WOW....look at the DOW
 

"You live in a world of illusion. Where everything's peaches and cream. We all face a scarlet conclusion. But we spend our time in a dream....."

Government Dependance...........the Fed bubble

The Last Time The Dow Was Here...
Tyler Durden on 03/05/2013 09:36 -0500


October 11th 2007, the last time stocks were here...

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•USDJPY: Then 117; Now 93•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares




Dow Jones high on Fed steroids

On Monday, billionaire superinvestor Berkshire Hathaway CEO Warren Buffett told CNBC that markets are on a "hair trigger" waiting for signs of change from the Fed. The market is "hooked on the drug" of easy money, Dallas Fed President Richard Fisher told Reuters.

Fisher's comparison of Fed policies to a drug is apt. Markets might not like the idea of the drug being withdrawn now, when the Fed holds a portfolio of $3 trillion. But the withdrawal symptoms will be a lot worse once the portfolio grows to $4 trillion, or more.

No one has a clear idea how the Fed plans to unload such staggering sums. As it sells off its hoard, the value of all bonds could plunge, more than wiping out the small returns bond investors are getting. But holding onto the bonds as the economy stabilizes would set off inflation, which the Fed is required to combat.

That's a good reason to start thinking about an endgame sooner rather than later. The longer the Fed's easy-money policies go on, the greater the risk they will distort markets, create new bubbles and set the economy up for another fall.

Fed Chairman Ben Bernanke has taken many bold and important actions, quantitative easing included, that averted a depression and propped up the economy during difficult times. He should be congratulated. But he's now left searching for a Goldilocks moment to reverse course, and such things are hard to divine.

Dow Jones high on Fed steroids: Our view




The recovery is remarkable because the American housing market remains weak, Europe still has moments of severe instability, and fiscal battles drag on in Washington.

Using other yardsticks, however, the performance of the blue-chip Dow does not look quite as impressive.

The much broader Standard & Poor’s 500-stock index, the benchmark favored by investment professionals, was slightly below its 2007 high even after it climbed 14.59 points on Tuesday, nearly 1 percent, to 1,539.79. And when adjusted for inflation, both the Dow and the S.& P. 500 were well below their levels at the start of the last decade.

The Nasdaq composite index also surged Tuesday, rising 42.10 points, or 1.3 percent, to 3,224.13, but it remains well below its 2000 high, when it topped 5,000.

Previous highs occurred when investors believed the economy could keep growing without any extraordinary assistance. By contrast, this rally has occurred on the back of enormous monetary stimulus by the Fed and the world’s other central banks.

The looming question is what will happen when the Fed stops its stimulus. Mr. Rosenberg said that after the crisis the stock market declined sharply on two occasions when the Fed signaled that it might temper its monetary easing.

http://www.nytimes.com/2013/03/06/bu...-activity.html




Under the Fed's plan for 2013, the central bank will purchase $40 billion a month of mortgage-backed securities and $45 billion a month of long-term Treasury securities. That puts it on course to purchase $540 billion worth of Treasury securities if the policy is continued all year and $480 billion worth of mortgage bonds.

It has been buying those amounts since September, but it altered the strategy this week. The Treasury buying program, known as Operation Twist, involved selling $45 billion a month of short-term Treasurys to fund the long-term purchases.

The Fed will no longer be selling the short-term Treasurys because its stockpile of these securities has run down. Instead, it will be funding its purchases by adding reserves to the banking system, which essentially means it will be printing money to buy more bonds. The money-printing worries people concerned about inflation, but Fed officials say they can manage the reserves in a way that prevents inflation.

http://online.wsj.com/article/SB1000...999853652.html

Wasn't Tyler Durden the main character from the movie Fight Club? :jester:

It must be all illusion and fantasy if Obama is at the helm. Otherwise the fundamentals of our economy would be sound.

-spence

Yes Spence. Scott posts objective, irrefutable facts, and your response, in true liberal fashion, is to accuse him of anti-Obama bias.

Spence, what, precisely, about the economy is sound? Our debt is almost $17 trillion (with that pesky $100 trillion entitlement shortfall hanging over our heads like a chainsaw of Damacles), unemployment is still way up, wages are still way down, healthcare costs are through the roof, housing prices are way down, the GDP shrank last quarter.

Spence, are you aware of any situations when all those things occurred under a conservative President, and people were not complaining?

The one thing that's up is the stock market. And I'd guess that irks Obama, because according to him, all that does is help the rich fat cats who already aren't paying their fair share.

uhh yeah...so the DOW and SP...the stock market,,,, are now positve indicators of the economy? Serioulsy?
isnt this what happened post-Clinton years? Remember that recession?

The DOW is nothing more than an indicator of how much more money the rich are making today! Has precious little to do with my world as far as I am concerned!!!:fury:

(Insert "F" bombs where applicable!)

Just means those that have will be able to sell shortly and make a killing.
Posted from my iPhone/Mobile device

It will happen soon too. The Feds will stop buying toxic bonds and then look out!
Posted from my iPhone/Mobile device

Talk about the bottom falling out
Posted from my iPhone/Mobile device

Let's just pump an even 100 trillion into the balloon and every American can retire!

the steroid analogy is perfect because just as in these remarkable sports performances there's a desire for many to believe it's real despite all common sense...this affects far more than the financial status of the rich BF..the dollar is being further devalued to accomplish and maintain this, that weakens your purchasing power and the value of your assets... imagine the joy that this president will greet another bursting bubble with, when American experience the shock of another massive drop in their 401k's and investments, particularly if he is able to regain control of congress in '14....imagine the latitude that he will grant himself in seizing control so that this can never again happen.......he really wouldn't want to do it....but he'd have to for our own good....:) we have a government that is hopelessly in debt, desperate to maintain it's lifestyle and some have big plans for expansion and fancy new additions...don't be surprised by anything that they do to accomplish their goals

Most of our citizens are either asleep at the switch or living in a dream world.

He didn't post facts, he posted people's one sided opinions. An objective post would have assessed multiple viewpoints.

Have you noticed that every time you mention entitlement spending you add another 10 trillion to the number? :hihi:

GPD was down because of reduced military spending...in the same quarter private spending was up, business investment was up, home construction was up and inventories are down.

I guess if you want to take a pessimistic viewpoint and argue that everything is terrible that's all you're ever going to see. What's important is the trend and the trends on most economic measures are positive.

According to Detbuch we haven't had a conservative president since Coolidge, so I'm afraid I couldn't really say...
A big reason the market is up is because the Street is gaining confidence in the broader economic picture.

I'd think Obama must love it, better economy with more people working and more people paying taxes to help us get this deficit down.

-spence

But the sequester was supposed to reverse all that. It must be nice to be able to point to the sequester as the reason if the "economy" falters, but to forget about it (nor give it any credit) if the "economy" gets better.

Sorry, I've been rushing a lot these days.

A lot of past tense in that post.

-spence

You would think by reading some posts here that some people are upset that the stock market is doing well under obamas watch.
Posted from my iPhone/Mobile device

wait till Paul Ryan put's his budget on the table again

I'm almost thinking we should radically cut taxes AND government spending just to smoke out all those who don't have a clue how things really work.

-spence

Not I....:)

funny, I always figured it was those that spend their adult lives in the public sector(service?) inventing new ways to wring wealth out of the private sector to fund their ponzi schemes and corrupt and unsustainable programs while rewarding their cronies and living lavishly on the public dole that didn't have a clue how things really work :)

Would that be a bad thing? I'm sure your familiar with what happens when we forget the past. Besides, technically, in history, it is only the past that can be described. Even as I put words to screen, they have already receded back from the moment. Anyway, my response was to your response to Jim in Ct's post about something in the past to which you replied to something I said about the past. In those respects all of my reply would be "past," but not in necessarily in the "past tense." Much of it was in the present or present perfect tense. In terms of tenses, it was, as you like to say, "balanced."

But you did, by erroneously saying that I said Coolidge was the last "conservative" President, you did manage to dodge Jim in Ct's question asking about reactions to "conservative" Presidents. There are, of course, many examples of such reactions. I remember when the economy grew at a persistent and modest 2% per year under Bush Senior. The left continuously complained that it was the worst economy since the Great Depression. Now, of course, with nearly constant lesser growth, we are told that we should be optimistic. That things are going well and in the right direction. Just one little example to Jim's qestion among the many many that could be given.

But the "conservative" "liberal" labels hide a more serious malady.