Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

Babylon...

You pretty much echo my thoughts. Valuations are still far too high with no fear being shown in the markets except fear of missing the big rally. Expectations for earnings are excessively optimistic and valuations are high even if those expectations were to be exceeded and none of that takes into account that the numbers now being reported are purely imaginary and bogus works of fiction.

There has been no solid bottom made, only artificial ones, and no capitulation at all since every time we begin to see fear, intervention prevents it from materializing. I do not think capitulation is mandatory to find a bottom, but either that or some form of exhaustion of sellers is one of the signs I am looking for, and so far there is not even a hint of either happening.

As you said, debt is the single largest fundamental problem facing the economy, and it is now an insurmountable obstacle that cannot be bypassed. The only way that the mountain of individual and corporate debt could be eased would be for the Fed/PPT/ESF to somehow drive the markets up far higher than they now stand, creating a new new source of capital for the economy, and for now I do not think they will be able to do so. I also believe that Alan Greenspan's recent musings indicate that he is thinking the same thing. If he is indeed unsuccessful, then only time will heal the economy as the debt levels are slowly worked down both out of cash flow and to a frighteningly large extent through bankruptcy and default. Only when debt reaches more manageable levels can the economy be in a position to resume growth.

Like you, I look for this to be a fairly long drawn out affair, possibly lasting years and causing more pain than most are now thinking. I think the NAZ will be cut in half, at least, before all is said and done but I am not convinced it will be quickly concluded nor do I think we will get a sharp recovery from the bottom, with different sectors of the market bottoming at different times a real possibility.

Given all that, I will turn bullish when I feel valuations are cheap, not expensive, and when I see some signs of real economic recovery in the offing - not the ubiquitous mantra of "we think the turn is just around the corner." As long as that hypnosis continues to work, we are not close to a bottom.

mlsoft