Stocks gain on Strong GDP
spyguy
Posts: 613
all smoke and mirrors drifitingintoastorm?
http://money.cnn.com/2008/08/28/markets/markets_newyork/index.htm?postversion=2008082811
GDP: Gross domestic product, the broadest measure of the economy, increased by a 3.3% annualized rate in the second quarter, the government reported. The revised reading improved on the initial report of 1.9% issued late last month and topped expectations for a growth rate of 2.7%.
It was the best reading since the third quarter of 2007 and showed a marked improvement from the sluggish 0.9% pace in the first quarter. The growth was partly attributable to a spike in exports as a result of the weak dollar. However, many experts also credited the rise to the more than $90 billion in economic stimulus checks that reached taxpayers during the quarter, suggesting that a sustained pickup is unlikely now that the rebates have ended. (Full story).
In other economic news, a separate government report showed that the number of Americans filing new claims for unemployment fell for the third week in a row, meeting expectations.
http://money.cnn.com/2008/08/28/markets/markets_newyork/index.htm?postversion=2008082811
GDP: Gross domestic product, the broadest measure of the economy, increased by a 3.3% annualized rate in the second quarter, the government reported. The revised reading improved on the initial report of 1.9% issued late last month and topped expectations for a growth rate of 2.7%.
It was the best reading since the third quarter of 2007 and showed a marked improvement from the sluggish 0.9% pace in the first quarter. The growth was partly attributable to a spike in exports as a result of the weak dollar. However, many experts also credited the rise to the more than $90 billion in economic stimulus checks that reached taxpayers during the quarter, suggesting that a sustained pickup is unlikely now that the rebates have ended. (Full story).
In other economic news, a separate government report showed that the number of Americans filing new claims for unemployment fell for the third week in a row, meeting expectations.
Post edited by Unknown User on
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Comments
Props for you for posting some positive financial news.
Ideologues tend not to notice optimistic news because it doesn't support their ideology.
-Enoch Powell
Dow up 230 on weak oil and strong dollar.
I'll ask again, all smoke and mirrors drift?
perhaps you should send drift a PM...
perhaps you should stay out of the thread unless you have something useful to say about the state of the US economy
why don't clean the sand out of your va-jj....
Goddamnit.
I just had a long reply and accidentally hit back on my multibutton mouse.
Fucker.
Anyhow.
Look.
Who gives a shit about GDP.
The market clearly doesn't.
That pretty little rally of yours brought the DOW to 11,715 last thursday after a 212 point rally.
But look at it now, less than a week later, and on a day when the market is UP 145 points it is still only at 11,690.
So clearly all the excitement over GDP wasn't too grand, if the gains went away over the weekend.
Even this rally on news that Gustav didn't kill us all can't get it back to that level.
HERE IS THE SKINNY:
No one is saying that GDP is the problem.
The REAL economy in the United States is relatively functional.
Manufacturing has some big problems, but all in all people are working, and that means the economy is "working" ... GDP is good.
THE PROBLEM is credit.
Go turn on CNBC some day and listen for a few hours.
You'll hear at least 3 or 4 people talking about "Credit Crisis 2.0" [WATCH THIS! Everythings fucking great, right?] or "the second half of this mess" or "a lot of pain still to come" or so on.
The problem here is banks have been utterly fucked by the residential housing market. And NOW that pain is spilling over on to all sorts of other segments of bank balance sheets -- small business loans, commercial accounts, and of course development and construction loans.
THAT is a MAJOR problem for the market, because not only does it mean more potential bank failures and thus strains on FDIC, and obviously on credit issuance (which at this point is only a problem to business, since consumers aren't hardly borrowing anymore anyhow) ...
but it means major problems for market PRICES because a bank under massive financial stress is forced to SELL ... forced to sell on margin concerns ... meaning they literally are FORCED because of constraints of their total loan to value rate of their portfolios.
As their balance sheets shrink, it means they must sell mercilessly in order to cover that margin, and that is where "credit crisis 2.0" comes from.
Its not just me and fear mongers,
its very smart and very calm figures on CNBC and all over the net in articles.
Go check it out.
By any reasonable measure, my "predictions" regarding this have all been bang on the fucking money.
Go ask Jlew, who was screaming "buy of the century" around 12,900 on the DOW.
He laughed in my face and said i was a fool, asked me when i was planning on buying if not now (and this was like January or some shit) ...
well look how great that plan worked.
I just call it as i see it man.
If you think one day of "good numbers" is the cure for what ails this market,
then you don't even understand the fundamentals of what is wrong with it, or how serious that situation is.
Like i said, even the calm talking heads on CNBC are saying things like, "this second phase of the credit crisis poses serious problems for the market. Its not a question of if we are going to see serious pain or not. We ARE in for some serious pain here. The question is, will that pain be a manageable sort of pain -- you know, a severe but manageable recession ... or will that pain be something more ominous and bleak."
Now when you hear shit like that coming out of the Idiot Box,
what do YOU think the REAL situation is like?
Come on man.
Don't shoot the fucking messenger.
Jeez.
You want some good trades?
Wait a week, and if this pops anymore, short the banks.
Don't wait at all to run out and buy you the shit out of some silver,
which is inexplicably down to pre-recession levels of 12.7 an ounce.
BUY BUY BUY that silver!
If I opened it now would you not understand?
credit is a problem, absolutely. this is just a cycle that has played out many times before. sadly, the only way greedy people learn is the hard way.
- banks wont just lend to any shumck ever again.
- people will think twice about borrowing money that they cant pay back.
You really don't get it.
The banks ...
The banks of record that is ... JP Morgan, Citibank, Wachovia, BoA, Goldman, Lemahns ...
those banks stand to fucking clean up.
Look at history,
who benefited the most out of the Great Depression?
Who was arguably the CAUSE behind it? (JP Morgan, cough cough) ...
THE BANKS!
The MAJOR BANKS.
The Money Trust masters!
Those people swooped down on the depressed streets of America and bought up, in wholesale fashion, dozens if not hundreds of bankrupt regional and local establishments.
What your statement illustrates is a fundamental misconception about the nature of credit and "money" in our economy.
Money, or more accurately, "wealth", is NEVER lossed.
I repeat, it is NEVER "lossed".
Wealth is only TRANSFERED.
And what is taking place right now is a MASSIVE transfer of wealth.
And why have the banks learned their lesson?
EVERY major disaster so far has been SOCIALIZED\NATIONALIZED ... and that trend looks to continue indefinately.
THAT IS THE WHOLE POINT OF THE FEDERAL RESERVE SYSTEM.
To GUARANTEE the unending rein of the money trust.
The system will ALWAYS bail out the large banks at the expense of Joe Tax Payer and the little firms.
You think anyone besides the employees themselves are crying over Bear Sterns?
FUCK NO!
JP Morgan made out like a mother fucking bandit on that!
And i'm sure the people at the top of the Morgan pyramid are rubbing their grubby fucking hands and doing a rain dance for more bank failures.
Just waiting to catapult their balance sheets to infinity on the backs of more bank failures ... failures brought on by their greedy and illicit tactics in the first place.
Its rigged, bub.
You best understand that.
And the house is having a fucking field day scamming the custies right now.
And as for cycles.
These aren't "just cycles". At least, THIS is not "just a cycle".
This is history in the making.
Saying it is just a cycle shows ignorance on your part towards a real appreciation for the magnitude of this crisis and the numbers involved. Like i've said before, the Savings and Loan "Scandal" of the 80's brought down our economy for a half decade or more ... and that was with a FINAL cost of around 1.2 trillion.
We are looking at an upfront SHORT TERM estimate that already blows past 1.5-2 trillion in losses.
The final bill on the tax payers plate could be 4 tril or more this time around.
We're talking MAJOR MAJOR MAJOR MAJOR MAJOR problems here.
PS - afer Jlews little 12900 comment, the market went straight to 11,900. It was several months before the market made a feeble attempt at hitting 12,900 again ... and that was after a massive rate cut by the fed, and it lasted a whopping week or so, before PLUMMETING.
If I opened it now would you not understand?
focus on the issues!
you think banks are going to clean up and I'm the one who doesnt get it? do you know what market cap is?
agreed!!! and its not just the banks that run crying (via lobbyist who out-number congress 8-1 in DC) to the gov't with their hand out, airlines, autos, etc...
driftin- its a shame bec most people cant wrap their heads around the massive redistribution of wealth using taxpayer funds (most notably by military and defense spending) that is taking place right under their noses while most cant afford to live anymore.
http://money.cnn.com/2008/08/29/news/companies/tully_jpmorgan.fortune/index.htm?postversion=2008090208
but yet you are fully in the corner of giving the government massively more amount money and control (under Obama)
You mean like this?
Look.
I think this whole thing is spinning horribly out of control.
I'm trying to explain to you how your little "cycles" work.
You made a statement about banks learning from this.
I'm telling you the larger banks were sitting with stiff dicks at the start of this, just waiting to see what they could "clean up" this time around.
Of COURSE, if the whole goddamn system comes down, then they arguably dont "win", all though "they" most likely find away to pervert government to have everything restructured in their favor anyhow.
WHAT ARE YOU SAYING, though?
Sounds like you are trying to have it both ways,
telling me everything is okay, and i am a fear monger,
then when push comes to shove,
telling me i can't be right,
because the banks are all in deep shit.
So what the fuck is it?
Are we okay,
or is everything fucked?
PS - one final observation.
What exaxctly is it you are getting at with your "Market Cap" jab?
Are you telling me i must be a fool to think banks are winning, because their share price is tumbling?
The point I am trying to make here is that REAL asset accumulation by the largest banks in these "cycles" is undeniable. Any potential profit out of those accumulations (like buying Bear Sterns) may be masked in the short term by the very real losses on their holdings ... but the two aren't mutualy exclusive.
JP Morgan's stock can be in the tube, and it can still be swallowing up real assets of distressed corporations left and right.
What am i missing here?
If I opened it now would you not understand?
we are ok. credit problems will continue and banks will lose billions. but overall, we are fine. GDP (which you say doesnt matter) is good, oil prices are coming down (down 8 bucks today), dollar is up (although has been volatile), corporate earnings are fine (except banks), we are about to enter in a alternative energy innvation boom.
the credit and housing markets are shaking out all the greed that lead up to its collapse. ultimately a good thing.
you sir are nothing more then a fear monger. you believe everything AJ says. even believing the Republicans manufactured Gustof? I know you think its possible. people like you and AJ make me sick
And you know this how?
I'll repost some things Ive posted before on here... check my posts.
I dont understand how anyone can tolerate let alone support a dem or rep.
Not enough politicians have brain cancer, I wish it were contagious.
Learn something in life kid, otherwise you're no bettor off than my dog when your dead. Make your parents proud.
Like the correction following the Dot Com boom. When will people learn if you base everything on speculation, you eventually lose.
Like gold?
I'm gonna go with Friedman this time around,
and say that the best solution to all this hanky-panky is to just eliminate the Fed, and FREEZE the money supply.
Just stop it.
Stop printing "money" ...
stop manufacturing more "high powered money"
and let the secondary markets take care of how to issue credit above and beyond that.
I think that would probably solve a lot of our market fluctuation problems.
It would piss the government and its real owners off to know end, and will never happen in a million years ... but it is a brilliant solution.
If I opened it now would you not understand?
Today, the Commerce Department reported the June deficit on trade in goods and services was $56.7 billion, down from the $59.2 billion deficit in May. U.S. imports of consumer goods did ease, as a result of the recession in retail sales, but the cost of oil imports and the trade deficit with China continued to rise.
U.S. exports have been growing, but the trade deficit remains large because of high prices for imported crude oil and refined products, subsidized imports from China, and the continuing woes of the Detroit automakers. At about 4.8 percent of GDP, those pose a significant drag on the economy and combine to destroy thousands of high paying U.S. jobs.
Simply, money spent on Middle East oil, Chinese televisions and coffee markers, Japanese and Korean cars can’t be spent on U.S. made goods and services, unless offset by a comparable amount of exports. Since U.S. imports exceed exports by 4.8 percent of GDP, the trade deficit creates an enormous drag on demand for U.S.-made goods and services. Along with the credit crisis and resulting slowdown in new housing and commercial construction, the trade deficit is driving up unemployment.
Since 2000, the trade deficit has increased $300 billion, and 3.8 million manufacturing jobs have been lost. China and other major Asian exporters of manufacturers subsidize their sales in U.S. markets by suppressing the exchange rates for their currencies against the dollar by intervening in foreign exchange markets. Were this problem resolved, the trade deficit could likely be cut in half, GDP would rise by $300 billion and about 2 million manufacturing jobs could be restored.
The Bush Administration characterizes critics of China’s mercantilism as protectionists. Democratic leaders in the Senate and House talk tough, but can never seem to bring a bill to a vote in either chamber that would bring substantive action.
Presidential candidate John McCain appears aligned with the President Bush on trade with China. Senator Barack Obama’s positions are in line with those of leading Congressional Democrats, who express angst but take no action.
Meanwhile, workers across Middle America suffer, and U.S. automakers abandon their communities for the Middle Kingdom. Wall Street bankers open new branches in China and lavish campaign contributions on both political parties for their compliance in America’s policy of appeasement.
Breaking Down the Deficit
Together, petroleum, China and automotive products account for nearly the entire U.S. trade deficit, and no solution to the overall trade imbalance is possible without addressing these segments.
Petroleum products accounted for $36.4 billion of the monthly trade gap, on a seasonally adjusted basis. Since December 2001, net petroleum imports have increased $30.8 billion, as the average price of a barrel of imported oil has risen from $15.46 to $117.13, and monthly imports oil and refined products have increased from 353 million to 383 million barrels.
Retuning conventional gasoline engines and transmissions, hybrid systems, lighter weight vehicles, nuclear power, and other alternative energy sources could substantially reduce U.S. dependence on foreign oil. These solutions require national leadership, but both Republican and Democratic Party leaders have failed to champion policies that would reduce dependence on Middle East oil.
In 2007, the Congress managed to push through the first increase in automobile mileage standards in 32 years but don’t cheer loudly. The 35 mile-per-gallon standard to be achieved by 2020 is far less than what is possible.
The bill also requires the production of about 2.4 million barrels a day of ethanol. Along with other conservation measures, the 2007 Energy Act could reduce U.S. petroleum consumption by 4 million barrels a day by 2030. Over the last 23 years, petroleum consumption has increased by about 5 million barrels a day, despite improvements in mileage standards, automobile and appliance technology, and conservation.
Unless U.S. economic growth stagnates, in 2030 the United States will be just as dependent on imported oil as before without stronger conservation and alternative fuel policies. Factor in falling production from U.S. oil fields, the situation gets worse.
China accounted for $21.4 billion of the June trade deficit, up from $21.0 billion in May and $5.5 billion in December 2001. The bilateral deficit is huge, because China undervalues the yuan, and this makes Chinese exports artificially inexpensive and U.S. products too expensive in China. U.S. imports from China exceed exports to China by a ratio of 4.3 to 1.
China revalued the yuan from 8.28 to 8.11 in July 2005 and since permitted the yuan to rise less than 5 percent every twelve months. Modernization and productivity advances raise the implicit value of the yuan much more than 5 percent every 12 months, and the yuan remains undervalued against the dollar by at least 40 percent.
China’s huge trade surplus creates an excess demand for yuan on global currency markets; however, to limit appreciation of the yuan against the dollar and euro, the Peoples Bank of China sells yuan and buys dollars, euro and other currencies on foreign exchange markets.
In 2007, the Chinese government purchased $462 billion in U.S. and other foreign currency and securities, and in 2008 it is on track to purchase about $640 billion in foreign currencies. This comes to about 17 percent of China’s GDP and about 43 percent of its exports of goods and services. These purchases provide foreign consumers with 4.4 trillion yuan to purchase Chinese exports, and create a 43 percent “off budget” subsidy on foreign sales of Chinese products, and an even larger implicit tariff on Chinese imports.
In addition, China provides numerous tax incentives and rebates, and low interest loans, to encourage exports and replace imports with domestic products. These practices clearly violate China’s obligations in the WTO, and it agreed to remove those when it joined the trade body.
In recent weeks, China has begun pushing down the value of the yuan, and if this continues, this will likely have major repercussions for global trade and financial stability in the months ahead.
Automotive products account for about $9.0 billion of the monthly trade deficit. Japanese and Korean manufacturers have captured a larger market and are expanding their U.S. production. However, Asian manufacturers tend to use more imported components than domestic companies, and GM and Ford are pushing their parts suppliers to move to China.
GM, Ford and Chrysler still carry significant cost disadvantages against Toyota plants located in the United States, thanks to clumsy management and unrealistic wages, excessive fringe benefits and arcane work rules imposed by United Autoworker contracts. Recent negotiations have improved the Detroit Three’s cost position but did not wholly close the labor cost gap with Toyota and other Asian transplants.
Recently negotiated labor agreements should reduce, but not eliminate, these cost disadvantages. Even with retiree health care benefits moved off the books and a two tier wage structure, the cost disadvantage will remain at least $1000 per vehicle.
Deficits, Debt and Growth
Trade deficits must be financed by foreigners investing in the U.S. economy or Americans borrowing money abroad. Direct investments in the United States provide only about a tenth of the needed funds, and Americans borrow about $50 billion each month. The total debt is about $6.5 trillion, and at five percent interest, the debt service comes to about $2000 per U.S. worker each year.
High and rising trade deficits tax economic growth. Each dollar spent on imports, not matched by a dollar of exports, shifts workers into activities in non-trade competing industries like department stores and restaurants.
Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.8 million jobs since 2000. Following the pattern of past business cycles, the manufacturing sector should have regained more than 2 million of those jobs, especially given the very strong productivity growth accomplished in technology-intensive durable goods industries.
Productivity is at least 50 percent higher in industries that export and compete with imports. By reducing the demand for high-skill and technology-intensive products, and U.S. made goods and services, the deficit reduces GDP by at least $300 billion a year or about $2000 for each worker.
Longer-term, persistent U.S. trade deficits are a substantial drag on growth. U.S. import-competing and export industries spend at least three-times the national average on industrial R&D, and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor.
Cutting the trade deficit in half would boost U.S. GDP growth by one percentage point a year, and the trade deficits of the last two decades have reduced U.S. growth by one percentage point a year. That would raise the potential trend rate of growth from 3 percent to 4 percent, and the additional taxes raised would be enough to resolve critical issues like social security and health care for the 45 million uninsured Americans.
Lost growth is cumulative. Thanks to the record trade deficits accumulated over the last 10 years, the U.S. economy is about $1.5 trillion smaller. This comes to about $10000 per worker.
The damage grows larger each month, as the Bush Administration and Democratic Congress dally and ignore the corrosive consequences of the trade deficit.
wishing people have brain cancer. something a relative of mine died because of. and you are talking about making my parents proud? I wonder what your would think of that comment.
LOL.
Your big day Thursday got its ass handed to it.
We were up 145 this morning, but somehow closed down 25?
S&P back down to 1270's and dow back under 11,500.
Woopity woo.
If thats your idea of being saved.
lol.
If I opened it now would you not understand?
surprise surprise. infowars must have posted a headline.
DOW isnt under 11500 btw. oil still held their loses and the dollar held onto its strength.
DOW and S&P have been in a trading range. the DOW hit the high end of the range, triggering some short selling programs.
relax sally, this drop today was no big deal.
Unemployment still on the rise.
Markets taking it in the ass.
DOW back to being within 200-some points of being in the 10,000 range.
:cool:
If I opened it now would you not understand?
cmon 10 trillion
:cool:
and reveling in it's loyalty. It's made by forming coalitions
over specific principles, goals, and policies.
http://i36.tinypic.com/66j31x.jpg
(\__/)
( o.O)
(")_(")
Back down to DOW 11,128 and S&P 1229.
Oh yeah.
We must be "saved".
:rolleyes:
Look folks.
I just try to call it like it is.
If i don't say, "oh happy happy joy joy" on a day when the market goes up a hundred (or 2) points, its because i know nothing fundamental has changed, and everything looks like shit.
Prices in the market are proving that in spades lately.
Stuck at what used to be sub-basement levels.
Now it is "the range" that Mr. Spyguy talks about.
But you know, if stocks are trading in a range known as "the gutter" or "absolute shit", it doesn't do much to neutralize the truth.
:(
If I opened it now would you not understand?
I was looking for this thread, to bump it yesterday, couldnt find it.
anywho, yes the dow and s&p are trading in a range...and we are in the low end of the range....I was expecting a bounce today but the employment # put a squash on that.
whats driving the market down isnt so much a bad US economy anymore, but worries on a global slowdown.
:rolleyes:
C'mon man.
And you should be honest with folks when you talk about this range crap.
We are NOT in a "normal" trading range for the market.We are in somewhere between very and super depressed levels.And if the DOW loses another 200-400 points in the next week, we are going to see sell programs kick in, long positions being covered, and large institutions implementing even further deleveraging.
All that means is bad news for prices.
Baring some major input from the PPT,we are looking at a possible broad-scale collapse of the markets.
That isn't fear-mongering, and you should know it.
BTW, i don't mean some rapid and drastic collapse like a "crash".
I'm talking about a long, protracted period of sustained low valuations.
Next week doesn't bode well for the market either.
Earnings for financials\banking come out next week, and potentially worse, on Tuesday we get another Pending Home sales report, and then on Friday both PPI (inflation) and Consumer Sentiment.
None of that could be imagined to be "good news".
Right?
Although i have to imagine that any uptick in pending home sales will get the market up 250 points on a whim. Only to come crashing back down on earnings for financials.
:sigh:
If I opened it now would you not understand?
PM me when we break back above 12,000 so i can put on my silly pants, and do the happy dance.
:cool:
PS.
I can NOT believe they have hammered silver back down to nearly $12 even.
Gold still holding at $800, still up 75% over little more than a year,
but for some reason silver has been gouged right back down to pre-crisis levels.
It just doesn't make much sense at all.
One month ago, many silver pieces were simply off the market. Sold out. Couldn't buy them.
Now silver has dropped from a high of $22 to the ridiculous fire-sale level of $12.20.
Bizzare.
If I opened it now would you not understand?