Get ready for the second half of the year.....

[outsidethebox]

First you get the gold. Then when you got the gold, you get the whiskey. Then when you got the whiskey, then you get the women.

LOL! good one!

[DC Tom]

First you get the gold. Then when you got the gold, you get the whiskey. Then when you got the whiskey, then you get the women.

 

Then you drown your sorrows in whiskey while the B word spends all your gold on shoes.

[/dev/null]

Then you drown your sorrows in whiskey while the B word spends all your gold on shoes.

 

I thought, then you killed your best friend for marrying your sister, go thru a table full of whiskey, grab a machine gun/rocket launcher, and go down in a blaze of glory against Kentucky Moonshiners

[DC Tom]

 

I thought, then you killed your best friend for marrying your sister, go thru a table full of whiskey, grab a machine gun/rocket launcher, and go down in a blaze of glory against Kentucky Moonshiners

 

Of course not. What is this, Scarface? Please...

[Magox]

Pros and Cons in what to look for out of the US economy moving forward.

 

Why the recovery is in deep trouble:

 

1. Housing will have a horrible summer: Since the housing credit expired, home sales are going to fall off a cliff. Canary in coal mine: mortgage applications hit their lowest level since the late 1990s. Practically nobody expects any better than a miserable summer for housing. The implications are fairly straightforward and depressing. Depressed home prices can tug down consumption, and until residential investment recovers, jobs can't grow in major industries surrounding real estate, like construction.

 

2. Consumers aren't spending enough: In April, consumer credit fell for the 17th month in two years, the longest period of de-leveraging in 70 years. That's good for families' credit ratings. It's bad for aggregate demand and hiring prospects. Consumption is two-thirds of the economy. When two-thirds of your body feels sick, it's hard to feel like you're getting better.

 

3. Unemployment is sticky: We're still kissing 10 percent unemployment. The private sector grew by a paltry 41,000 jobs in May, one-tenth the number of short-term jobs created by the Census. Discouraged workers are up. After a decade of real estate-fueled growth, there's no logical engine for America's next jobs boom.

 

4. The stimulus is drying: For months, personal spending and state budgets survived because of direct transfers from the federal government. But the Recovery Act is winding down and with deficit concerns eclipsing stimulus concerns in Washington, it's possible that state cutbacks could dramatically exceed federal spending in the closing months of 2010, which would hold back the recovery.

 

5. The European crisis: There are a lot of unknowns here, but let's count at least three reasons that international instability could hurt the U.S. First, debt tremors in Europe are shaking up the stock market. When families with money tied up in stocks see the Dow on a roller coaster ride, they can become nervous about future gains and cut back on large expenditures, which hurts aggregate demand. Second, U.S. banks have significant exposure to European banks (about $1.1 trillion in derivatives and loans) that could still face reduced investment and even huge defaults of government debt. If Europe sneezes, the U.S. financial sector gets a cold and the American economy suffers all the symptoms. Third, U.S. exports will fall if Europe squeezes its big wallet with a national austerity project.

 

Why the recovery is on track:

 

1. Employment has been growing all year: May was a weird month, but take the long view. Employment fell for more than a year, and now it's growing at a pace of several hundred thousand jobs a month.

 

2. Consumer confidence is up: Consumers might not be borrowing, but they're feeling fine! The Consumer Confidence Index, a rough measurement of how Americans are feeling about their wallets, has grown for the last three months. Confident consumers who are also paying down debt (see above) suggests that a consumer-driven recovery, when it's really here, will be substantial and sustainable.

 

3. Retail is having a good year: After seven straight months of gains, economists think retail sales grew again in May. Auto sales, spurred by cheap gas, are driving this recovery.

 

4. Manufacturing is still rocking: Economic activity in the manufacturing sector expanded in May for the 10th consecutive month, on the back of new orders and production. Inventories disappeared in 2009 and businesses -- especially in the tech industry -- are still ramping up orders and creating new jobs in manufacturing (via CR).

 

5. The European crisis: Yep, this one goes in both categories. The European crisis is scary, but it puts a lid on two things we don't want to rise: interest rates and oil prices. Instability in Europe is making investors jittery and shaking up the stock market, but in the short term it could help the United States. A flight to safety is making it easier for the U.S. government, businesses and home owners to borrow. What's more, a stop-start European economy means falling oil prices, giving car-owners relief at the pump and window-browsers more reason to splurge on that Ford truck now.

[John Adams]

I love how threads like these get started and are hot when the market is down and silent as it goes up.

 

Of course, that's why doom and gloom Dwight Drane was here during the fall and AWOL during the recovery.

[LeviF]

I love how threads like these get started and are hot when the market is down and silent as it goes up.

 

Of course, that's why doom and gloom Dwight Drane was here during the fall and AWOL during the recovery.

You better choose your side, JA.

[Magox]

I love how threads like these get started and are hot when the market is down and silent as it goes up.

 

Of course, that's why doom and gloom Dwight Drane was here during the fall and AWOL during the recovery.

More like hot the first few days and silent a few days later..... but ok

[Magox]

Anyhoooo

 

Found an article today that fits the thread. From a man that I respect when it comes to market predictions, good old George Soros

 

http://preview.bloomberg.com/news/2010-06-...oes-spread.html

 

I think I remember talking about a phase 2 a couple months ago.

 

Here you go:

Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

 

“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”

 

Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.

 

Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance, according to Bank of America Corp.

 

“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.

 

Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound. He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year. His firm, Soros Fund Management LLC, manages about $25 billion.

 

Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said.

[Magox]

What to expect in the second half of the year:

 

4) Consumer confidence numbers havn't yet reflected the Stock markets plunge. Those numbers will come off some.

 

5) The uncertainty of European contagion.

 

6) Stimulus package has already peaked and it's artificial effects will show signs of deterioration Q3 and Q4

 

Lots of things to be wary of going into the second half of the year.

http://preview.bloomberg.com/news/2010-06-...ave-income.html

 

Sales at U.S. retailers unexpectedly dropped in May, signaling consumers boosted savings as employment slowed and stocks fell.

 

The decrease at building-material stores followed an 8.4 percent jump in April and a gain in March that may have reflected a surge in appliance sales propelled by a provision of the government’s stimulus package last year that provided rebates for purchases of more energy-efficient products.

 

One reason why Americans are slowing the pace of spending may be that the labor-market recovery is showing signs of slowing.

 

The debt crisis in Europe raises the risk that tumbling stock prices may give households another reason to rein in spending.

[Magox]

Digesting today's numbers

 

http://preview.bloomberg.com/news/2010-06-...d-recovery.html

 

Manufacturing is leading the U.S. economic rebound, helping protect the recovery from a slowdown in housing following the expiration of a government tax credit, reports today indicated.

 

Factories in the region covered by Federal Reserve Bank of New York grew at a faster pace in June, signaling they are weathering the turmoil caused by the European debt crisis, according to the bank’s so-called Empire State index. Builder confidence fell this month, while global demand for U.S. financial assets in April exceeded forecasts, other reports showed.

 

Gains in business investment and exports may keep powering American industry, sustaining the world’s largest economy as it climbs out of the recession.

 

This is the good news. Manufacturing has been steadily picking up, the question is can it sustain? This is why China matters, if they slow down markedly then our exports will go down, specially with the dollar rising. Another risk, which will occur to a certain degree is how much will Europes Austerity measures slow down our exports over to European customers, this is important considering 30% of our exports go to them. The other risk to manufacturing is consumer behavior, if consumers begin to retrench themselves, then this will slow down the pace of the manufacturing recovery, which is most likely the strongest sector of our economy right now.

 

The outlook for housing is less sanguine. The National Association of Home Builders/Wells Fargo confidence index dropped to 17 from 22 in May, lower than all estimates of economists surveyed and the biggest decrease since November 2008. Readings lower than 50 mean more respondents said conditions were poor.

 

The builders group’s indexes of current single-family home sales, buyer traffic and sales expectations for the next six months all fell, with the latter dropping to lowest level since March 2009.

 

Under a government incentive program, which was renewed and expanded in November, buyers had to sign contracts by the end of April and close deals by June 30 to qualify for the credit worth up to $8,000.

 

The number of mortgage applications to purchase properties dropped in the first week of June to the lowest level since 1997, according to figures from the Mortgage Bankers Association.

 

This most likely will be very weak over the next few months, and without strong job creation, the housing market could fall into it's own double dip, which would spill over into the real economy.

[Pine Barrens Mafia]

Digesting today's numbers

 

http://preview.bloomberg.com/news/2010-06-...d-recovery.html

 

 

 

This is the good news. Manufacturing has been steadily picking up, the question is can it sustain? This is why China matters, if they slow down markedly then our exports will go down, specially with the dollar rising. Another risk, which will occur to a certain degree is how much will Europes Austerity measures slow down our exports over to European customers, this is important considering 30% of our exports go to them. The other risk to manufacturing is consumer behavior, if consumers begin to retrench themselves, then this will slow down the pace of the manufacturing recovery, which is most likely the strongest sector of our economy right now.

 

 

 

This most likely will be very weak over the next few months, and without strong job creation, the housing market could fall into it's own double dip, which would spill over into the real economy.

 

Avoiding a humiliation through PBEM?

[Magox]

Avoiding a humiliation through PBEM?

Bring it ON B word!

[Pine Barrens Mafia]

Bring it ON B word!

 

 

PM me. I've played live games before, but never PBEM, should be interesting.

[John Adams]

Remember the flu pandemic? Man this place was hot then! What was that? Bird flu? Pig flu? Projections of a mass labor shortage for all the people that would be sick. "Where will we put the bodies?"

 

We loves us some bad news!

[Pine Barrens Mafia]

Remember the flu pandemic? Man this place was hot then! What was that? Bird flu? Pig flu? Projections of a mass labor shortage for all the people that would be sick. "Where will we put the bodies?"

 

We loves us some bad news!

 

True, that. But the larger questions about the economy (deficit spending and the overall debt) still loom as problems with no solutions available at the current time. Thoughts as to how we dig out of the hole we're in?

[Magox]

I can´t remember who it was, but there was a poster here in PPP that once stated that he respected Nasim Talebs foresight, author of the Black Swan, and now the signs are there once again, as apparent as ever, at least to some of us anyway, yet this particular poster still enjoys keeping his head in the sand.

[IDBillzFan]

Thoughts as to how we dig out of the hole we're in?

I'd start by putting a budget together. If they have the stomach for it.

[Pine Barrens Mafia]

I'd start by putting a budget together. If they have the stomach for it.

 

That's a good one.

[John Adams]

I can´t remember who it was, but there was a poster here in PPP that once stated that he respected Nasim Talebs foresight, author of the Black Swan, and now the signs are there once again, as apparent as ever, at least to some of us anyway, yet this particular poster still enjoys keeping his head in the sand.

 

You think my head's in the sand just because I enjoy jabbing at the DD's of the world who never fail to appear when there's a faint scent of disaster but wouldn't post good news if it bit them?

 

Remember: I own GLD...not dollars. I own some black swan type funds too. That's not head in the sand.

 

And if Taleb taught one thing, it's this: You can't predict and there are more extreme events than the bell curve predicts. If you think you can predict when the extreme events are going to happen (i.e, your "6 months of doom"), you're probably setting yourself up for a FAIL. If you bet generally THAT extreme events (good and bad) will happen, you might do OK.