So Much For The Fed Pause Rally

[haha]

Well, was that ever a dog that didn't bark!  Here's a short squib from WSJ that illustrates how a pundit will never be at a loss for words:


The sharp decline in markets is notable, however, because it suggests that the primary issue is no longer whether the Fed is raising rates, but whether the economy has weakened to a point that will imperil economic growth. "To be honest, I would have expected a rally -- not a huge rally -- but one thing is, by him pausing, it introduces some uncertainty," said Richard O'Hara, portfolio manager and director of research at Wayne Hummer Asset Management. "What is he seeing that we're not?" (Subscription required)

http://online.wsj.com/article/SB115503910640629756.html?mod=yahoo_hs&ru=yahoo

 

[LOL!]

Not to worry ... the rally has just been delayed by a day or so.

 

[Cut-Throat]

We've been in a recession since Clinton left office. Any of these things are small blips on a radar.

 

[brewer12345]

I think stagflation is a legitimate worry right now. It doesn't look like the Fed has slain the inflation dragon and the rate increases and the slo-mo implosion of housing are choking off growth.

 

[wabmester]

That pause was already baked into the cake. The market had the odds of a pause at 75%.

It was nice to have the market distracted by the fed for so long. I have a feeling we'll miss those days.

 

[Mwsinron]

What fun would it be if you made loads of cash all the time....

 

[gindie]

We've been in a recession since Clinton left office. Any of these things are small blips on a radar.

CT - I am certain you won't agree with this.  But, actually Bush inherited the Clinton recession.   And, through the tax cuts at the beginning of his term, significantly dampened the severity of it.

 

[Cut-Throat]

CT - I am certain you won't agree with this. But, actually Bush inherited the Clinton recession. And, through the tax cuts at the beginning of his term, significantly dampened the severity of it.

I don't even think you agree with it!

I know that this is the GOP spin machine speaking, but we are all grownups here!

 

[Marshac]

CT - I am certain you won't agree with this.  But, actually Bush inherited the Clinton recession.   And, through the tax cuts at the beginning of his term, significantly dampened the severity of it.

 

[Danny]

I think stagflation is a legitimate worry right now. It doesn't look like the Fed has slain the inflation dragon and the rate increases and the slo-mo implosion of housing are choking off growth.

I agree - think we're getting boxed into a corner...growth in GNP will slow even more if lenders become reluctant to lend....

 

[IHateCNBC]

I don't even think you agree with it!

I know that this is the GOP spin machine speaking, but we are all grownups here!

And, through the tax cuts at the beginning of his term, significantly dampened the severity of it.

The emergency rates turned the housing market into a slot machine. 

Cutting taxes while at emergency funds rates = .

Keep shopping!!!   

 

[MonarchDon]

With MM rates at around 5% and FDIC Insured savings around 5% and all of the uncertainty in the equity markets these secure investments seem like a no brainer for the awhile.

 

[laurence]

ROTFLMAO!!! Ow! Ouch! And the Academy Award for best use of "keep drinking the Kool-Aid" reference goes to....

 

[GolferAndy]

Using the traditional yardstick of defining a recession as two or more consecutive quarters of negative GDP growth.. the U.S. has not had a recession since '90-'91. There was negative GDP growth in the third quarter of the year 2000, the first quarter of 2001, and finally the third quarter of 2001, which was caused almost entirely by the 9-11 tragedy.

People shouldn't politicize recessions. When they happen.. they happen. It's a normal part of the business cycle. You might as well blame the next one on your dog.

 

[wabmester]

People shouldn't politicize recessions. When they happen.. they happen. It's a normal part of the business cycle. You might as well blame the next one on your dog.

I do, but my dog's name is The Fed.

 

[Ed_The_Gypsy]

"Now there you go again...."

Remember: 50% international.
Remember: market timing is hard to do. (I can't do it , and I am a super-genius. )
Remember: diversify.

 

[Marshac]

Using the traditional yardstick of defining a recession as two or more consecutive quarters of negative GDP growth.. the U.S. has not had a recession since '90-'91. There was negative GDP growth in the third quarter of the year 2000, the first quarter of 2001, and finally the third quarter of 2001, which was caused almost entirely by the 9-11 tragedy.

God, i'm out of kool-aid. It's not slowdown in GDP growth, but rather a real decrease in GDP. Slower growth is STILL growth.

Check this out

Edit: Andy- I think I may have read your post too fast and misunderstood what you wrote. 'negative growth' == contraction, but you might want to check your dates. Check this out.

I'm just sick of this administration's attempt to revise history.

 

[GolferAndy]

Your politics are showing. Every administration tries to present itself in as much of a positive light as possible. It would be a sad state of affairs in this country if they didn't! After all.. they have a certain "cheerleader" role with regards to the economy as well.

Interesting graph showing GDP growth since 1946 with "recessions" superimposed over it.

http://research.stlouisfed.org/fred2/series/GDP

 

[brewer12345]

I agree - think we're getting boxed into a corner...growth in GNP will slow even more if lenders become reluctant to lend....

Funny you should mention that. I am aleady seeing signs of a pullback in the mortgage market, with banks backing away from the riskiest products (ultra low pay rate option ARMS, subprime mortgages to the riskiest borrowers, etc.). I think that this will ouch off the next leg of the downturn in the housing market as the marginal buyer is kicked out of the game by lack of access to mortgage money. You know what that means. And in the background, I see India and China announcing huge new infrastructure projects all the time.

Hint: take a look at what has happened to dry bulk (coal, cement, grain, etc.) shipping rates in the last 6 months. This happened even as a record number of new ships were built.

 

[Leonidas]

Hint: take a look at what has happened to dry bulk (coal, cement, grain, etc.) shipping rates in the last 6 months. This happened even as a record number of new ships were built.

Brewer, can you point me in the right direction or give me a link? I find some comments here and there but must not be looking in the right places for rate comparisons. I did find some mention of fleet utilization and rates for 'capesize" ships was up, but a London analyst said that was all because Chinese steel related demand was rapidly growing. I thought their govt was trying to slow down the growth in the steel industry by forcing out some of the smaller producers - doesn't seem to be working.

 

[brewer12345]

Brewer, can you point me in the right direction or give me a link?  I find some comments here and there but must not be looking in the right places for rate comparisons.  I did find some mention of fleet utilization and rates for 'capesize" ships was up, but a London analyst said that was all because Chinese steel related demand was rapidly growing.  I thought their govt was trying to slow down the growth in the steel industry by forcing out some of the smaller producers - doesn't seem to be working.

http://www.dryships.com/index.cfm?get=report

Capesize = biggest ships, require well developed port facilities
Panamax = Medium sized ships, workhorse, require decent ports
Supramax/Handymax = Smaller ships, carry their own cranes and don't draft much, so they can use primitive ports

IMO, the stocks of most of the companies that own these ships have not caught up with charter rates and present a bargain if you think charter rates will stay up or keep going up. Check out (in no particular order): DRYS, DSX, GSTL, EGLE, EXM, QMAR, BULK

Disclosure: I own shares of EGLE, call options on DSX and DRYS, and warrants on BULK

 

[Marshac]

Funny you should mention that.  I am aleady seeing signs of a pullback in the mortgage market, with banks backing away from the riskiest products (ultra low pay rate option ARMS, subprime mortgages to the riskiest borrowers, etc.). 

I recently got a boat loan for my waverunner, and it was actually very difficult to find a bank that offers boat loans. From talking to some of the loan officers, I learned that their banks (like WaMu) VERY recently killed almost all of their consumer loan products, with the exception of revolving credit. The product that they push now are HELOCs- which they can package up and sell off anyways. Seems as if banks don't want exposure to consumer debt right now.... I found this to be very interesting....

 

[BUM]

http://www.dryships.com/index.cfm?get=report

Capesize = biggest ships, require well developed port facilities
Panamax = Medium sized ships, workhorse, require decent ports
Supramax/Handymax = Smaller ships, carry their own cranes and don't draft much, so they can use primitive ports

IMO, the stocks of most of the companies that own these ships have not caught up with charter rates and present a bargain if you think charter rates will stay up or keep going up. Check out (in no particular order): DRYS, DSX, GSTL, EGLE, EXM, QMAR, BULK

Disclosure: I own shares of EGLE, call options on DSX and DRYS, and warrants on BULK

I listened to EGLE's earnings call last night. The ceo made a point of mentioning that shares could be purchased from the company direct. Here is the link taken from their webpage


http://www.eagleships.com/phoenix.zhtml?c=189576&p=irol-newsArticle&ID=892478&highlight=



I hopped on board about a month ago... nice dividend!

 

[brewer12345]

Yeah, but as I always say: do your own due diligence, please.

 

[kcowan]

... VERY recently killed almost all of their consumer loan products, with the exception of revolving credit. The product that they push now are HELOCs- which they can package up and sell off anyways. Seems as if banks don't want exposure to consumer debt right now....  I found this to be very interesting....

Probably the last gasps of the bubble. Sell off those HELOCs before foreclosure costs start to eat them up....

OTOH let's hope that the buyers of such instruments are not represented in any of our funds, including pension funds! Time to do some due diligence on who the buyers are...