cannot be nationalized or socialized.

Obama is killing the mother's milk of the economy.

Yes, the economy is like a wild horse, it wants to run and make money (well, that is an added concept)...but Obama hates it. He wants to kill it.

The world economy is based on individuality and creativity and risk...Obama hates that and believes in collectivity, and social order, and the destruction of risk.

If you want to bet on this economy...wait until there is a sea change. Wait until Obama gets his comeuppance.

6 posted on 02/07/2013 4:52:39 PM PST by RoosterRedux (Get armed, practice in the use of your weapons, get physically fit, stay alert!)
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To: allendale

And don’t forget consumer debt through the roof.


7 posted on 02/07/2013 4:53:32 PM PST by tiki
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To: blam
I feel a song coming on. "This is the time, and this is the record of the time."
8 posted on 02/07/2013 4:56:18 PM PST by dr_lew
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To: blam

Do you think there might be a blow-off top first?


9 posted on 02/07/2013 4:58:32 PM PST by steve86 (Acerbic by Nature, not NurtureĀ™)
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To: entropy12

I walk around in stunned disbelief every day that the big correction/crash hasn`t happened yet. The US economy is running of fumes from QE/ZIRP/OPTWIST.


10 posted on 02/07/2013 5:00:49 PM PST by Para-Ord.45
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To: allendale

Bingo.

You ain’t seen nothing yet. Wait till the Obamacare taxes kick in. At some point, these giveaways are going to have to be reigned in. The whole Economy is on life support via Government debt and has been for quite a while (maybe since 2002).


11 posted on 02/07/2013 5:08:44 PM PST by rbg81
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To: RoosterRedux
"But as a Wall Streeter who lost big in 1987, I get the same feeling now."

You're not alone:

DOUG KASS: 'I'm Getting The Summer Of 1987 Feeling' In The Market Right Now

12 posted on 02/07/2013 5:13:28 PM PST by blam
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To: entropy12

Again, another Govt. bubble being blown. Govt. created housing bubble popped so that`s dead now T-bills returning next to nothing so everyone is intentionally herded into the last DOW corral. The perfect bubble.


13 posted on 02/07/2013 5:18:38 PM PST by Para-Ord.45
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To: blam

Keep an eye on government salary demands for raises.


14 posted on 02/07/2013 5:28:38 PM PST by Varsity Flight (Extortion-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: blam

Oct 87 I got sent to Boston to do some computer consulting. I was there the day it happened, and wasn’t sure exactly why most of the people there were crying in their beer, I had no stock investments and didn’t pay attention to finance at that time.

It was an absolutely beautiful week there! I spent hours walking around and taking pics of the fall colors. And up and down the downtown streets trying the food and brew at the sidewalk bars.

Only been there three or four times, but I love that town. Especially the Irish Catholic gals!

(Hey! A guys gotta relax once in a while!)

;-)


15 posted on 02/07/2013 5:28:46 PM PST by djf (Conservative values help the poor. Liberal values help them STAY poor!!!)
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To: entropy12

The money is flowing from Ben Bernanke. Banks are funneling their QE money to equities and exotic instruments, inflating stocks and stabilizing housing. Ben’s play money isn’t being loaned and it isn’t being made available to the 99% (so prices aren’t going up).

The question is how and when the bubble will burst. I don’t think anyone knows because this has never been done before.


16 posted on 02/07/2013 5:29:40 PM PST by ReaganGeneration2
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To: Para-Ord.45
I agree.

But as old friend used to say (who had much more experience with the market than me)..."the market is like your "willy" (I think you get the point)...it has a mind of its own. It (the market) wants what it wants and it is not rational. Your willy wants a girl (or many girls)...the market wants a return...a profit, a gain."

"The market doesn't care how (there is no ethic...no law or sin)...the market wants a profit, a return."

But like little willy...the market is stupid. The market is a collective...not a brain trust. It is a foaming at the mouth, blubbering fool."

"You can make a fortune in stocks once you come to understand the market."

"Don't underestimate it...just come to understand it."

17 posted on 02/07/2013 5:30:44 PM PST by RoosterRedux (Get armed, practice in the use of your weapons, get physically fit, stay alert!)
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To: Para-Ord.45
BTW, I was on Wall St and was tutored by the wisest of sages.

Of course, these sages regularly stepped in dog poo and tracked it in the house.

But that is the nature of markets and dog poo.

Hang around either...and something will go wrong.

Fortunately for me...the sages I was around were great guys.

18 posted on 02/07/2013 5:37:36 PM PST by RoosterRedux (Get armed, practice in the use of your weapons, get physically fit, stay alert!)
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To: blam

Fixing to turn 62 this April. Went by the Social Security office Wednesday. Punched in my SS number which printed out an assigned number to talk to one of the SS people. There were 60 chairs in the waiting room and all of them were taken except 2. I sat down in one and looked around. There were maybe 3 or 4 people in the room, including myself, who looked old enough to receive an SS check. Everyone else looked to be in their 20’s. 30’s, and early 40’s. Everyone was dressed nice,looked healthy, and well feed. If I had ever entertained the idea of waiting until I was 65 or 66 to reveive my SS money I lost it in that office. My number was called, the lady assigned me a date to come back and get the paper work done to receive my SS money March 1st. I’m going to try and get some of my money back before the sh%t hits the fan.


19 posted on 02/07/2013 5:46:32 PM PST by kempo
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To: Para-Ord.45

Me too, I guess people who visit FR are better informed, unlike those people who are spoon fed their news from TV, I can’t figure it out, unemployment is high, and that’s not including those who have given up looking for work, taxes have increased, pay checks have shrunk, cost of living has gone up, gas prices are rising too, groceries are getting smaller, yet everyone acts like nothing is wrong, it’s like the calm before the storm, I’m questioning my sanity, it’s as if what’s right is wrong, and what’s wrong is right, strange times!


20 posted on 02/07/2013 6:46:10 PM PST by IslamE (epiphany)
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To: RoosterRedux

Don’t worry, it’s different this time.


21 posted on 02/07/2013 7:26:18 PM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: F15Eagle; blam

I know zero, zip, NADA about the stock market, but right now I’m compelled to view old “Wall Street Week with Louis Rukeyser” YouTube clips from right around the time of the crash in 1987. Someone named Zweig was supposed to have had a good handle on what was going on.


22 posted on 02/07/2013 7:54:22 PM PST by thecodont
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To: IslamE
"...yet everyone acts like nothing is wrong, it’s like the calm before the storm, I’m questioning my sanity, it’s as if what’s right is wrong, and what’s wrong is right, strange times!"

That's because we're living in our improved environment without all of those awful smokestack industries and the scary breeder men who worked in them. [Oh, yeah, a whole heap of irony and sarcasm there--not about you but about our contemporary leadership.]

Do you see? Look at third world countries known for their agricultural and energy production without much manufacturing. Do you see farther?


23 posted on 02/07/2013 9:59:26 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: thecodont
Wall Street Week with Louis Rukeyser

Oh, my, I haven't thought about him in such a time! He passed away, yes? Watching the crash of '87 was like watching the aftermath of an earthquake. There wasn't anything anyone could do or have done, and what a mess it left behind.

24 posted on 02/08/2013 12:22:50 PM PST by Excellence (9/11 was an act of faith.)
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