Post by Savant on Aug 2, 2004 8:40:05 GMT -5
A Market Conundrum? - Published 04:40 EDT August 02 2004
Our last heading of: "A Strengthening Market Tone for Now" served us well going into weeks end, although the market exhibited some pockets of nervousness within this strengthening envelope, we were more heartened to see the Nasdaq and broader indices starting to outperform the Dow and S&P 500 and that maintained our strengthening tone for now, but where we go from here may create volatility.
The conundrum we now face is how the markets react to the limited raising of Terror Alerts over the weekend and what impact this may have. The fact that we appeared poised for a continuation of the uptrend going into the end of the week and month, may well be a harbinger of things to come and further evidence of the bottoming process we highlighted at the early part of last week. But, even if there is some kind of pullback resulting from these new developments over the weekend, this may eventuate into some kind of retest of last weeks lows and provided that any such test is successful then it could pave the way for a stronger and even more sustainable rally as the market perhaps responds more positively to the efforts to avert any such threats as those highlighted. The market has had a tendency to shrug off these threats after a few days, but that may depend more upon how the fundamental strength or weakness of the economy impacts the markets and also how the Stock and Bond Markets react to the torrent of statistical data due to be released soon. One very encouraging sign was the firmness in the consumer confidence index reflecting the economy's positive performance.
Speaking of which, someone must have been slipping John Kerry a copy of our reports over recent months, because the wordage we have used in a number of important issues we have published, appeared to show up in John Kerry's address to the nation at the Democratic Convention on Thursday night.
Readers may recall, we were critical of John Kerry's remarks that this was the worst economy since the Great Depression, because in of itself it was a pretty asinine speculation that really showed him up as out of touch with reality. Maybe his handlers were telling him that this was a non-starter that needed some counter-balance to soften his rhetoric.
Since we have been almost unique as far as we know in proclaiming this to be: "The Best Economy Ever" virtually since the beginning of 2004 and haven't heard this shouted from the rooftops as we have been doing from anyplace else, we were somewhat surprised and exceedingly gratified to hear John Kerry actually proclaim that some have been saying that this is: "The Best Economy Ever" in his acceptance speech. The fact that he acknowledged the possibility that it might be, by actually saying it, after proclaiming the exact opposite speaks volumes about why a lot of people don't like his flip-flopping on every issue imaginable and Oops! He just did it again.
And that's not all... Longer term readers of our reports may recall one of our end of year end issues, wherein we explained how expanding the deficits at this time by "investing in our future" with the lowest long term interest US Government Mortgage on our collective futures, should be something we should embrace than complain about and further called for expanding the defense budget to $1 Trillion and as part of that, boost to a One Million strong: "Million Man CIA and Special Forces Unit" to deal with terrorism around the World and other contingencies that are likely to need these kind of specialized forces of the future, so we had to chuckle a bit, with Kerry's proposal to boost Special Forces by a puny 40,000... Nice try, but ultimately this has to be a much larger percentage of the armed forces of the future and hopefully the next occupant of 1600 Pennsylvania Avenue will see things the way they should be.
So back to the economy: Who is really right about whether this really is the best economy ever or not? Well, we have already made an overwhelmingly strong case for the fact that it is and since we are almost indisputably the Number 1 economy in the world by most measures, especially in regards to competitiveness, productivity and all time corporate profitability, it's hard to call it anything else.
Still, what might actually resonate with people sometime in the future, is perish the thought we ever have to suffer through an economy such as we had to during the Carter years of the late 70's, with unemployment approaching double digits and skyrocketing interest rates, then people could well be hollering and begging for a return to the nostalgia of 1% interest rates and the good ol' days of 2004.
Within this forum try to analyze the facts and markets as best we can and we're used to sticking our necks out when the occasion calls for it. In early April 2003 we had to the courage to call for new all time highs in the broadest US indices, specifically the Value Line, Mid-Cap, Banking Index and S&P 600 within the year and that is what came to pass, with the Value Line actually hitting new record highs within just a few months in one of the most potent market rallies in history. At the same time Warren Buffet and Bill Gross, (one of the largest Bond and Fund managers in the World) were calling stocks way overpriced and the Dow headed for 5000. So. How confident do we feel about calling this: "The best economy ever"? More confident than our 100% correct call of Q1 2003.
Looking back at the gloom and doom the permeated Q1 2003, which we equated to 1932 and what ultimately evolved so rapidly in line with our positive thinking, we began scratching our heads and asking how could such humble folk be so right and yet two of the most powerful financial players in the World, be so wrong? We don't know. And in life there are many puzzles. But we surely do know this:
No matter how rich and powerful any Billionaire may be they are not omnipotent and can make huge mistakes that can be very costly.
Nobody has a monopoly on the future, knowledge of the future or knowledge itself and that's what keeps us going here every day. And sooner or later, cream rises to the top for those who put in the time and effort. And we put the time and effort in like nobody else we know, to get these markets right and trying to divine our future the way we see it.
Our view of the future has been quite prescient in that we also called for 6% plus growth in the 3rd quarter of 2003, long before anyone else and we got 8% plus. That was a helluva positive surprise to us and even more of a surprise to those who were looking for less when it actually came in. It is also abundantly clear to us that without the stewardship of the economy in recent years spearheaded by aggressive tax-cuts, this economy could well been in the tank and possibly unimaginably worse than what it has turned out to be, given all of the unfortunate things that befell us.
What we were trying to say in our year end issues regarding the growing budget deficit, is that compared to the deficits of the 80's, the deficit today is a walk in the park, because the cost of maintaining this deficit is substantially less and as a percentage of the GDP, it is also a whole lot less than the actual numbers of $455 Billion imply. The most important clarifying point to really understand is:
If we were able to turn around the seemingly endless deficit years and black hole of the 80's and go sharply positive within a relatively short few years, we certainly can and almost certainly will do it again and most likely grow our way out of this problem. In the 90's we were one of the first to recognize the steepness of this emerging trend and actually called for a big surplus almost 4 years ahead of the Government's projections which ultimately accelerated a blowoff in the stockmarket that created the 2000 so called market bubble.
We remain optimistic for now on stocks although Investors should realize that we are at a crossroads where the going could be...
Stay tuned for more updates...
Have a great week
Trade Well
Savant
Our last heading of: "A Strengthening Market Tone for Now" served us well going into weeks end, although the market exhibited some pockets of nervousness within this strengthening envelope, we were more heartened to see the Nasdaq and broader indices starting to outperform the Dow and S&P 500 and that maintained our strengthening tone for now, but where we go from here may create volatility.
The conundrum we now face is how the markets react to the limited raising of Terror Alerts over the weekend and what impact this may have. The fact that we appeared poised for a continuation of the uptrend going into the end of the week and month, may well be a harbinger of things to come and further evidence of the bottoming process we highlighted at the early part of last week. But, even if there is some kind of pullback resulting from these new developments over the weekend, this may eventuate into some kind of retest of last weeks lows and provided that any such test is successful then it could pave the way for a stronger and even more sustainable rally as the market perhaps responds more positively to the efforts to avert any such threats as those highlighted. The market has had a tendency to shrug off these threats after a few days, but that may depend more upon how the fundamental strength or weakness of the economy impacts the markets and also how the Stock and Bond Markets react to the torrent of statistical data due to be released soon. One very encouraging sign was the firmness in the consumer confidence index reflecting the economy's positive performance.
Speaking of which, someone must have been slipping John Kerry a copy of our reports over recent months, because the wordage we have used in a number of important issues we have published, appeared to show up in John Kerry's address to the nation at the Democratic Convention on Thursday night.
Readers may recall, we were critical of John Kerry's remarks that this was the worst economy since the Great Depression, because in of itself it was a pretty asinine speculation that really showed him up as out of touch with reality. Maybe his handlers were telling him that this was a non-starter that needed some counter-balance to soften his rhetoric.
Since we have been almost unique as far as we know in proclaiming this to be: "The Best Economy Ever" virtually since the beginning of 2004 and haven't heard this shouted from the rooftops as we have been doing from anyplace else, we were somewhat surprised and exceedingly gratified to hear John Kerry actually proclaim that some have been saying that this is: "The Best Economy Ever" in his acceptance speech. The fact that he acknowledged the possibility that it might be, by actually saying it, after proclaiming the exact opposite speaks volumes about why a lot of people don't like his flip-flopping on every issue imaginable and Oops! He just did it again.
And that's not all... Longer term readers of our reports may recall one of our end of year end issues, wherein we explained how expanding the deficits at this time by "investing in our future" with the lowest long term interest US Government Mortgage on our collective futures, should be something we should embrace than complain about and further called for expanding the defense budget to $1 Trillion and as part of that, boost to a One Million strong: "Million Man CIA and Special Forces Unit" to deal with terrorism around the World and other contingencies that are likely to need these kind of specialized forces of the future, so we had to chuckle a bit, with Kerry's proposal to boost Special Forces by a puny 40,000... Nice try, but ultimately this has to be a much larger percentage of the armed forces of the future and hopefully the next occupant of 1600 Pennsylvania Avenue will see things the way they should be.
So back to the economy: Who is really right about whether this really is the best economy ever or not? Well, we have already made an overwhelmingly strong case for the fact that it is and since we are almost indisputably the Number 1 economy in the world by most measures, especially in regards to competitiveness, productivity and all time corporate profitability, it's hard to call it anything else.
Still, what might actually resonate with people sometime in the future, is perish the thought we ever have to suffer through an economy such as we had to during the Carter years of the late 70's, with unemployment approaching double digits and skyrocketing interest rates, then people could well be hollering and begging for a return to the nostalgia of 1% interest rates and the good ol' days of 2004.
Within this forum try to analyze the facts and markets as best we can and we're used to sticking our necks out when the occasion calls for it. In early April 2003 we had to the courage to call for new all time highs in the broadest US indices, specifically the Value Line, Mid-Cap, Banking Index and S&P 600 within the year and that is what came to pass, with the Value Line actually hitting new record highs within just a few months in one of the most potent market rallies in history. At the same time Warren Buffet and Bill Gross, (one of the largest Bond and Fund managers in the World) were calling stocks way overpriced and the Dow headed for 5000. So. How confident do we feel about calling this: "The best economy ever"? More confident than our 100% correct call of Q1 2003.
Looking back at the gloom and doom the permeated Q1 2003, which we equated to 1932 and what ultimately evolved so rapidly in line with our positive thinking, we began scratching our heads and asking how could such humble folk be so right and yet two of the most powerful financial players in the World, be so wrong? We don't know. And in life there are many puzzles. But we surely do know this:
No matter how rich and powerful any Billionaire may be they are not omnipotent and can make huge mistakes that can be very costly.
Nobody has a monopoly on the future, knowledge of the future or knowledge itself and that's what keeps us going here every day. And sooner or later, cream rises to the top for those who put in the time and effort. And we put the time and effort in like nobody else we know, to get these markets right and trying to divine our future the way we see it.
Our view of the future has been quite prescient in that we also called for 6% plus growth in the 3rd quarter of 2003, long before anyone else and we got 8% plus. That was a helluva positive surprise to us and even more of a surprise to those who were looking for less when it actually came in. It is also abundantly clear to us that without the stewardship of the economy in recent years spearheaded by aggressive tax-cuts, this economy could well been in the tank and possibly unimaginably worse than what it has turned out to be, given all of the unfortunate things that befell us.
What we were trying to say in our year end issues regarding the growing budget deficit, is that compared to the deficits of the 80's, the deficit today is a walk in the park, because the cost of maintaining this deficit is substantially less and as a percentage of the GDP, it is also a whole lot less than the actual numbers of $455 Billion imply. The most important clarifying point to really understand is:
If we were able to turn around the seemingly endless deficit years and black hole of the 80's and go sharply positive within a relatively short few years, we certainly can and almost certainly will do it again and most likely grow our way out of this problem. In the 90's we were one of the first to recognize the steepness of this emerging trend and actually called for a big surplus almost 4 years ahead of the Government's projections which ultimately accelerated a blowoff in the stockmarket that created the 2000 so called market bubble.
We remain optimistic for now on stocks although Investors should realize that we are at a crossroads where the going could be...
Stay tuned for more updates...
Have a great week
Trade Well
Savant
