Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Why Are Markets Ignoring The Obvious U.S. Slow Down As If It's Nothing?
The Business Insider ^ | 8-3-2010 | Vincent Fernando, CFA

Posted on 08/03/2010 10:58:10 AM PDT by blam

click here to read article


Navigation: use the links below to view more comments.
first previous 1-2021-4041-51 last
To: blam

Maybe the businesses that have slashed payrolls by laying off many workers aren’t doing that poorly. but sooner or later they need people to buy the products.


41 posted on 08/03/2010 12:21:47 PM PDT by cvq3842
[ Post Reply | Private Reply | To 1 | View Replies]

To: goldendays
No. It's because at this point in history the real economy in the U.S. is "nothing" -- i.e., is largely irrelevant -- to the factors that drive the U.S. stock market.

Almost all corporations that showed good earnings last quarter -- and which, therefore, made the DJIA rise -- showed good earnings on overseas sales and operations.

If Caterpillar's plant and sales is going gangbusters in China, what happens in the U.S. real economy is not relevant to how much money Caterpillar makes and what it's stock goes for.

42 posted on 08/03/2010 12:22:55 PM PDT by fightinJAG (Obama: "I will gladly pay you on Tuesday for a hamburger today.")
[ Post Reply | Private Reply | To 4 | View Replies]

To: fightinJAG

all because the government sent America JOBS over seas to china Listen to these men, they were telling you the truth.
http://video.google.com/videoplay?docid=1590858026591557284#


43 posted on 08/03/2010 12:24:06 PM PDT by goldendays
[ Post Reply | Private Reply | To 40 | View Replies]

To: jroneil

The stock market is based on what corporate stock is worth to buyers on any given day. What stock is worth depends on corporate profit. Corporate profit these days comes mainly from overseas — meaning it is not dependent upon the U.S. economy at all.

So the reason the U.S. markets sometimes shrug off what is happening in the U.S. economy is that what is happening in the U.S. economy is only a tiny piece of the puzzle as to how corporations make money and how much they make.


44 posted on 08/03/2010 12:26:21 PM PDT by fightinJAG (Obama: "I will gladly pay you on Tuesday for a hamburger today.")
[ Post Reply | Private Reply | To 8 | View Replies]

To: fightinJAG

Caterpillar’s has to sign contract to give 51% to China.


45 posted on 08/03/2010 12:29:53 PM PDT by goldendays
[ Post Reply | Private Reply | To 42 | View Replies]

To: drangundsturm

I don’t agree that corporations are necessarily “not replacing workers.” They may not be replacing U.S. workers. But what I see happening is corporations hiring lots more workers overseas because that’s how they can maximize profits.

So the corporation makes more profit — thus possibly increasing its stock prices — but it adds exactly zero jobs directly to the U.S. economy.

As for the fear, which is not wrong, that corporations will start precipitously spending the piles of cash they are sitting on, I think here too what we’re seeing about the true globalization of these companies will come into play.

Why are coroporations sitting on cash? Mostly become of Obama and the huge amount of uncertainty and animousity his administration has added to a very fragile U.S. economy. IOW, this money is insurance against The Next Stupid Thing President Obama Might Do.

If and when the threat of stupid Obama-isms clears up, and corporations feel more free to let some of the cash out of the bag, they won’t necessarily start spending it in the U.S. In fact, they probably won’t spend much of it here directly! Why would they? Their profitable divisions and operations are overseas.

So once the need to self-insure passes, there will be a whole, literal WORLD in which corporations can start to parcel out this money. Yes, it could still become a money dump that results in hyperinflation. However, given the size of the pool into which the corporations can throw these “pennies,” hyperinflation may be much less likely than when a bunch of U.S. corporations, all with major operations mainly in the U.S., start spending to ramp up only U.S. operations.


46 posted on 08/03/2010 12:36:51 PM PDT by fightinJAG (Obama: "I will gladly pay you on Tuesday for a hamburger today.")
[ Post Reply | Private Reply | To 12 | View Replies]

To: boomop1; goldendays; Izzy Dunne

Today on Varney & Co., they said the market is up because people and businesses are trying to realize as much income as possible this year due to the tax hammer that is coming down next year. Art Laffer said that profits may look good right now, but the whole economy will tank in 2011.

Forbes Magazine offered the same advice - take income now, and defer deductions until next year. We will be in for a real slowdown then.


47 posted on 08/03/2010 1:30:00 PM PDT by Pining_4_TX
[ Post Reply | Private Reply | To 2 | View Replies]

To: Pining_4_TX

That makes more sense than anything else I’ve heard/read. Thanks.


48 posted on 08/03/2010 1:45:44 PM PDT by blam
[ Post Reply | Private Reply | To 47 | View Replies]

To: blam

You’re welcome. :-)

I am fascinated by economics and business, even though I don’t understand most of it.


49 posted on 08/03/2010 6:00:48 PM PDT by Pining_4_TX
[ Post Reply | Private Reply | To 48 | View Replies]

To: DCPatriot
Same reason that gas was mysteriously $4+ @ gallon just sixty days out of the election.

So blatant that the sheeple can't see it.

50 posted on 08/03/2010 6:04:43 PM PDT by stevio (Crunchy Con - God, guns, guts, and organically grown crunchy nuts.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: stevio
So blatant that the sheeple can't see it.

I see the sheeple-users are starting to infiltrate FR again.
51 posted on 08/03/2010 6:06:57 PM PDT by aruanan
[ Post Reply | Private Reply | To 50 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-51 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson