Replies to post #102618 on Biotech Values

[bladerunner1717]

Individual investors turn remarkably bearish




Behind The Money
By John Melloy, Executive Producer, Fast Money
The number of individual investors that have a bullish outlook on the stock market for the next six months plunged to 21 percent, from 30 percent last week, according to a widely followed sentiment survey.

What’s more, this is the lowest weekly reading from the American Association of Individual Investors since a March 2009 level of 19 percent, which occurred just before the S&P 500 collapsed to a 12-year low of 676.

So effectively, individual investors feel as good about stocks as they did at the very depths of the credit crisis, even though the S&P 500 is still more than 50 percent higher than that low.

Looking at the events of the past five days (the survey is completed every Wednesday) not much comes to mind that would trigger such a surge in pessimism. There was the record plunge in July existing home sales on Tuesday, but the stock market actually almost finished higher that day as traders speculated that was just the after-effects of a tax credit that pulled sales forward.

Perhaps the individual investor is just feeling the same frustration and fatigue of famed hedge fund manager Stanley Druckenmiller, who hung it up last week after 30 years of running his fund.

"While the joy of winning for clients is immense, for me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain," wrote Druckenmiller in his August letter to investors.

The contrarian view of many professional traders out there is now that four out of five retail investors have given up, it is time to buy.

"It’s a good sign that a short-term bottom is in,” said Peter Boockvar, equity strategist at Miller Tabak in New York.

The only problem is that individuals typically throw in the towel after getting knocked out by a bear market. Considering the volatile grinding by the equity market over the last 12 months that has left the S&P 500 essentially little changed, you can call this a T.K.O.


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[bladerunner1717]

GDP revised significantly downward for the 2nd quarter (as Rosenberg predicted)


Breaking News Alert
The New York Times
Fri, August 27, 2010 -- 8:38 AM ET
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U.S. Growth in Second Quarter Is Lowered to 1.6% Pace

Economic statistics released Friday offered the clearest sign yet that the recovery in the United States had slowed to a crawl. The government lowered its estimate of economic growth in the second quarter to an annual rate of 1.6 percent, down from an initial estimate of 2.4 percent issued last month.

The revision is a significant slowdown from the annual rate of 3.7 percent in the first quarter and 5 percent in the last three months of 2009.

The news follows dismal statistics this week on July home sales and factory orders. Economists are now concerned that the outlook for job creation, which has been spluttering all summer, could deteriorate further.

Because forecasters had expected an even worse growth estimate, the markets reacted positively in the first few minutes, as traders awaited a policy speech later on Friday morning from the chairman of the Federal Reserve, Ben S.
Bernanke.


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P.S.

Breaking News Alert
The New York Times
Fri, August 27, 2010 -- 10:00 AM ET
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Bernanke Signals Stepped-Up Efforts to Spur Economy

The Federal Reserve chairman, Ben S. Bernanke, gave his strongest indication yet on Friday that the central bank was ready to resume huge purchases of longer-term debt, and was determined to prevent the economy from slipping into a cycle of falling prices.

While Mr. Bernanke emphasized that deflation was "not a significant risk for the United States at this time," he said the Fed "will strongly resist deviations from price stability in the downward direction." It was his most robust statement to date that the Fed would do its part to avoid a Japanese-style deflation from taking hold.

[bladerunner1717]

PENS FOR A PENNY. Maybe the real sign of deflation. (Rosenberg)

DEFLATIONARY EXPECTATIONS
Have a look at Back-to-Schoolers Put Off Shopping on page B1 of the USA Today about the latest trend … holding off to buy items for hopes of lower prices. To wit:
“Much like consumers who put off holiday shopping until the last moment, there is a growing contingent of frugal folks, many pummeled by the economy in recent years, who delay back-to-school shopping in hopes of landing bargains like these — or who put it off simply because they don’t have the money.”
We were on to this era of frugality theme two years ago and it was met with derision. Now it’s endemic. Two years ago, 36% of consumers polled by the NPD Research Group said they would try to outlast the retailers; this year, that figure is up to 62%. Kmart’s chief marketing officer says in the article that back-to-school sales are coming in slower this year compared to last. So to move inventory, here is what retailers are being forced to do:
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Office Depot is selling acrylic rulers for a penny (regular price is 99 cents); two-pocket paper folders for a penny (regular price is 29 cents) and pencil boxes … again, for a penny (regular price is 79 cents).
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Staples is selling Bic Stick pen packs for a penny too.
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Wal-Mart, not to be outdone, is selling 7-sheet notebooks for 15 cents.

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J.C. Penney is offering out $10 coupons for purchases of $25 or more. As Yogi Berra says, to save you gotta spend.
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Kohl’s has cut all student lounge furniture by 55%.
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Target has cut its drawing pads by half.
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Kmart has sliced backpack prices by 30%.
So stick these in your inflation pipe and smoke it! We get complaints from our readership all the time about how inflation is actually soaring — well, step out of your own personal bubble — Tiffany’s, Gucci and Daniel — for a minute, join the masses in the real world, and you’ll see tremendous deflationary pressures emerging.



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[bladerunner1717]

"It's Paid to be Bullish"

James Altucher strikes back at critics (like Roubini) in an interesting and hilarious interview. He sees the DOW at 1600 in the next two years.

http://finance.yahoo.com/tech-ticker/its-paid-to-be-bullish-james-altucher-demands-apology-from-mish-roubini-yftt_535705.html


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