Replies to post #202146 on Zeev's Turnips Patch-No Politics (ZEEV)

[osprey]

Drivers for the next bear market should be the huge deficits, falling dollar, higher interest rates, and maybe higher oil/gas prices. To my mind economic excesses tend to be self correcting. That is, one cannot flood the economy with cheap dollars by running huge deficits (1/2 trillion/year!), record low interest rates, printing presses rolling, WITHOUT SOMETHING ELSE HAPPENING. AKA known as "The law of unintended consequences" or "There ain't no such thing as a free lunch."

In this case we have already seen one such consequence, the dollar is heading towards the status of the North American Peso. My gut feeling is that the piper will be paid, sooner or later and 2005 sounds right, although future casting that far out (for me) is uncertain. The other driver in play right now, is the stock market bubble. As numerous analysts have mentioned, the market sectors that have risen the most are most speculative small, medium cap Nasdaq companies. Boring old companies that make products and sell them for money have risen, just not as much. The bubble will burst, this is so unpredictable not even going to try. Things have to get to the gonzo, totally insane, pets.com to 1000, NASDAQ to 30,000 stage before these things burst.

[nevin]

Zeev, thanks for your response. I think TRKN was Plasma when I got in (unfortunately I think they sold their future by licensing their technology to AMAT instead of developing on their own).

I agree with you RE sustainability of the current economic up-cycle. The last upcycle was enhanced by continuous home re-financing boom that not only lowered John Q. Public's monthly nut but put a lot of bucks in his jeans to spend. I also see your point RE post election year being the year to administer bad tasting medicine, but, and this is a big but, if the Dems win will they have the political fortitude to prescribe that kind of treatment to a patient that seems to support their prognosis only very reluctantly (Joe Sixpack has little interest in the deficit with so much more high-value entertainment in the media like Janet Jackson's nipple or an All Star Survivor series).

As a student of economics, I can see the potential for problems down the road if we don't get the deficit under control (crouding out effect - rising interest rates and possibly inflation) but I think the Bush Adminstration or possibly a new one has ample time to get things under control when the economy is firmly in recovery territory. Voters are less concerned about rising taxes when incomes and wealth (the stock market) are rising. So, that's the big hanging question - will the bitter medicine offset or more than counterbalance the effects of a recovering economy. Stay tuned, there's more after this episode of Survivor but only a handuful of people will be watching.

Job growth, as I ramble on, is the key to sustaining the recovery. Funny, I was telling a friend of mine here in Denver Friday night over margaritas that we will be in full swing when we see 230,000-250,000 jobs added in a single month or for a few months in a row. U.S. business took their bitter pill during this last downturn and squeezed out all the excess from the last upswing. Now, they are running lean and mean, which is great for producing the kind of earnings the Street is looking for but at some point they risk losing business if they don't hire additional workers. I'm hopeful we'll see some strength in the employment numbers over the next six months. My guess is that personal incomes will begin to rise as the recovery matures - possibly a year from now and that might add additional fuel to the fire (which by then might be weakened by rising interest rates).

As for the stock market, what's your assessment of how demographics will impact the market over the next few years? I've read where some pundits believe that as the baby boomers (who control the bulk of the wealth in this country) move closer to retirement they will want to participate in the market as the upside becomes more visible. Any thoughts on this?

I appreciate your insights and analysis. This is great thread with a lot of good dialogue. Hopefully, it won't fizzle like SI.

P.S. Any thoughts on OVTI going into earnings? Mgmt seems pretty confident with the announced stock split (haven't seen one of those in many moons).

Anyway, I've got to throw another log on the fire as my fingers are starting to freeze up.

Cheers!

[Burk]

Zeev, if we do close above 2088 in the next few days, does it mean you won't be expecting that "swoom" down below 1900 in the next month or two? Just curious. Thanks.

[James Bondage]

The general opinion about the upcoming week is up. This is good for your relapse target. ;)

[jrintl]

Are you keying on any particular day here/line in sand in which we should turn/head back down or is 2088 the only real criteria? tia