LVG

Some news from the EU front:

http://www.bbc.co.uk/news/business-17836624

Deutche Bank's profits plummet 35%:

http://www.bbc.co.uk/news/business-17851185

Spain's bond costs double from a year ago:

http://www.businessday.co.za/Article...aspx?id=170410

The Netherland's government fell due to failure to pass an austerity package:

http://www.washingtonpost.com/busine...3cT_story.html

Concern that demand for French debt is softening due to the potential of a credit downgrade:

http://www.telegraph.co.uk/finance/f...d-auction.html

And finally, though almost a month old, the Fed bout 61% of US debt.

http://www.moneynews.com/Headline/fe...mo_code=E8AA-1

In other news (tounge-in-cheek), the British government has dipped into their material stockpiles of old WWII posters. This classic is seen as coming back onto the streets of London:

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RISE UP DARK SIDE

"The problem with quotes on the Internet is that it is often difficult to verify their authenticity." - Abraham Lincoln

Russ Smith

And yet the US markets were all up today? Makes you wonder how long before people notice what's going on worldwide.

I'm still all cash on my IRA's, my work 401k is still in stocks but it's quite small, I'm fully expecting a correction.

__________________
“Your expectations always exceed outside expectations. I feel like you just can’t stop working, can’t stop getting better, because I’ll be a failure in my eyes before I’m a failure in someone else’s eyes.” -- Arron Afflalo

82CardsGrad

Not sure how long you've been in cash - chances are you've missed out on a nice run over the past year or so. That said, I am also expecting to see a correction and am very surprised it hasn't hit yet, what with the problems all over Europe and China slowing (though they recently showed some improvement), as well as Brasil - combined with slowing job gains here in America, poor manufacturing and durable goods numbers and problematic gas prices...

Russ Smith

About 4-5 weeks I think. When it was around 13,500 on the Dow I went all cash. Went down below 13 so I've missed about 300 points back up but I missed the drop too.

__________________
“Your expectations always exceed outside expectations. I feel like you just can’t stop working, can’t stop getting better, because I’ll be a failure in my eyes before I’m a failure in someone else’s eyes.” -- Arron Afflalo

82CardsGrad

I'm still all stocks at present... each time I think it's "that" time to pull the trigger and run to cash, the market comes back. Crazy...

jefftheshark

Bad news like the GDP miss coupled with the bad weekly payroll report equals an uptick in the DOW because they think it's a step closer to QE3. The Fed said this week that they'll go the QE route if forced, but that they don't think they will. It's a classic case of mixed signals bordering on schizophrenia. The Fed is basically shoving everyone into the market as there is no yield to be found anywhere else, but this is a dangerous game - for them and for us. I think the best bet is no more than a 50% exposure to stocks, but that's just me.

Geithner said that there is absolutely no chance of Europe's problems spilling over on us, which makes it a 100% certainty that they will. Everybody's thinking they can get out in time - however many will be wrong.

JTS

82CardsGrad

I know Jeff... I'm "this" close to jumping ship and running to cash. However, there is a TON of $$ still on the sidelines... The retail investor really hasn't come back into the market. That would be a very strong indicator to me that it's time to get out... but, as I say - it hasn't happened... yet.

Duckjake

Just drove from Austin to Stillwater Oklahoma to pick up my daughter from College. I don't think I've ever seen so many 18 wheelers on Interstate 35. Literally hundreds of them. Non stop from Austin to Stillwater and back. Where are they going and what are they hauling if the economy is wrecked? It was all day 5 oclock traffic for Peterbilts.

__________________
Forget the pay. Can the guy play.

jefftheshark

Meridith Whitney, a well known "doom & gloomer" was interviewed the other day and said that she was bullish on the USA, but only the section starting on either side of Texas and going straight up to North Dakota.

I suppose that I'm guilty of sounding like I think everything's going to hell in a handcart, yet that's not ever going to be true everywhere. I think that there will always be those who thrive during tumultuous times. What I see is that we as a global economy are not immune to the things that occur in Europe or Asia. If there was a war in Iran for example and we saw a shutdown in oil from the gulf then you could say that Texas might boom, as would Canada and the northern tier states including Alaska. But places like Japan could get crushed by the same event.

All economies are local, just like politics.

JTS

LVG

For the US, what Duckjake is pointing out really is a form of selection bias. His observation tells that there is increased trucking activity along that section that he traveled for the time that he traveled it, but cannot be generalized to regional, national, or international indicators, or expanded to additional time frames without additional supporting data.

I'm not trying to throw rocks, DJ, just pointing out the dangers of generalizing observations.

__________________
RISE UP DARK SIDE

"The problem with quotes on the Internet is that it is often difficult to verify their authenticity." - Abraham Lincoln

82CardsGrad

Good point... however, the reality remains that, in this bizarro economy we find ourselves in today, we see unemployment remaining far too high and too few jobs being created. We see foreclosures and short-sales still presenting problems. We hear about people on welfare and food-stamps at record levels. Yet, the vast majority of publicly traded companies continue to produce incredibly strong financial performances. In all industries...
I get the sense that those financial performances are simply unsustainable when there are so many other huge negative inputs. But then again - companies have been fattening up for quite a while now, while other important economic data continues to illustrate harsh conditions. Very strange...

LVG

Doesn't the international nature of modern business mean that the US economy can be in the crapper, but companies can continue to post strong results because of overseas strength?

I know there are other explanations but none come to mind right now - can you think of any (other than outright fraud)?

__________________
RISE UP DARK SIDE

"The problem with quotes on the Internet is that it is often difficult to verify their authenticity." - Abraham Lincoln

82CardsGrad

Of course... however, take a company like Apple - where the majority of their sales (which continue to hit record levels) are based here in the U.S. Take a look at retailers here in the U.S. as well. Major U.S. banks...
The dichotomy between corporate America and main street is huge right now. I honestly don't recall it ever being as substantial as it is today...

jefftheshark

Wage arbitration. Corporate profits go up as labor costs go down.

Real wages in the US have been trending down for well over a decade with credit creation making up the difference. The workers in America moved into service industry jobs that while (usually) necessary do not in themselves create wealth. It all works great until the credit card gets cut up and then it gets ugly.

That's why it is important to look at Greece. They are the first to experience what happens when their cards get declined. They are selling their national sovereignty in exchange for enough cash to make the next couple of payments. Add Spain and Italy to the mix and it gets harder and harder to come up with enough cash. Unless you just print it out of thin air and that's a whole different ball of wax.

Nasim Taleb tells a great parable in his book The Black Swan where he talks about a turkey on a farm. For its entire life the farmer takes wonderful care of the bird. It comes to expect that every day the farmer is going to feed it when it gets hungry, give it water if its thirsty and medicate it if feels under the weather. The farmer is his best friend in the entire world. Then one Wednesday morning from out of the blue the farmer lops his head off.

The lessons: 1) Past performance means nothing. 2) Just because you don't understand the system doesn't mean that you can't be affected by it. and 3) Everything is going to sound rosy until it isn't.

The trucks are gonna be traveling down the highways right up until they aren't.

JTS

Duckjake

I understand that's why I asked the question. On another note two houses on my street have been put up for sale in the last month. One was sold before it was even listed on MLS. The other had 3 offers for more than the asking price within 2 days of listing. It's like Austin is working in a bubble or something.

Construction is still depressed as every Construction Co in the US has opened an office here because there's no work anywhere else I guess. Thank goodness for the RFP matrix selection process*. Otherwise projects would be going for -10% profit

* a personal note for my friend LVG as most of you won't know what that means. Watching that Packers game in the LV was too much fun wasn't it?

__________________
Forget the pay. Can the guy play.