Posted on 08/21/2011 4:45:51 PM PDT by blam
Why The Current Bear Market Is Far From Over
Comstock Partners
Aug. 21, 2011, 10:25 AM
(Comstock Partners is a New York-based hedge fund)
What is currently happening in the market and the economy was predictable and is following the sequence we have long expected. Households accumulated enormous debts in the past decade, leading to the credit crisis and recession of 2007-2009. The government stepped in with massive monetary ease and fiscal expansion that produced only a weak recovery and a vast increase in government debt. The market erroneously assumed that the recovery would follow the pattern of typical post-war expansions and rallied strongly from the early 2009 bottom to the recent highs.
A similar pattern developed in Europe where sovereign debt of the weaker EU members has become a serious problem that EU leaders have been unable to solve. Now we are undergoing the aftershocks of the crisis.
As we have repeatedly stated, crisis recoveries are characterized by short sub-par recoveries and numerous recessions as household debt burdens dampen consumer spending for long periods. We did see the short sub-par recovery and now it seems to be ending at a time when the Fed has already used its best weapons and fiscal policy is due to become more restrictive. First half GDP was revised down sharply. Housing has continued to weaken. Consumer spending has been sluggish. Initial jobless claims for the latest period jumped back over 400,000. The ECRI leading index has declined to 127.9 from its April peak of 131.1.
Even more shocking was the plunge in the August Philly Fed Index to minus 30.7 from 3.2 in July. The drop was the weakest since October 2008. In addition, the August University of Michigan Consumer Confidence Index dropped to 54.9, lower than any level
(snip)
(Excerpt) Read more at businessinsider.com ...
The bear market will end when stocks are priced too low for current conditions, however bad those conditions are. This usually happens long before conditions start improving.
Blam, I really appreciate your market/monetary posts and reports. Thanks for doing this. I know many are not interested, but many of us are. You are doing a good service with them.
Thanks again.
Duh.
Because the only thing we export, is jobs to China.
If we can’t have bulls, why not some cool looking Himalayan yaks?
I was just wondering- when will the price of an ounce of gold equal the DJIA- then I thought about the effect of inflation on the DJIA, so I don’t know if they will ever be equal. Or, is the DJIA adjusted for inflation?
Me too, blam. I consider economic news of the utmost importance at this point in time, and you’re Johnny-on-the-Spot when it comes to the news that is relevant to the situation as I see it, particularly as it relates to PMs and other stuff the MSM is too scared to publish.
So yeah, thanks.
I'm happy that you appreciate.
bump.
I believe if an investor were to invest solely based on this parameter that they would be hugely successful.
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