Nope, lol.
Buffett says U.S. in recession
NEW YORK (Reuters) - Billionaire investor Warren Buffett said on Monday the U.S. economy is in recession and that stocks are "not cheap" despite recent declines.
Buffett said economic conditions have not deteriorated to levels in 1973 and 1974, a deep recession also marked by rising oil prices and falling stocks.
Get out the disco balls!
Stag,
ReplyDeleteInvestment professionals on tv are now constantly saying that it is a good time to buy stocks because everyone is so negative. That slogan is getting old. Can't they think of anything more compelling than that?
BTW. both Clinton & Obama are proposing to raise the tax rates on dividends and long term capital gains. I suppose that's another reason to be negative on stocks, which of course is a reason to be positive.
Its all good, all the time.
MAB,
ReplyDeleteI keep hearing over and over again that this isn't the 1970s. Of course it isn't. It is like the 1970s with a large heap of debt, lol.
One argument is that inflation and unemployment are a lot lower now than they were back then. I do believe that's true.
However, this same argument could be made once the first flake of snow hits the ground during a perfect storm. Most storms do not go from clear sunny skies one minute to blizzard conditions the next. There's usually a transition period.
I say most, because I remember being in the parking lot at a local ski resort. It was morning and there wasn't a cloud in the sky. A father was telling his son to bundle up because it was only going to get colder. My friend and I thought he was nuts (but fortunately kept our thoughts to ourselves). By the time we bought our tickets it was snowing heavy and we were headed back to the car to bundle up.
Good thing the banks aren't already f'd. Oh wait.
ReplyDeleteReally Scary Fed Charts: March
Stag,
ReplyDeleteA father was telling his son to bundle up because it was only going to get colder. My friend and I thought he was nuts (but fortunately kept our thoughts to ourselves).
Great story. It reminds me of when I was trout fishing years ago. Next to me, a father clipped the hook off his young son's line after the kid almost took out a few eyes trying to cast. For the rest of the morning, the kid just stared at his bobber and kept asking when he was going to catch a fish. Fortunately, I kept my thoughts to myself.
Sometimes, destiny can indeed turn on a dime. But other times, destiny is a foregone conclusion.
The plight of the boy fishing without a hook is emblematic of many of today's real estate and stock "investors." Many of whom have little or no savings. No amount of hope is going to change the outcome.
Regardless of the Fed or stimulus plans, overvalued assets such as stocks and real estate are doomed to low or negative returns. Right now, treasuries fit that bill too (imo). In the past, higher inflation could have raised the nominal numbers. With today's stubbornly low wages, any inflation will be very damaging.
I see nothing wrong with a period of relative austerity. Perhaps fathers and sons will go to the town lake to fish instead of a trip to Disney World. The local ski area instead of Vail.
Ben Bittrolff,
ReplyDeleteTruly scary charts you've got there. Nice warning to the inflationists too. There continues to be a large disconnect between the price of toilet paper at Costco and the price of most financial inflation hedges. Me thinks too many inflationists exist right now. I love hoarding toilet paper. I'm not much interested in hoarding commodities which have skyrocketed while presumably heading into a possibly deep and nasty global recession though. They are being priced for hyperinflation now (but I'm seeing little evidence of that at the retailers), and that's just a small risk, certainly not a certainty.
Legendary oil man Boone Pickens (who predicted $100 oil years ago) is actually shorting oil due to the investment froth.
http://www.reuters.com/article/hotStocksNews/idUSN2144606820080221
My short-term mood continues to be mildly deflationary (as seen in the upper left corner of my blog). It isn't easy these days, but what's new? I'm still stagflationary long-term though.
I don't think real yields are headed higher in the long-term, which is about the only "bet" I'm making by being in inflation protected treasuries. It isn't necessarily a bet directly on inflation. It is more of a bet on finding it increasingly difficult to make money off of money in the coming years (for a variety of reasons).
It is funny. I bought a guitar yesterday as my last luxury fling heading into the abyss. Apparently I want to fiddle while Rome burns. It would be an investment if we head into hyperinflation, but I suspect that it won't hold its value in the coming years. There is too much stuff in self-storage units across this country which could be sold for food someday, in theory.
Economic history books may need a new word to describe what we may face. It isn't quite deflation. It isn't quite inflation. Heck, it isn't quite stagflation either more than likely. Perhaps gambling casino might describe it best. My choices of shows are "Mad Money", "Fast Money", and "American Greed" it seems. No thanks, I'll pass on all of it.
MAB,
ReplyDeleteFor the rest of the morning, the kid just stared at his bobber and kept asking when he was going to catch a fish.
Great story! I suspect there are a lot of investors wondering the same thing these days.
In my inbox today were two advertisements.
Ameritrade wants to teach me the wonders of technical analysis. Funny, if it worked so great why don't they just use it for themselves. Why do they need me?
Etrade also wants to improve my trading skills. I'm feeling a sense of inbox deja vu. Further, I can safely assume my trading skills are being pitted against the major investment banks with decades of experience. I'm sure to win once I take the free web seminar on introduction to trading!
Next up. I'm planning to improve my batting skills (presumably through a free online introduction to batting seminar) so that I can compete in the World Series, lol. Well, we can all dream, can't we? ;)
This is definitely the "Something for Nothing" era. Or perhaps I should say was instead of is. Times are a changin'. I'm firmly in the "Nothing for Something" camp these days. Heaven help us all if we all start to believe that. Surely some have, based on the real yield of the 5-Year TIPS.
Stag,
ReplyDeleteI saw yet another wall street pundit on TV today claiming that now was a great time to buy U.S. stocks. His thesis was that due to the "global economy" billions of new consumers were now buying all the "things" that Americans have - toasters, TVs, cars, etc.
I felt like screaming. Even if his thesis is valid, most of those "things" are NOT made by American companies. Even the raw materials are not American. Plus, if his thesis of increased global demand is accurate, it would likely be inflationary for the U.S. consumer. Another poorly thought out wall street sales pitch.
Bloomberg also showed the yield for the 5 yrear TIP at -0.18% this morning. Return OF capital is now in vogue. What a novel concept!
U.S. inflation pressures
ReplyDeleteebbed to a four-year low in February due mostly to
disinflationary moves in interest rates and in loans, a U.S.
economic research institute said on Friday. The Economic Cycle Research Institute's U.S. Future
Inflation Gauge (USFIG), designed to anticipate cyclical swings
in the rate of inflation, fell to 115.9 in February, its lowest
since January 2004 when it was 115.0, according to ECRI data. "With the USFIG dropping to a four-year low, it is clear
that the widespread worries about an uptrend in U.S. inflation
pressures are not warranted," said Melinda Hubman, research
associate at ECRI.
http://www.reuters.com/article/bondsNews/idUSNAT00378820080307
Look Mark, magic no inflation. HA
kevin
MAB,
ReplyDeleteI felt like screaming.
That seems relatively normal these days. You scream, I scream, we all scream for ice cream! (Let's hope the Fed gives us TWO scoops on a sugar cone, with plenty of sprinkles and a cherry! That's SURE to work.)
Kevin,
...widespread worries about an uptrend in U.S. inflation pressures are not warranted...
Clever use of the word "warranted" I think. Virtually nothing is warranted these days (i.e., guaranteed). Further, what timeframe are we talking here? I'm relatively deflationary in the short-term. It is what comes next that concerns me most (should the economy actually temporarily "recover").
Mark you and I both know damn well that they will fire up the printing presses and monetize the debt before this is all said and done I think that is about a year off and then it's going to be full steam ahead.
ReplyDeleteKevin
Stag,
ReplyDeleteI would appreciate your input on a new business venture I'm kicking off.
Basically, its a totally new and unique strategical advertising model. Kind of like Google.
The idea, is to integrate commercials into infomercials. Both TV & internet will be utilized. It's the ultimate in cross selling. THe ability to leverage existing advertising is huge. Imagine Chuck Norris & Billy May together. Awesome!
Kevin,
ReplyDeleteI know that they will fire up the printing presses? Do I? Oh yeah, that's right. I do! Perhaps a speech should be written.
Stagflation: Making Sure "It" Happens Here
It could include much of Bernanke's anti-deflation speech from 2002.
MAB,
I think you are onto something. That is the ultimate cross selling. Now imagine what would happen if you combined it with the ultimate cross buying! I'm hearing more and more advertisements for people interested in BUYING our structured settlements ("cash now") and people interested in BUYING our old jewelry.
Perhaps Chuck could do it all. You know you want the total gym, but how are you going to pay for it? Cash now! Okay, now you've got the cash. What are you going to do with it? Total Gym! Isn't that right Christie? Absolutely!