Dr. Wu writes:
What's wrong with you darn poor people? Just because we outsourced your job and laid you off is no reason not to keep spending! How am I supposed to buy my third yacht at this rate, you lazy ingrates?
Dr. Wu | 03.26.08 - 9:54 am | #

hc writes:
This probably implies orders to emerging markets is probably hurting too. We'll see further "improvements" in trade deficit (excluding oils), which is bad news for China and other EMs.

Why the market rallies in the face of all these is beyond me.
hc | Homepage | 03.26.08 - 10:00 am | #

hc writes:
Unless I'm reading it wrong, the market valuation implies that the market participants are seeing:

1. This will be a short recession, we'll get back to making profits later half of 2008.
2. Real estate is mostly over as an issue. We'll buy houses again in 6 months.
4. Credit Crunch is no longer a problem, banks can lend profitably and their profits will show up in 6 months. (to whom would they lend baffles me)
5. Consumers will recover and we'll have a great Xmas.

I find it really hard to believe any of these. What am I missing? I feel like the only person surrounded by crazies -- which could imply I'm crazy.
hc | Homepage | 03.26.08 - 10:04 am | #

Jas Jain writes:
--
Is Brian Westbury an economist? If yes, he definitely qualifies as a rogue economist. The guy is on CNBC a lot and right after the DG numbers the guy was an unrepentant bull on the economy. He maintains that there would be no recession and his GDP growth for Q1 is 2% and 1.5% for Q2. What a clueless moron (or, is he purposely lying?), but that is necessary for rogue economists.

American media and politics are full of rogue economists. They play a big role in breeding dopes. Crooks hire economists in their pursuit of breeding dopes.

Jas
Jas Jain | 03.26.08 - 10:05 am | #

zztop writes:
I know this is off topic, but, is it just me or is Andrew Ross Sorkin, the NYTimes guy who maintains the dealbook blog and writes the private equity articles, a complete apologist for that industry as well as for Wall Street. During a time like this, we need serious journalism from the NYTimes. Not some dufus punk who looks like he's more interested in angling for a PE job than writing seriously and objectively about what could be a serious financial crisis.
zztop | 03.26.08 - 10:08 am | #

energyecon writes:
Jas,

One quibble with nomenclature. If the appearant majority of economists are complicit in the scam, then the rogues would be the ones calling bullsh!t rather than the cheerleaders.

TTFN
energyecon | 03.26.08 - 10:09 am | #

solo writes:
PPT is in action, funny how Dow,S&P and Nas just shoot up all at the same time.
solo | 03.26.08 - 10:10 am | #

transient writes:
hc writes:

"I find it really hard to believe any of these. What am I missing? I feel like the only person surrounded by crazies -- which could imply I'm crazy."

I'm beginning to think the same thing.
transient | 03.26.08 - 10:12 am | #

bacon dreamz writes:
from OFHEO:

Based on comments received in two public comment periods, OFHEO is issuing a final Guidance that provides that the conforming loan limit would not decrease from its current level of $417,000 in 2009 and subsequent years. However, the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached.

http://www.ofheo.gov/media/ guida...anceFR32608.pdf
bacon dreamz | 03.26.08 - 10:14 am | #

Jas Jain writes:
--
New Home Sales so-so. Doen 1.7%, MoM, and down 29%, YoY.

New Completed Homes For Sale, 188K, have backed off slightly from the highs of 197K, but still higher than a year ago. This number must come down to 100K for inventory to have been worked off.

Jas
Jas Jain | 03.26.08 - 10:16 am | #

12th Percentile writes:
PPT? I don't think so. Didn't you see the positive news?

"Stocks have pulled off their lows after positive new home sales data hit the wires. February new home sales totaled 590,000" Briefing.com

A 13 year low is positive news. It could've been a 26 year low. now that would be slightly discouraging.
12th Percentile | 03.26.08 - 10:18 am | #

Beemer writes:
hc,
I know what you're missing. You skipped right over point #3.
Beemer | 03.26.08 - 10:18 am | #

Stuart writes:
By Kristy Scheuble
March 26 (Bloomberg) -- Following is a summary of the
Feb. new home sales report from the Commerce Department.

================================================== =============================
Feb. Jan. Dec. Nov. Oct. Sept.
2008 2008 2007 2007 2007 2007
================================================== =============================
Total Sales 590,000 601,000 611,000 631,000 725,000 693,000
MOM% change -1.8% -1.6% -3.2% -13.0% 4.6% -1.1%
3 mo. average 600,667 614,333 655,667 683,000 706,333 730,000
Prev. est. n/a 588,000 605,000 630,000 725,000 693,000
Net Revision 20,000
-------------------------------------------------- -----------------------------
Northeast 37,000 62,000 57,000 55,000 66,000 62,000
Midwest 73,000 78,000 82,000 85,000 128,000 103,000
South 333,000 315,000 333,000 341,000 380,000 354,000
West 147,000 146,000 139,000 150,000 151,000 174,000
-------------------------------------------------- -----------------------------
Months' supply 9.8 9.8 9.5 9.5 8.4 9.3
================================================== =============================
Feb. Jan. Dec. Nov. Oct. Sept.
2008 2008 2007 2007 2007 2007
================================================== =============================
Homes for sale 471,000 481,000 494,000 502,000 512,000 527,000
-------------------------------------------------- -----------------------------
Median price $244,100 $225,600 $226,000 $249,100 $234,300 $240,300
YOY% change -2.7% -11.3% -7.6% 3.7% -6.4% 6.0%
Mean price $296,400 $282,500 $282,800 $316,800 $310,100 $292,200
YOY% change -7.8% -10.2% -6.3% 8.6% 1.1% -1.4%
================================================== =============================
NOTE: All unit figures are expressed at annual rates, seasonally adjusted.
Stuart | 03.26.08 - 10:19 am | #

sam writes:
Jas Jain

Brian Westbury is an actor acting as an economist. CNBC is now just another gvt propoganda agency. The fix is in. I used to watch it and totally got sickened when they brought Cramer the clown in. Most of his calls are wrong but the masses love him. If you want to know how the economy is doing ask you UPS or fedex driver how business is. I dont even see them in my neighborhood anymore and whwn I do see them they dont even run like they used to, they walk. there is my economic indicator in a nutshell. Theere are no orders and they are not durable. enough said. Welcome to Rome
sam | 03.26.08 - 10:19 am | #

Don writes:
What kills me is the constant use of the words "surprising" or "unexpected" or "unforeseen." It really does appear to me that these writers are completely unfamiliar with that new-fangled thingy called the internets where you can actually find something called information. If any of these incredibly lazy writers spent less time waiting in line for lattés at Starbucks and instead bothered to visit sites like CR and Big Picture and Mish and BondDad, to name just a few, then just maybe they wouldn't be "surprised" at lousy DG figures.
Don | 03.26.08 - 10:21 am | #

sam writes:
12th Percentile

the home builder stocks are still trading in the red today. when you sell a new home for 40% off is that positive news. I am not so sure the buyers got a deal. It could be 50% off next week.
sam | 03.26.08 - 10:21 am | #

Anonymous writes:
More rate cuts Benny, the crack babies are crying again.
Anonymous | 03.26.08 - 10:21 am | #

Beemer writes:
Check out the Paulson stuttering if there is a Q&A session.
Beemer | 03.26.08 - 10:23 am | #

Jas Jain writes:
--
"This will be a short recession, we'll get back to making profits later half of 2008."

hc,

After kinda admitting that the economy is in a recession CNBC is already talking about early cycle plays to profit from the recovery that can't be far away. That is where having bred the dopes is so helpful to those whose main business is selling Scams.

Scam Lovers in America, for the past ten years, are the best example of born-and-bred dopes. How much money Crooks have made off these dopes?

Crooks and born-and-bred American dopes are codependents!

Jas
Jas Jain | 03.26.08 - 10:23 am | #

Allen C writes:
Tanta, CR, others,

Aren't we due for some MBS ratings downgrade announcements?
Allen C | 03.26.08 - 10:25 am | #

sam writes:
USD tanking vs Euro. Currently 1.5724.
Central banks said to intervene at 1.60. How effective will such intervention be?
sam | 03.26.08 - 10:25 am | #

12th Percentile writes:
Sam,

Don't get me wrong, I've bet a large sum of money on the continued collapse of the real estate market in the US of A. If they want to drag it out that doesn't really bother me much at all. I'm patient. And when they go through these silly (is this the bottom cycles) it is pretty easy to make money off of the volatility.
12th Percentile | 03.26.08 - 10:27 am | #

Cobradriver writes:
"2. Real estate is mostly over as an issue. We'll buy houses again in 6 months."


hc,

This is one of those blanket statements that has to be watched. There are some smoking deals to be had if you have CASH. I have a standing offer on a couple of lots at 1999/2000 prices. Will the owners take them? Who knows? I am flexible/not commited to any single property.

Here is a good example... 4/3/3 car,direct gulf canal,brand new,needed the baths and kitchens finished. Landcaping done. Sold as a bank foreclosure for 96k cash. The homes on this street were selling for 500-700k at the peak. Probably worth 200-250.

Are we at the bottom in SW Florida,NO. But like I said,there will be deals on the way down...You just must be comfortable with what you are getting into.

Chris
Cobradriver | 03.26.08 - 10:27 am | #

Stuart writes:
The dollar is screwed . Another Yen style carry trade.
Stuart | 03.26.08 - 10:29 am | #

sam writes:
http://www.reuters.com/article/ o...539260820080325

Goldman sees $1.2 trillion global credit loss


Why didnt they see the losses the first time? Sometimes I just dont get it anymore. I need to do one of thos Rip Van Winkle maraton sleeps and wake up to a new Rome, I mean world.
sam | 03.26.08 - 10:32 am | #

Changes Ahead writes:
Are we at the bottom in SW Florida, NO.

Referring to water? At the bottom sooner than previously expected. Antarctica is m-e-l-t-i-n-g ...

Ice shelf measuring 25 miles long breaks off Antarctica
Changes Ahead | 03.26.08 - 10:33 am | #

Jas Jain writes:
--
"I used to watch it and totally got sickened when they brought Cramer the clown in. Most of his calls are wrong but the masses love him."

Sam,

Cramer is an entertainer, an important "player" in breeding dopes. What makes Americans such dopes is that they seek entertainment all the time and can't do any serious analysis when things have to be fun.

Cramer is bad, but Kudlow is worse. Is Kudlow also an economist? It yes, he is definitely a rouge economist. A rouge economist is a propagandist and not a scientist.

Jas
Jas Jain | 03.26.08 - 10:35 am | #

Cobradriver writes:
"fedex driver how business is."

Did you actually look at the earnings release last week??? After the one time tax benefit last year that added 8 cents a share they were basically flat year over year...

Heck,the trucking company I work for actually picked up year over year.

Some companies are o.k.,others,not so much.

Chris
Cobradriver | 03.26.08 - 10:36 am | #

Tom in AZ writes:
Changes Ahead writes:
Are we at the bottom in SW Florida, NO.

Changes, your link refreshes the comments.
Tom in AZ | 03.26.08 - 10:37 am | #

jd writes:
This week's cheering of BB intervention and Federal Reserve notes now being backed about 50% with MBS, and the announcement that the bottom was in...happy days are here again...with little dissent, reminds me of other cheering in the stark face of reality.

http://youtube.com/watch?v=OUhRYXCFI10

Corruption and evil countenanced will find other expression elsewhere. Eventually balance sheet manipulation must be made right or the destruction allowed its reign. Pretending that the great scare, the great unwind has gone away, may help some sleep at night. But the nascent threat is only growing stronger until dealt with properly. Debasement, special purpose vehicles, fantasy accounting, forex-commodity-treasury manipulation are waving in the air just like Chamberlin's "PEACE IN OUR TIME". We have signed agreements afterall. WWI-WWII and now GDI-GDII.
jd | 03.26.08 - 10:38 am | #

jd writes:
I am teeling my friend to sell his Jaguar immediately before it depreciates to nothing. Would you beleive this crap.

India's Tata Motors will buy luxury brands Jaguar and Land Rover from Ford Motor for about $2.3 billion in cash, the companies said on Wednesday.

http://www.cnbc.com/id/23807512
jd | 03.26.08 - 10:41 am | #

ipodius writes:
Note...how to get your post not read. Include words like marxist, imperialistic, greedy bastards, pigs, pigmen, (insert derogatory adjective here) American, corrupt and evil....

You get the picture.

Cogent analysis = good read.
ipodius | 03.26.08 - 10:42 am | #

Stuart writes:
Like a SAAB, you can actually hear Jags depreciating in your driveway...
Stuart | 03.26.08 - 10:44 am | #

ipodius writes:
India's Tata Motors will buy luxury brands Jaguar and Land Rover

I don't know about any of you, but if I were in the market for a "luxury" vehicle I probably wouldn't be spending the big bucks on a brand owned by some Indian manufacturer noted for mass-producing low-end cars. I didn't want a tarted-up Ford a few years ago, and I certainly don't want a tarted-up third world vehicle now.

It's all about brand kids, all about brand. It's why Ford failed at Jaguar and why this will not work for Tata.
ipodius | 03.26.08 - 10:45 am | #

Jumpin' Jack writes:
Save your gunpowder. These incredible deals compared to the bubble top aren't going to look so very profitable in a few years. This credit contraction may remove more than $10 trillion in the coming many months, and negative growth is assured.

When the bottom is in, you're going to be so dispirited that you won't recognize it or wish to. Buy now, you'll sell later for horrific loss. But of course it's your blood!
Jumpin' Jack | 03.26.08 - 10:47 am | #

jd writes:
TATA motors sounds like those plastic cars you can find at toy r us that run on batteries and fit tow six year olds. General motors will be bought by the Chinese and the Russians who dont know what a muffler is will definitely buy Chryslers who dont know how to keep a muffler on the car. What a brave new world we live in. See you in the gas line at the ABUDABI GAS and fried camel hump stand
jd | 03.26.08 - 10:51 am | #

ipodius writes:
The durable goods order data bodes ill in a number of ways, since it's only likely to deteriorate from here for a while. I'm certianly not seeing any uptick in the last two quarters for anything, and there will be no reversal in RE this year. The best RE can hope for is to bottom plateau, but it's not going to be a driver of anything for the foreseeable future.

In fact, I'm not seeing anything with sufficient upside to replace any of the boom areas since 2000. What has enough traction? As the consumer retrenches, has credit cut back on, and faces no home ATM and stagnant wages, where does the money go?
ipodius | 03.26.08 - 10:52 am | #

Cobradriver writes:
Buy now, you'll sell later for horrific loss. But of course it's your blood!
Jumpin' Jack | 03.26.08 - 10:47 am | #

My parents bought a couple of 2/1,30 year old homes here in Florida for less than 30k. We already have renters paying 525 month in rent.

Could the deals get better? Possibly. Shit, it cash flows positive right know and will still flow if we reduce the rent. It's also paid for so if it sets,Who cares?? Taxes are only a couple hundred a year...

Chris
Cobradriver | 03.26.08 - 10:52 am | #

12th Percentile writes:
Hyundai's look more like Jag's these days then Jag's do. I'd buy a Hyundai.
12th Percentile | 03.26.08 - 10:53 am | #

Jumpin' Jack writes:
Yeah, ipodius. Let's strip out any language whatsoever implying morality. In fact, let's never use "value"; its too values laden. There is no good nor bad, surplus or deficit, asset or liability--just streams of zeros and ones. No gradations--a melted cheese sandwich and lobster bisque, just the same to you.

No more value creation. Creationism, yuck. So right hand balance sheet sanguine outlook will do. Bankruptcy (including moral) can merely become time sensitive discoordination of productive streams with assistive suppliers structural retrenchment.

Garbage in, garbage out. Same for the human mind.
Jumpin' Jack | 03.26.08 - 10:54 am | #

ipodius writes:
Buy now, you'll sell later for horrific loss. But of course it's your blood!

You know, people said that to me in the last bust but in the long run it didn't work out that way. Everything depends on your timeframe and cash position. Again, you don't have to buy at the bottom and sell at the top. Just almost...enough that the spread made it profitable even if you left a little money on the table.
ipodius | 03.26.08 - 10:55 am | #

Fair Economist writes:
Durable goods is very volatile, so this isn't very conclusive evidence for recession: http://www.census.gov/briefrm/es...ww/ esbr021.html

I feel like a broken record, but it's very reasonable for stocks to be going up. 5% ROE looks very nice compared to a 3.5% 10- year T-bill or MINUS 10% in real estate. Stocks are the only reasonable investment for a buy-and-holder right now.
Fair Economist | 03.26.08 - 10:56 am | #

idoc writes:
Fair Econ

i used to respect you ;)
idoc | 03.26.08 - 10:58 am | #

jd writes:
Thank you for calling Dell support, I mean Jaguar support, so sorry, My name is Rick how can I help you. Would you hold for a few hours please. This is beyond sick.
jd | 03.26.08 - 10:58 am | #

ipodius writes:
Let's strip out any language whatsoever implying morality

Frankly you can save the morality lectures for where you go on a Sunday. Ethics is an issue not morality. There is no morality in the deal, but there are ethics. The distinction isn't minor.

When I sit down and look at the numbers, it is 1s and 0s. But when I choose to do business with someone, or not, ethics play a part. Which is why I refuse to do business with Walmart, and a few other companies out there. This is about financial analysis. You can moralize all you want in a political or religious blog. I'm all ears, however, to a discussion on business ethics.
ipodius | 03.26.08 - 10:59 am | #

Jas Jain writes:
--
"American, corrupt and evil...."

ipodius,

Yes, why talk about the truth when sterile "cogent analysis" will do. That is what dopes want -- a cogent analysis that avoids the ugly truth about America of the past decade and the present. BTW, Crooks love cogent analysis.

Denial is necessary to maintain blind faith in American system that will end in collapse because it is on a path of no return. The dirty deed has already been done under Greenspan-Bernanke, the agents of the Crooks.

Jas
Jas Jain | 03.26.08 - 10:59 am | #

ipodius writes:
I feel like a broken record, but it's very reasonable for stocks to be going up. 5% ROE

Can I have some of what you put on your cheerios this morning Fair Econ? Business investment is in the toilet and not getting better. Where is this coming from?
ipodius | 03.26.08 - 11:00 am | #

revro writes:
ipodius, i dont think that tata plans to target the recently fired london&new york bankers. maybe they will try to do in what they are good at, to target emerging markets. you know those two big countries china and india in which there are many new rich people. so instead of going the japanesse way of lexus, infinity, acura, they knew that noone would go for a laxa :) so they bought a world brand.
revro | 03.26.08 - 11:06 am | #

Angry Saver writes:
Fair Economist,

Why in the world would you be using the 10 yr as a benchmark? Long term investment grade corporates are yielding just under 6%. Inflation is running over 4% yoy. Stocks are at historicly high valuation levels. Treasuries have been more volatile than stocks or real estate due to the fear of a systemic collapse.

Not a proper benchmark at this point in time imo.

Are you Brian Westbury? Just kidding.
Angry Saver | 03.26.08 - 11:10 am | #

jd writes:
JAS JAIN

priceless!!!!!!

http://www.youtube.com/watch?v=g...h? v=gUkbdjetlY8

http://www.youtube.com/watch?v=A...h? v=AyGc_rlF8aA
jd | 03.26.08 - 11:10 am | #

Angry Saver writes:
Hey Jas,

I remember watching Jim Cramer tout homebuilder stocks as screaming buys right at their peak. He called the homebuilders "land banks." His thesis was that the "land banks" were permanent stores of value and therefore were no longer a cyclical industry. I kid you not.
Angry Saver | 03.26.08 - 11:14 am | #

Sebastian writes:
"Sebastian, Rogue Economist." I like the sound of that.


S.
Sebastian | 03.26.08 - 11:14 am | #

jd writes:
Wolf: Free Market Capitalism Just Passed Its Peak

http://www.nakedcapitalism.com/2...ust- passed.html

Martin Wolf of the Financial Times sees the Bear Stearns bailout as the high water mark of free market capitalist ideology

Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Joseph Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.
jd | 03.26.08 - 11:15 am | #

ipodius writes:
revro I think that is the strategy, but I'm not sure how many Chinese are going to buy Indian-built saloons. Or how many affluent Indians there really are to do that either. They need to Euro and American buyers to provide a stable base, and they just lost that.

Luxury branding is a very, very cagey thing and has to be guarded jealously. The second down-market people are wearing your stuff it when it's over...just ask Burberry. Or Tiffany. I mean, come one, have you been in a Tiffany lately? Vulgar over-priced stuff you expect to see on the middle-class that thinks wearing it makes them rich. And these are the companies that are very, very vunerable to an economic reset.

If you're the shorting type of guy, short any luxury brand that has stepped down-market and appeals to the aspirational segment. They're the ones that are going to get whacked the most in the next 18 months.
ipodius | 03.26.08 - 11:16 am | #

albrt writes:
"short any luxury brand that has stepped down-market and appeals to the aspirational segment"

I think the only luxury brands that DON'T fit this description right now are the ones I never heard of.
albrt | 03.26.08 - 11:20 am | #

jd writes:
ipodius

amen... we all want that little turquise box from Tiffany, not anymore. I will take one out of my closet and put the jewelry I bought at walmart in it to give as a gift.
jd | 03.26.08 - 11:20 am | #

Sebastian writes:
Angry Saver said: "Why in the world would you be using the 10 yr as a benchmark? Long term investment grade corporates are yielding just under 6%. Inflation is running over 4% yoy. Stocks are at historically high valuation levels. Treasuries have been more volatile than stocks or real estate due to the fear of a systemic collapse.

Not a proper benchmark at this point in time imo."

IMO, any reasonable benchmark will work. The problem comes (and it's a particular problem on this blog) when people *don't use one at all* or *don't look at it over a long enough timeframe*.

In my studies, I use SP500 TTM as-reported peak EPS (which Hussman uses, although he second-guesses it) to calculate PE valuations, giving me a consistent yardstick over multiple decades.

I also use 10-year Treasury yields as a benchmark to compare against stock market earnings yields. (Which tells me the relative valuation of stocks to fixed-income.)


Sebastian
Sebastian | 03.26.08 - 11:26 am | #

jd writes:
Ipodius

is Burberry still British owned?
jd | 03.26.08 - 11:29 am | #

Angry Saver writes:
Sebastion,

I see no benefit in buying high. Ever. The best you can hope for is average.
Angry Saver | 03.26.08 - 11:31 am | #

Sebastian writes:
albrt said: "I think the only luxury brands that DON'T fit this description right now are the ones I never heard of."

(OT) My car of choice, if money was no object.

http://www.bristolcars.co.uk/Ble.../ Blenheim3S.htm


S.
Sebastian | 03.26.08 - 11:38 am | #

Jim writes:
American media and politics are full of rogue economists. They play a big role in breeding dopes. Crooks hire economists in their pursuit of breeding dopes.


Fact is most US media pundits are idiots and fools. I can only think this is because they speak to idiots and fools who (are) like them, so the media use them. I haven't seen or heard a really smart, sensible economist on TV for years. PBS used to have a dapper fellow some years back who had a brain, but I haven't seen him for years. The PBS market wrap up show uses mainly IB shills whose viewpoints range from silly to stupid.
Jim | 03.26.08 - 11:38 am | #

ipodius writes:
I think the only luxury brands that DON'T fit this description right now are the ones I never heard of.

Exactly...the Battistoni's, Isaia's, Loro Pinana's, and such won't feel what those brands you see in a mall will. I'd be shorting LVMH as those as the ones that become tempted by the masses. Same goes for cars in that category.
ipodius | 03.26.08 - 11:41 am | #

Sebastian writes:
Angry Saver said: "I see no benefit in buying high..."

I agree. However, by my long-term benchmark, the SP500 PE is just under 16 now, having touched just under 15 at its recent low. That's just about the level it reached at the bottom of the largest bear market of our generation between 2000-2002.


Sebastian, Rogue Economist
Sebastian | 03.26.08 - 11:42 am | #

ipodius writes:
Sebastian, that's a little esoteric there! I personally never trust English cars, just German or Italian ones. And Japanese high-end cars have no soul.
ipodius | 03.26.08 - 11:42 am | #

sam writes:
Japanese cars may have no soul but the good ones last forever with normal maintenance. Thats what is needed today.
sam | 03.26.08 - 11:45 am | #

Maj Tom writes:
Sebastian,

Where do you get your data for your long term PE benchmark?
Maj Tom | 03.26.08 - 11:46 am | #

Maj Tom writes:
Seb,

I only ask because on 12/31/07 the trailing PE on S&P was over 18...

The dow was over 40 but that is beside the point.
Maj Tom | 03.26.08 - 11:47 am | #

Angry Saver writes:
Sebastion,

Why do you believe the earnings? I strongly believe the record earnings of the last few years are highly bogus. Consider the earnings of Bear Stearns, Citi, Merrill, Big Oil, etc. Also, remember Enron & MCI had "earnings." Your valuation approach is fine. Your data and history are flawed.
Angry Saver | 03.26.08 - 11:50 am | #

Sebastian writes:
Maj Tom asked: "Where do you get your data for your long term PE benchmark?"

Prof. Shiller's website (Cowles' reconstructed data) for the old stuff going back to the 19th Century, updated with current data as-reported EPS from Standard & Poor's.

http://www.irrationalexuberance....e.com/ index.htm

http:// www2.standardandpoors.com...SP500EPSEST.XLS

As you can see, not a novice mistake using forecast earnings instead of actual earnings. I haven't forgotten how you patronized me.:)


S.
Sebastian | 03.26.08 - 11:51 am | #

Jas Jain writes:
--
"We have signed agreements afterall. WWI-WWII and now GDI-GDII."

jd,

And the same old crooks at the roots of all these -- first moneybags of London and later moneybags of NYC.

AllenM, one day this evil will end!

Jas
Jas Jain | 03.26.08 - 11:54 am | #

Sebastian writes:
Angry Saver said: "...I strongly believe the record earnings of the last few years are highly bogus..."

I strongly believe that this isn't the first time it's ever happened.:)

We've seen this before, it's been reflected in stock market behavior and valuations before, and we can make reasonable forecasts based on historical information.


Sebastian
Sebastian | 03.26.08 - 11:56 am | #

Maj Tom writes:
Seb,

Then I am glad you recognized your error in reporting your 2002 PE and the most recent low of PE.

http://www.bullandbearwise.com/ S...rningsChart.asp

Perhaps this chart might refresh the others in the audience on your interpretation of whether we are above or below the long term trend of PE ratios.

I only bring this up because you keep telling everyone that PE ratios are low when in fact they are not.

I am glad you put in the Shiller data and I encourage anyone to go to the first data series excel spreadsheet and review Figure 1.3 which supports the "irrational exuberance" and the out of norm PE ratios of the last decade.

BTW, neither of your references lists the S&P500 PE ratio as below 15...
Maj Tom | 03.26.08 - 12:01 pm | #

Jas Jain writes:
--
"Sebastian, Rogue Economist."

No way. Rogue economists make good money by prostituting their minds. Seb seems like an honest man and besides Seb is a born loser (nice people finish last!). If Seb were an economist he would only be guilty of gross incompetence.

Jas
Jas Jain | 03.26.08 - 12:03 pm | #

Anonymous writes:
"Note...how to get your post not read. Include words like marxist, imperialistic, greedy bastards, pigs, pigmen, (insert derogatory adjective here) American, corrupt and evil....Ipodius"

Honestly, who the hell cares about your reading decisions, ipodius? Get over yourself, NO ONE comes here to read you, or desiring your comments.

Your ignorance knows no bounds. How's the sand down there?
Anonymous | 03.26.08 - 12:08 pm | #

Sebastian writes:
Maj Tom said: "BTW, neither of your references lists the S&P500 PE ratio as below 15..."

As I have *repeatedly* said, I use peak TTM as-reported earnings, as Hussman describes.

http://www.hussmanfunds.com/html...tml/ barrons.htm


S.
Sebastian | 03.26.08 - 12:08 pm | #

Jas Jain writes:
--
"I also use 10-year Treasury yields as a benchmark to compare against stock market earnings yields."

No one has informed Seb that "The Fed Model" is a hoax. Comparing an elephant with a rat?

A UST-Bond Lover and Scam Hater for ten years,

Jas
Jas Jain | 03.26.08 - 12:11 pm | #

sam writes:
Anonymous
Honestly, who the hell cares about your reading decisions, ipodius? Get over yourself, NO ONE comes here to read you, or desiring your comments.

Your ignorance knows no bounds. How's the sand down there?


Cool your jets. Ipodios's posts give this board some liveliness. Ipodious is educated. While I always dont agree with his views they give me something to think about... We need more of his type on the board. Lively debate is better than no debate.
sam | 03.26.08 - 12:14 pm | #

Jas Jain writes:
--
Jim,

Thanks for validating my observations. I just describe them in a vivid language so that the moral component can't be easily ignored.

Jas
Jas Jain | 03.26.08 - 12:14 pm | #

Maj Tom writes:
Seb,

Thanks, your 3rd attempt to prove your theory again supports that PE ratios are well above normal.

The funny thing is that I follow Hussman, Shiller, et al, and none of them think the economy or markets have much hope right now...

Also, on a note that isn't fixing Sebastians errors... CNBC lost a ton of viewers during the downturn and they must promote a positive spin wherever they can to retain viewership. I personally can't stand the spin from them and simply listen to Rick Santelli who is the only market analyst that has made any sense.

People like Roubini and Schiff have been comically dismissed as loons and CNBC hangs their hats on Professor Steve Liesman who majored in English and Tech Rep. Dennis Kneale. The information from CNBC must be taken with a grain of salt and as long as CR, Tanta, Ritholz, Mish, Tim Knight, Iacona and several others exists, we will get the "other side," Sebastians comments notwithstanding.

Just kidding Seb.
Maj Tom | 03.26.08 - 12:17 pm | #

Jas Jain writes:
--
"I strongly believe the record earnings of the last few years are highly bogus."

AngrySaver,

Furthermore, bulls like Seb don't understand how cyclical earnings are. The reported earnings fall by 50% in most cycles. Seb want to deny recession because the reported earnings fall like a rock during recessions.

Happy Saver,

Jas
Jas Jain | 03.26.08 - 12:18 pm | #

dryfly writes:
To get back on topic - the durable goods order should never have been a surprise... If a surprise at all it is because it wasn't lower.

Automotive & building related DG orders are terrible from what I hear - all the way down the supply chain. Consumer products are mostly 'non-durable' so I don't know about that (think food, paper, households & such).

The biggest drop was in heavy equipment - if I read the report right it was the biggest drop m-o-m ever. I bet a lot of that is due to automotive taking - its going to get a lot worse in automotive before it gets better. I was hearing/reading about 8 & 9 year payment plans on CNBC a few days ago. Talk about stealing future demand.

The only bright spots are in infrastructures - energy grid, oil exploration, logistics, agriculture & aerospace. My guess is after McCain is signed in add military expenditures. None of them are big enough to turn the ship... just won't be as big of a crunch when it hits the iceberg.

Gonna be fun watching all this unwind.

dryfly | 03.26.08 - 12:20 pm | #

m writes:
I want to go back to the way it was. I dont like it here anymore. Since August I have literally been a wreck. I was going to put my house on the market now, but whats the sense. Nothing is selling in my neighborhood and if I lower my price too much my neighbors will stone me. Putting my kid through schhol is breaking me. I dont know how people can afford it. Student loans are harder to get. Everything just seems so disjointed. Where is Toto, I want to get back on the yellow brick road.
m | 03.26.08 - 12:32 pm | #

cd writes:
M-I suggest taking the red pill the blue one has FED stamped on it..
cd | 03.26.08 - 12:34 pm | #

m writes:
cd
I am already on 3 white pills for anxiety and depression.
Toto, where are you?
m | 03.26.08 - 12:40 pm | #

Mook writes:
Seb - Genuine question here, not being snarky:

You're quite wedded to the idea that price/earnings ratios vs. historical averages can help determine market bottoms and are waving a green flag of sorts to jump back in to the market. Fine, as far as it goes - I'm not in 100% agreement with you, but that's for another time.

But when you mention names that you went out and loaded up on recently - ABAX,ARD,BMRN,BRKR,EGLE,INCY - it's safe to say you're not employing the same P/E-centric methodology. Yes, a couple of them are R&D-oriented but, as a group, they're trading at what I'd consider outrageous P/E multiples if they're making profits at all.

Why the vast disconnect in your treatment of P/E for market timing vs. for stock-picking?
Mook | 03.26.08 - 12:40 pm | #

aka-bozo writes:
m writes:
I want to go back to the way it was. I dont like it here anymore.


Jeez dude, we're talking about THE most worthy WINNING (actually haven already MOSTLY won)– owning almost EVERYTHING - and you're still fantasizing about "returning to the glorious days of yesteryear" when the "good people" ran your government. Before "those people" got involved.

Let me let YOU in on a little secret... Those "glorious days" are gone, dude. THE most worthy of your society, the WINNERS of the American “survival of the fittest” contest, bought both your political parties, own all your assets, and are now happily selling them to SWF (including your politicians), and are buying huge plots of land in NZ and estates in Dubai (on those cool islands, build with all your SUV gas money). Sorry dude, your peasants don’t own anything - and, as it takes billions to run for politics in your country, those billions just HAPPEN to come from the same MOST-worthy people, just like God intended ! But, as you Americans only like competition when it comes to Japanese electronics - as opposed to having the (SHOCKING) concept of more than two parties debating “things” (that competition of ideas “concept” that (maybe) one or two of your glorious Founding Fathers just might have mentioned) perhaps if you had SOME political debate, you wouldn’t be in the situation of having 1% of THE BEST and MOST worthy owning 90% of your country, and owning your political process too-boot. I know, I know, your peasants are much more worried about “getting even with those people” than egalitarian liberal democracy. Seems to me they got EXACTLY what they’ve been voting for, for the last 40+ years. You sure didn’t want any gov`ment interference in the life’s of THE BEST and absolutely MOST worthy of the greatest society in the history of HISTORY. Don’t want no BUROCRATS telling the BEST minds of the BEST country of the BEST economic system telling the HARD WORKING PEOPLE OF `MERICA how to run their lives. “If we let them BUROCRATS tell the banks what to do, NEXT they’ll be telling US who we have to LIVE WITH !!” Right? Ain’t that WHY you’ve been voting for the Party of FREE-ENTERPRISE for the last 40+ years? Wasn’t old Greenspan a saint just a few short years ago?

Remember, vote for the “Freedom Firewall”. Only the “Freedom Firewall” can filter out the negative trrrists that are destroying the morals of the greatest country in the entire UNIVERSE.
aka-bozo | 03.26.08 - 1:08 pm | #

dryfly writes:
m writes:
cd
I am already on 3 white pills for anxiety and depression.
Toto, where are you?
m | 03.26.08 - 12:40 pm | #

Do they work? If so the fed might just want to buy in bulk & dump into the water supply... say its the new fluoride.

dryfly | 03.26.08 - 1:10 pm | #

m writes:
dryfly

I gained 15 lbs in 2 weeks and have erectile dysfunction. so, do they work?
m | 03.26.08 - 1:19 pm | #

dryfly writes:

I gained 15 lbs in 2 weeks and have erectile dysfunction. so, do they work?
m | 03.26.08 - 1:19 pm | #

Hmmmm. Maybe I'll stick with bottled water for now.

dryfly | 03.26.08 - 2:29 pm | #

mjc writes:
m: The hell with your neighbors. They can't stone you after you are gone.

If you have to sell, sell.
mjc | 03.26.08 - 3:43 pm | #