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3.3% economic growth last quarter (pg. 4)
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| jerZ07002 |
| quote: | Originally posted by Krypton
Exactly my point, which is why I don't pay much attention to GDP figures. The published GDP can show growth, but the economy can show something completely different. I view the stock market as the ultimate barometer of economic strength and health, hands down. The market is the best way to gauge the health of an economy, not some centralized formula everyone thinks is important. The stock market DOES take into account government, geo-political situations, job growth, energy consumption, consumerism, all into account. |
you missed the part about non-public companies. Markets value stocks: that's all markets value. Stock values are based on DCF or some other asset values. How can a market that values a specific stock accurately incorporate the contributions of a small business that may not purchase its products from a public company? Market pricing only incorporates general economic conditions to the extent it affects that specific stock. Public corporations don't canvas the entire economy, not even close! For instance, how would the markets incorporate the contributions of a bed and breakfast in vermont which grows its own vegetables, has it's own water well, purchases electricity from a public utility, and purchases minimal products from public companies? The $400 a night in rent, where is that incorporated? Multiply that by hundreds of thousands of small businesses and you are missing a huge part of the economy.
EDIT: the markets may be a decent measure of the health of a specific sector of the economy (i.e., public corporation), however, markets are inadequate at measuring the overal economic health for the reasons i already stated. |
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| Krypton |
| quote: | Originally posted by jerZ07002
you missed the part about non-public companies. Markets value stocks: that's all markets value. Stock values are based on DCF or some other asset values. How can a market that values a specific stock accurately incorporate the contributions of a small business that may not purchase its products from a public company? Market pricing only incorporates general economic conditions to the extent it affects that specific stock. Public corporations don't canvas the entire economy, not even close! For instance, how would the markets incorporate the contributions of a bed and breakfast in vermont which grows its own vegetables, has it's own water well, purchases electricity from a public utility, and purchases minimal products from public companies? The $400 a night in rent, where is that incorporated? Multiply that by hundreds of thousands of small businesses and you are missing a huge part of the economy.
EDIT: the markets may be a decent measure of the health of a specific sector of the economy (i.e., public corporation), however, markets are inadequate at measuring the overal economic health for the reasons i already stated. |
All true, nevertheless, private companies are interconnected to the overall market so that, in the event of a stock market slowdown because of bad loans on Wall Street, many people are less likely to take that vacation and stay at the Vermont bed and breakfast. Private companies still belong to a sector, and if that sector is doing poorly, public or private, it's going to feel the pain. If Ruby Tuesday and several of the sector leaders are doing poorly because of some economic slowdown, I guarantee you private restaurants would also see a slowdown in their earnings. Not all but generally speaking. I still view the stock market as the go to indicator of economic strength. |
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| jerZ07002 |
| quote: | Originally posted by Krypton
All true, nevertheless, private companies are interconnected to the overall market so that, in the event of a stock market slowdown because of bad loans on Wall Street, many people are less likely to take that vacation and stay at the Vermont bed and breakfast. Private companies still belong to a sector, and if that sector is doing poorly, public or private, it's going to feel the pain. If Ruby Tuesday and several of the sector leaders are doing poorly because of some economic slowdown, I guarantee you private restaurants would also see a slowdown in their earnings. Not all but generally speaking. I still view the stock market as the go to indicator of economic strength. |
oh - i don't disagree that it's a decent economic indicator, however, there is so much more going on in the economy other than public corporations. My main point is that certain economic activity escape the 'markets' |
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| The17sss |
| quote: | Originally posted by Krypton
My GOD! Have you seen the price of cereal at the grocery store!! OBVIOUSLY NOT!!:disbelief I love my cereal, but it is more expensive. |
Eh... markets go up and down... bear or bull, I just don't see the chaos right now that's being portrayed. BUT, I will concede something to you... I almost myself when I went to buy some Raisin Bran Crunch the other day and it was like $5.39 for the box. I was like, has it always been like this and I just didn't pay attention? Talk about an ass raping. |
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| Krypton |
| Well fellas, the market is down more than 20% from its highs, such as the Dow Jones's high of around 14,000. Declines like that happen for very good reasons, and those reasons are indicative across the whole economy, public and private, and even worldwide. But cereal nowadays is routinely above $5 a box. That's just something I notice along with the price of gasoline. Yep, while the government spend its tens of billions of dollars a month fighting wars in Iraq and Afghanistan, we pay the price through inflation. It's either inflation or taxes. Have your pick fellas. You can't have your guns and butter too. We're paying for these wars one way or the other. Bush tax cuts? How about Bush inflation tax increases? |
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| mndeg |
I can't believe some of you are arguing that we aren't in a recession.
You'll see in a year. It'll be much more drastic then.
Crazy republicans.
Markets are still way overvalued right now. Dow belongs at 9k or less.
This is no tech bubble or S&L crisis. |
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| Krypton |
| quote: | Originally posted by mndeg
I can't believe some of you are arguing that we aren't in a recession.
You'll see in a year. It'll be much more drastic then.
Crazy republicans.
Markets are still way overvalued right now. Dow belongs at 9k or less.
This is no tech bubble or S&L crisis. |
You believe the Dow is overvalued??? I can't agree with that. I believe the Dow is about 30% undervalued and should be worth around 13,500 to 15,000 according to my own calculations of fundamental and intrinsic strengths of all 30 stocks averaged together. Actually, here's a picture of my analysis so you can see for yourself..
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| mndeg |
Fake growth estimates. Doesn't take into account macro changes of U.S. economy.
Credit tightening, U.S. consumers out of money, no more cheap credit for consumers to borrow from.
Consistent job losses, house values expected to decrease for at least another year (understated imo). I believe 70% of spending is from consumers. Transition from an oil based economy to a different energy source is going to cost money and the transition will be rough. The American way of life is not sustainable without cheap oil.
Huge 11+ trillion dollar deficit, won't be able to keep up with interest payments soon.
The fed has been trying to prop up the markets for a while now.
http://www.youtube.com/watch?v=Sobq7wCXjUw |
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| atbell |
| quote: | Originally posted by mndeg
I can't believe some of you are arguing that we aren't in a recession.
You'll see in a year. It'll be much more drastic then.
Crazy republicans.
Markets are still way overvalued right now. Dow belongs at 9k or less.
This is no tech bubble or S&L crisis. |
I'm with you here.
The housing market is just starting to clear. People try to sell in the summer if they are haveing trouble, if they haven't sold by Aug. they probably won't sell for another 6 months or so. This means that distress sales are going to start moving into forclosure which will add to the already historic high numbers of forclosures.
I don't know how many people are just holding on but I have a feeling the stock might be quite high.
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Inflation on consumer goods is still quite high.
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We've also entered the next true yearly business cycle. August is a stable (stables not quite the right word) month normaly because so many people are on vacation. In september the whole world is working again so you get a much better idea of what the actual demand for "things" is. Another slow time that has recently been emerging is from about Dec. 25 to early Feb. This is because of the Christmas holidays, new years, and Chinese new years.
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Long and short, yeah I think things are bad. I also think that most of the decision makers (CEO's, Central Bankers, Politicians) have yet to really grasp the magnitude of the problems. To many people are limited to thier sphere of interest and don't see the big picture. |
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| atbell |
| quote: | Originally posted by mndeg
Fake growth estimates. Doesn't take into account macro changes of U.S. economy.
Credit tightening, U.S. consumers out of money, no more cheap credit for consumers to borrow from.
Consistent job losses, house values expected to decrease for at least another year (understated imo). I believe 70% of spending is from consumers. Transition from an oil based economy to a different energy source is going to cost money and the transition will be rough. The American way of life is not sustainable without cheap oil.
Huge 11+ trillion dollar deficit, won't be able to keep up with interest payments soon.
The fed has been trying to prop up the markets for a while now.
http://www.youtube.com/watch?v=Sobq7wCXjUw |
Good summary. That covers a lot of what I'm seeing.
One of my working theories is that traditional measures of debt sustainability focus only on trade balences or budget balences. These are flow variables that only look at the change over a given period.
What needs to be considered is the stock of debt and the stock of trade imbalence. The US deficit, the stock of federal debt, has increased about 500 Billion from Jan 2006 to Aug 2008. The stock of the US trade imbalence has increased by about 2 TRILLION dollars in that same time period.
A part of this obfuscation is that debt has been parsed into many different categories. This means that to truely understand how much debt the US has one needs to sum federal, state, local, corporate, personal, and debt from other organizations. This number gets very big very fast. |
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| jerZ07002 |
| quote: | Originally posted by mndeg
Huge 11+ trillion dollar deficit, won't be able to keep up with interest payments soon.
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the fed deficit is not 11+ trillion dollars - it's 9.6 trillion (still not a very nice number). While that's bad, it's not as bad as the public deficit after WW2 in which the public deficit was greater than GDP. The US GDP is still a few trillion greater than public debt by about 5 or 6 billion. |
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| Krypton |
| quote: | Originally posted by mndeg
Fake growth estimates. Doesn't take into account macro changes of U.S. economy.
Credit tightening, U.S. consumers out of money, no more cheap credit for consumers to borrow from.
Consistent job losses, house values expected to decrease for at least another year (understated imo). I believe 70% of spending is from consumers. Transition from an oil based economy to a different energy source is going to cost money and the transition will be rough. The American way of life is not sustainable without cheap oil.
Huge 11+ trillion dollar deficit, won't be able to keep up with interest payments soon.
The fed has been trying to prop up the markets for a while now.
http://www.youtube.com/watch?v=Sobq7wCXjUw |
This is a bottom up analysis. I could care less about macroeconomic trends. Those are practically impossible to predict. But company financial statements, that is solid fact, and very dependable data with which to make predictions. Macro economic predictions are wrong much more than they are right. And with the international nature of today's business, now you have to predict macro on an epic global scale. Are you seriously going to tell me I, or you, can predict this with any practical accuracy at all? I don't believe it's predictable outside general beliefs of uptrend/downtrend, so I see no point in considering a macro prediction in my model. I don't like it being called "fake" either. Took me two days to run this, and years to develop the model itself.
Notice how my model predicts a -11% profit decrease. I consider that much more an accurate prediction than say, oh, inflation is going to be this %, or I expect unemployment to starts declining to this level, or the Fed is going to do this or that.. |
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