Second quarter economic growth at 3.4%

[ProfJohn]

There was a recent article in which some government type said we had essentially gotten past the economic slow down caused by the housing slow down and were starting to see increased growth again.

The second quarter numbers seem to show that this person was right.
Not only was second quarter growth very good at 3.4% but ?core? inflation rose at only 1.4% which is a 1% drop from the previous quarter.

It seems that we are not going to see a major economic slow down or recession due to the housing slump. Having weathered that crisis who knows how much longer our economy can continue to grow.

(This should also help in our efforts to balance the budget as well.)
link

The economy snapped out of a lethargic spell and grew at a 3.4 percent pace in the second quarter, the strongest showing in more than a year. A revival in business spending was a main force behind the energized performance.

The new reading on gross domestic product, released by the Commerce Department on Friday, marked a big improvement from the first three months of this year, when economic growth skidded to a near halt at just a 0.6 percent pace, the slowest in more than four years.

At the White House, President Bush said job growth has been strong and the economy is resilient and flexible. "I want the American people to take a good look at this economy of ours," crowed Bush, whose economic stewardship has received weak marks.

Stronger spending by businesses and government powered the rebound in the April-to-June quarter. Individuals, however, tightened their belts as they coped with high gasoline prices and the ill effects of the housing slump. The sour housing market continued to weigh on national economic activity in the spring but not nearly as much as it had in previous quarters.

Inflation -- outside a burst in energy and food prices -- moderated.

On Wall Street, stocks seesawed in early trading Friday -- one day after the Dow Jones industrial average suffered its second biggest drop of the year, plunging by 311.50 points.

Treasury Secretary Henry Paulson called the market turbulence a "wake up call" to investors to re-examine their degree of risk.

"Lenders need to be very aware of the risks. Borrowers need to be aware of risks. I would submit people are more aware of those risks and the need for discipline today than maybe they were a month or two ago," Paulson said in a briefing with reporters.

"So again let's keep eye on the very strong underlying economy, which puts us in a position of strength," he added.

The second quarter's performance was better than the 3.2 percent growth rate economists were expecting. It was the strongest showing since the first quarter of 2006, when the economy expanded at a brisk 4.8 percent annual rate.

Gross domestic product measures the value of all goods and services produced in the United States. It is considered the best barometer of the country's economic fitness.

"I think the confidence level of companies has come back. That's why there was a modest pickup in capital spending," said Ken Mayland, president of ClearView Economics.

Even as the economy picked up speed in the spring, inflation managed to settle down.

An inflation gauge closely watched by the Federal Reserve showed "core" prices -- excluding food and energy -- rose at a rate of just 1.4 percent in the second quarter. That was down sharply from a 2.4 percent pace in the first quarter and was the smallest increase in four years.

That should help ease some inflation concerns. Fed Chairman Ben Bernanke has said the biggest threat to the economy is if inflation doesn't recede as policymakers anticipate. Out-of-control prices are bad for the economy and the pocketbook. They eat into paychecks, erode purchasing power and reduce the value of investments.

The Fed has kept a key interest rate at 5.25 percent for more than a year. Economists predict that rate will stay where it is through the rest of 2007.

Bush has been trying to counter weak public-approval ratings for his handling of the economy. Only 37 percent approve of his performance, close to a record low, according to a recent AP-Ipsos poll.

Problems in the troubled housing and mortgage markets have rattled investors in recent days. Friday's report showed that the ailing housing market is still crimping economic activity, but not as much as it had.

Investment in home building was cut by 9.3 percent, on an annualized basis, in the second quarter. That wasn't nearly as deep as the 16.3 percent annualized drop in the first quarter. It was the smallest cut in just over a year.

Businesses, meanwhile, regained their appetite to spend and invest in the second quarter.

They boosted their spending on new plants, buildings and other commercial construction at a whopping 22.1 percent rate, the most in 13 years. Investment on equipment and software posted a 2.3 percent growth rate, an improvement from a meager 0.3 percent growth rate in the first quarter.

Businesses also replenished their inventories in the second quarter, adding to overall economic growth. Stronger export growth helped the nation's trade picture and added to the economy's momentum.

Also contributing to the second quarter's rebound: Government spending increased at a 4.2 percent pace. That compared with a 0.5 percent annualized drop in the first quarter.

However, consumers, whose spending largely prevented the economy from stalling out in the first three months of this year, lost energy in the second quarter. They boosted spending at a pace of just 1.3 percent, the smallest since the final quarter of 2005.

High gas prices and fallout from the housing slump are beginning to take their toll on peoples' appetite to spend. Still, a solid jobs climate -- the nation's unemployment rate is at a relatively low 4.5 percent -- should help cushion some of these negative forces.

The government also issued annual revisions that showed the economy grew at an average annual rate of 3.2 percent from 2003 through 2006, or 0.3 percentage point less than previously estimated. The revisions are based on more complete data.

Last year the economy grew by 2.9 percent -- slower than the 3.3 percent increase previously calculated. The new figure marked the weakest annual growth since 2003 and underscored the depth of the housing slump.

 

[dullard]

And yet we still have a US federal budget deficit.

The economy is ok. It isn't great, but it certainly isn't awful. Why can't our leaders take advantage of it? We've had a good economy for years and still they can't cut spending or increase tax revenue. THAT is the biggest problem with our economy at the moment.

 

[techs]

I have to admit that five years of a declining dollar coupled with an inexplicable explosive increase in our trade deficit and skyrocketing home forclosures along with almost no real growth in wages in 6 years and millions losing health insurance and an exploded national debt along with increasing wage disparity between the super rich and the rest of us, not to mention a looming deficit that is so huge it defies description with all of it purchased with the largest borrowing of any country in history is a GOOD economy .
NOT.

 

[ProfJohn]

Originally posted by: dullard
And yet we still have a US federal budget deficit.

The economy is ok. It isn't great, but it certainly isn't awful. Why can't our leaders take advantage of it? We've had a good economy for years and still they can't cut spending or increase tax revenue. THAT is the biggest problem with our economy at the moment.

Umm 2005 and 2006 both saw double digit increases in tax revenue to the government, this is the largest two year growth since 1981! For the first eight months of this year (fiscal year) receipts into the government have grown by 8% over last year.

Our deficit problem is NOT revenue related it is spending related.

We need to cut and control spending and then we can balance the budget via growth.

 

[LegendKiller]

Q2 and Q3 numbers for GDP are usually higher than Q1. Although the YOY change is better than 2006, but worse than 2005 and 2004. Core inflation came in OK, but once you look beyond that it downright sucks. Core is nowhere near a reflection of what your average consumer is feeling and it hides what is actually happening in the real world. Core is a fictional number.

You're seeing the bottom fall out of the credit market, which is where the economy gets it's leverage to grow.

 

[dmcowen674]

Originally posted by: ProfJohn
There was a recent article in which some government type said we had essentially gotten past the economic slow down caused by the housing slow down and were starting to see increased growth again.

The second quarter numbers seem to show that this person was right.
Not only was second quarter growth very good at 3.4% but ?core? inflation rose at only 1.4% which is a 1% drop from the previous quarter.

It seems that we are not going to see a major economic slow down or recession due to the housing slump. Having weathered that crisis who knows how much longer our economy can continue to grow.

(This should also help in our efforts to balance the budget as well.)

You and your handlers are on drugs.

There is no other possible explanation.

There is nothing in that article that indicates a "good" economy.

The entire report is built around some aircraft orders for Boeing.

How sad especially when Boeing no longer manufactures the planes here, only assembles them here.

The parts and pieces are made overseas and shipped back to the U.S. for assembly only.

 

[dullard]

Originally posted by: ProfJohn
Umm 2005 and 2006 both saw double digit increases in tax revenue to the government, this is the largest two year growth since 1981! For the first eight months of this year (fiscal year) receipts into the government have grown by 8% over last year.

Our deficit problem is NOT revenue related it is spending related.

We need to cut and control spending and then we can balance the budget via growth.

If revenue was so good, why could it get double digit increases? The answer is because revenue was bad. Our revenue is too small to match our spending. Pure and simple. They should cut spending and raise revenue in good times. That way, they have a stock pile to use in bad times (spend the stockpile to help out the bad times and cut taxes at the same time). We shouldn't be struggling to balance the budget! We should have been in a good surplus, so that we can run a deficit later when we need to.

The goverment needs to learn from the fable of the ant and the grasshopper.

 

[blackangst1]

PJ: Why bother posting anything positive about anything involving anything that might even remotely have to do with this administration? 95% of posters here have that swirling look in their eyes normally seen by SHEEPLE.

You guys make me lol at you. What a miserable existence lol

 

[LegendKiller]

Originally posted by: blackangst1
PJ: Why bother posting anything positive about anything involving anything that might even remotely have to do with this administration? 95% of posters here have that swirling look in their eyes normally seen by SHEEPLE.

You guys make me lol at you. What a miserable existence lol

Question. Where do you work? Where do you live?

Where do I work? 5th largest bank in the world, in manhattan. I have a bloomberg terminal right next to me that I look at all day.

I also closed a $200m deal last week with another one closing in a few weeks. There's maybe a handful of people more tied into the 'Street than I am on this whole board.

Now sit down sparky before you make a bigger fool of yourself and your "sheeple" rubber stamp.

 

[techs]

Originally posted by: dullard
And yet we still have a US federal budget deficit.

The economy is ok. It isn't great, but it certainly isn't awful. Why can't our leaders take advantage of it? We've had a good economy for years and still they can't cut spending or increase tax revenue. THAT is the biggest problem with our economy at the moment.

Well then we certainly must get rid of the Republicans.

 

[techs]

Originally posted by: LegendKiller

Originally posted by: blackangst1
PJ: Why bother posting anything positive about anything involving anything that might even remotely have to do with this administration? 95% of posters here have that swirling look in their eyes normally seen by SHEEPLE.

You guys make me lol at you. What a miserable existence lol

Question. Where do you work? Where do you live?

Where do I work? 5th largest bank in the world, in manhattan. I have a bloomberg terminal right next to me that I look at all day.

I also closed a $200m deal last week with another one closing in a few weeks. There's maybe a handful of people more tied into the 'Street than I am on this whole board.

Now sit down sparky before you make a bigger fool of yourself and your "sheeple" rubber stamp.

Yes, and the stock market was going great guns right up til it crashed in 1929.
In fact, the recent mergers and acquisitions could be a serious sign that companies no longer see growth in their markets and are turning to consolidation for growth.

 

[blackangst1]

Originally posted by: LegendKiller

Originally posted by: blackangst1
PJ: Why bother posting anything positive about anything involving anything that might even remotely have to do with this administration? 95% of posters here have that swirling look in their eyes normally seen by SHEEPLE.

You guys make me lol at you. What a miserable existence lol

Question. Where do you work? Where do you live?

Where do I work? 5th largest bank in the world, in manhattan. I have a bloomberg terminal right next to me that I look at all day.

I also closed a $200m deal last week with another one closing in a few weeks. There's maybe a handful of people more tied into the 'Street than I am on this whole board.

Now sit down sparky before you make a bigger fool of yourself and your "sheeple" rubber stamp.

I work for a Fortune 15 company as a network designer, mostly on their OC192 ring. I have NASDAQ actually on my 4th monitor at my desk. I dont give a shit where you work or for whom. It's nothing but a ePeen for you, which is why you feel the need to say it in the first place. You arent the know all end all for finance. If you were, you wouldnt be working. Sure, you probably know more than most, and you, like myself, have enjoyed success. But your self rightous claims of being some financial genious also means nothing. Politically your a sheeple. You've proven it. So STFU and quit being a prick.

 

[LegendKiller]

Originally posted by: blackangst1

Originally posted by: LegendKiller

Originally posted by: blackangst1
PJ: Why bother posting anything positive about anything involving anything that might even remotely have to do with this administration? 95% of posters here have that swirling look in their eyes normally seen by SHEEPLE.

You guys make me lol at you. What a miserable existence lol

Question. Where do you work? Where do you live?

Where do I work? 5th largest bank in the world, in manhattan. I have a bloomberg terminal right next to me that I look at all day.

I also closed a $200m deal last week with another one closing in a few weeks. There's maybe a handful of people more tied into the 'Street than I am on this whole board.

Now sit down sparky before you make a bigger fool of yourself and your "sheeple" rubber stamp.

I work for a Fortune 15 company as a network designer, mostly on their OC192 ring. I have NASDAQ actually on my 4th monitor at my desk. I dont give a shit where you work or for whom. It's nothing but a ePeen for you, which is why you feel the need to say it in the first place. You arent the know all end all for finance. If you were, you wouldnt be working. Sure, you probably know more than most, and you, like myself, have enjoyed success. But your self rightous claims of being some financial genious also means nothing. Politically your a sheeple. You've proven it. So STFU and quit being a prick.

ePeen? Like running around calling people who don't agree with you "sheeple", please sparky. Why don't you get a new flucking line and go back to laying CAT5.

I'm not the "end all and be all" of finance, but I know a hell of a lot. I have a pretty good inside track into what is going on, as it is my job to know. You seem to do nothing but look at a number and think that it's great, rather than knowing what is driving it, how it compares to other numbers, or where things are heading. The internet is a great way to know jack crap about stuff and be able to think you do, which is why you run around calling people "sheeple", when if you were working at IT at my shop you wouldnt' dare do that because you'd be laughed out of the building. It's obvious who knows more about finance and the very fact that you think you can dismiss anything by simple saying "whoa dude, you're trying to prove your "ePeen"", without providing any factual backup to your assertions only undercuts your situation.

People do not realize what is going on in the capital markets. The equity markets are starting to understand what has been happening in the debt markets for the past 3 months. Credit is *gone*. Some overnight, short-term, secure facilities can't even borrow paper. If you had any finance knowledge you'd know that that means the most secure and cheapest way of borrowing is drying up.

Why? Because everybody knows the bottom is falling out of the boat. Only suckers like you who run around saying "sheeple" and "ePeen" and agreeing with NonProfJohn thinks otherwise.

Enjoy the 3%+ drop in your portfolio, it's only started.

 

[blackangst1]

Whatever you say man sounds like you me all figured out We can sit here and argue all day long back and forth, and you will still be nothing more than some portfolia manger and I will be nothing more than a CAT5 tech (LOL). Either way, we'll see. But to have to stoop to posting your creds on a tech messageboard shows me what a small man you are. *shrug* maybe not, but who cares?

Oh and BTW...3%? I'll need another 6 to trigger my stops so I really dont care. As I've said before Im waiting for a 20% correction. 3% does little to put a dent in my 36% gains for the year.

 

[Mxylplyx]

Originally posted by: dmcowen674

Originally posted by: ProfJohn
There was a recent article in which some government type said we had essentially gotten past the economic slow down caused by the housing slow down and were starting to see increased growth again.

The second quarter numbers seem to show that this person was right.
Not only was second quarter growth very good at 3.4% but ?core? inflation rose at only 1.4% which is a 1% drop from the previous quarter.

It seems that we are not going to see a major economic slow down or recession due to the housing slump. Having weathered that crisis who knows how much longer our economy can continue to grow.

(This should also help in our efforts to balance the budget as well.)

You and your handlers are on drugs.

There is no other possible explanation.

There is nothing in that article that indicates a "good" economy.

The entire report is built around some aircraft orders for Boeing.

How sad especially when Boeing no longer manufactures the planes here, only assembles them here.

The parts and pieces are made overseas and shipped back to the U.S. for assembly only.

You are full of shit once again. Boeing has partners in Washington, South Carolina, and Kansas manufacturing major components for the 787.

 

[dmcowen674]

Originally posted by: Mxylplyx

Originally posted by: dmcowen674

Originally posted by: ProfJohn
There was a recent article in which some government type said we had essentially gotten past the economic slow down caused by the housing slow down and were starting to see increased growth again.

The second quarter numbers seem to show that this person was right.
Not only was second quarter growth very good at 3.4% but ?core? inflation rose at only 1.4% which is a 1% drop from the previous quarter.

It seems that we are not going to see a major economic slow down or recession due to the housing slump. Having weathered that crisis who knows how much longer our economy can continue to grow.

(This should also help in our efforts to balance the budget as well.)

You and your handlers are on drugs.

There is no other possible explanation.

There is nothing in that article that indicates a "good" economy.

The entire report is built around some aircraft orders for Boeing.

How sad especially when Boeing no longer manufactures the planes here, only assembles them here.

The parts and pieces are made overseas and shipped back to the U.S. for assembly only.

You are full of shit once again. Boeing has partners in Washington, South Carolina, and Kansas manufacturing major components for the 787.

A handful of "partners" that is no where near the majority of the plane does not a manufacture make.

Probably not possible but try and be honest for once.

 

[LegendKiller]

Originally posted by: blackangst1
Whatever you say man sounds like you me all figured out We can sit here and argue all day long back and forth, and you will still be nothing more than some portfolia manger and I will be nothing more than a CAT5 tech (LOL). Either way, we'll see. But to have to stoop to posting your creds on a tech messageboard shows me what a small man you are. *shrug* maybe not, but who cares?

Oh and BTW...3%? I'll need another 6 to trigger my stops so I really dont care. As I've said before Im waiting for a 20% correction. 3% does little to put a dent in my 36% gains for the year.

Why post it? Because people on boards think that because they don't know somebody, they know somebody. I know, that you know almost nothing about finance because all you can do is dittohead NonProfJohn and really your only support for my post was to call me a "sheeple", you provide no analysis, no debate, no facts, no logic, nothing. If this were the real world, I'd own your ass up and down and you'd not be able to dismiss me as a "sheeple" if you met me. Obviously you can act big by simply labeling people as such.

Why do I think the GDP number is a joke?

1. Inflation number that are headline numbers don't include energy and food, what really matters to consumers. My Milk Index has gone up 48% in 3 months (what it costs to buy a gallon of milk in Manhattan).

2. Debt is drying up. LBOs can't be sold. There is about 300bn in debt that needs to be sold and nobody is buying. THus, the underwriters have to hold the bag, meaning capital that would otherwise go to IPOs, withholding capital for secured borrowing pieces (Letters of Credit and Liquidity Agreements require capital to be held which isn't deployed). All in, this creates a credit crunch that will filter it's way down to consumers eventually.

3. Spreads are widening. Spreads have ballooned out for every corporate credit product. To get the Alliance Boots deal done KKR had to increase spread on some tranches by 85bps+. That's a huge hit to costs.

4. Countrwide's CEO actually included the Great Depression in his commentary. *NO* CEO does that. Granted he's known for some outrageous statements, it's still huge when CEOs compare any time to the GD. Considering even their Alt-A portfolio and Prime portfolio is starting to decline, it means that this is not a sub-prime contained problem. This includes the whole credit spectrum. Hedge funds everywhere are blowing up. Two at Bear, two in Australia, UBS and several other banks. Several underwriters are laying off their fixed income staff, including one of the most influential and respected guys in MBS research.

5. Capital One, Chase, BofA, and other credit card issuers are reporting higher balances on lines, but lower delinquencies. Some are even credited as saying that people who are in foreclosures are actually paying more on their CC's so they can live, and they think that is a *good* thing as it gives them more revenue. That's all and well, but it only highlights the fact that consumers are still spending more than they can make WHILE being essentially bankrupt. That means that the economy and it's consumption isn't driven by indogenous weath, but by exogenous debt spending. Debt spending is nothing more than taking income in the future and moving it to the present and paying a premium to do so. That means that if we use more income today, then we have to give up income tomorrow. Since we are borrowing at record levels, we will have to pay back at record levels.

6. More than half of the GDP gained in the last 6 years was driven by Mean Equity Withdraw (MEW). This again is debt spending that will have to be repaid in the future. Despite unheard of house appreciation levels and home ownership and wealth generation, equity in houses is STILL plummeting. Think about that for a minute. Housing has increased in value faster than any other point in history, we have spent all of that increase by taking on debt, and even despite that massive growth, we STILL owe more on our houses. Not to mention housing ownership has dropped for the past 7 months. What happens when housing completely tanks? Then you're going to see that home equity number go back up, but it's not because people have more money in their houses, but because far fewer people who owed more on their houses have lost them.

The debt train has frozen. This whole 7 years was fueled by it and now it's gone. Think about it for a minute.

Here is what I should have made in the last/next 11 years.

2000 - $10
2001- $5
2002 - $2
2003- $2
2004- $3
2005- $4
2006- $4
2007- $3
2008- $3
2009- $3
2010 - $3

That means that I *should* have made $42 in 11 years. Instead, here is what I did...

2000- $10
2001- $8
2002 - $8
2003- $9
2004- $10
2005- $12
2006 -$15
2007- $14

Now, in 8 years I have spent $86, or more than 2x what I should have spent in 11 years. What am I going to do in 2008-2010?

This is what you suckers, dittoheads, and headline lovers do not understand. We should *NOT* have spent that much money in the last 7 years. Our whole economy was built on credit and now that it's getting tapped out, we have to repay it, through negative growth.

You praise a good GDP number, I lament it because I know it's just one more number that will have to reverse eventually. THe longer we delay the inevitable, the worse and longer it will be.

Now, since you're such a knowledgable person in the area of finance and economics, I'll also educate you on debate, much like I had to do to Vic. When somebody like me comes alone and presents my case, like above, and has data to back it up, you refute those items with your own theories and facts. Then I counter your items. That means for every # above, you present your rebuttal. Naturally, those rebuttals would consist of things other than "OMG, YOU ARE SHOWING YOUR ePEEN!!!!1111!!!" or "Sheeple!!!!111!!!!!!""

So, please, by all means, refute my items above to present why you think this GDP number, and the overall health of the economy, is "good" and why you think it will continue to be so.

 

[Genx87]

Originally posted by: LegendKiller

Originally posted by: blackangst1
Whatever you say man sounds like you me all figured out We can sit here and argue all day long back and forth, and you will still be nothing more than some portfolia manger and I will be nothing more than a CAT5 tech (LOL). Either way, we'll see. But to have to stoop to posting your creds on a tech messageboard shows me what a small man you are. *shrug* maybe not, but who cares?

Oh and BTW...3%? I'll need another 6 to trigger my stops so I really dont care. As I've said before Im waiting for a 20% correction. 3% does little to put a dent in my 36% gains for the year.

Why post it? Because people on boards think that because they don't know somebody, they know somebody. I know, that you know almost nothing about finance because all you can do is dittohead NonProfJohn and really your only support for my post was to call me a "sheeple", you provide no analysis, no debate, no facts, no logic, nothing. If this were the real world, I'd own your ass up and down and you'd not be able to dismiss me as a "sheeple" if you met me. Obviously you can act big by simply labeling people as such.

Why do I think the GDP number is a joke?

1. Inflation number that are headline numbers don't include energy and food, what really matters to consumers. My Milk Index has gone up 48% in 3 months (what it costs to buy a gallon of milk in Manhattan).

2. Debt is drying up. LBOs can't be sold. There is about 300bn in debt that needs to be sold and nobody is buying. THus, the underwriters have to hold the bag, meaning capital that would otherwise go to IPOs, withholding capital for secured borrowing pieces (Letters of Credit and Liquidity Agreements require capital to be held which isn't deployed). All in, this creates a credit crunch that will filter it's way down to consumers eventually.

3. Spreads are widening. Spreads have ballooned out for every corporate credit product. To get the Alliance Boots deal done KKR had to increase spread on some tranches by 85bps+. That's a huge hit to costs.

4. Countrwide's CEO actually included the Great Depression in his commentary. *NO* CEO does that. Granted he's known for some outrageous statements, it's still huge when CEOs compare any time to the GD. Considering even their Alt-A portfolio and Prime portfolio is starting to decline, it means that this is not a sub-prime contained problem. This includes the whole credit spectrum. Hedge funds everywhere are blowing up. Two at Bear, two in Australia, UBS and several other banks. Several underwriters are laying off their fixed income staff, including one of the most influential and respected guys in MBS research.

5. Capital One, Chase, BofA, and other credit card issuers are reporting higher balances on lines, but lower delinquencies. Some are even credited as saying that people who are in foreclosures are actually paying more on their CC's so they can live, and they think that is a *good* thing as it gives them more revenue. That's all and well, but it only highlights the fact that consumers are still spending more than they can make WHILE being essentially bankrupt. That means that the economy and it's consumption isn't driven by indogenous weath, but by exogenous debt spending. Debt spending is nothing more than taking income in the future and moving it to the present and paying a premium to do so. That means that if we use more income today, then we have to give up income tomorrow. Since we are borrowing at record levels, we will have to pay back at record levels.

6. More than half of the GDP gained in the last 6 years was driven by Mean Equity Withdraw (MEW). This again is debt spending that will have to be repaid in the future. Despite unheard of house appreciation levels and home ownership and wealth generation, equity in houses is STILL plummeting. Think about that for a minute. Housing has increased in value faster than any other point in history, we have spent all of that increase by taking on debt, and even despite that massive growth, we STILL owe more on our houses. Not to mention housing ownership has dropped for the past 7 months. What happens when housing completely tanks? Then you're going to see that home equity number go back up, but it's not because people have more money in their houses, but because far fewer people who owed more on their houses have lost them.

The debt train has frozen. This whole 7 years was fueled by it and now it's gone. Think about it for a minute.

Here is what I should have made in the last/next 11 years.

2000 - $10
2001- $5
2002 - $2
2003- $2
2004- $3
2005- $4
2006- $4
2007- $3
2008- $3
2009- $3
2010 - $3

That means that I *should* have made $42 in 11 years. Instead, here is what I did...

2000- $10
2001- $8
2002 - $8
2003- $9
2004- $10
2005- $12
2006 -$15
2007- $14

Now, in 8 years I have spent $86, or more than 2x what I should have spent in 11 years. What am I going to do in 2008-2010?

This is what you suckers, dittoheads, and headline lovers do not understand. We should *NOT* have spent that much money in the last 7 years. Our whole economy was built on credit and now that it's getting tapped out, we have to repay it, through negative growth.

You praise a good GDP number, I lament it because I know it's just one more number that will have to reverse eventually. THe longer we delay the inevitable, the worse and longer it will be.

Now, since you're such a knowledgable person in the area of finance and economics, I'll also educate you on debate, much like I had to do to Vic. When somebody like me comes alone and presents my case, like above, and has data to back it up, you refute those items with your own theories and facts. Then I counter your items. That means for every # above, you present your rebuttal. Naturally, those rebuttals would consist of things other than "OMG, YOU ARE SHOWING YOUR ePEEN!!!!1111!!!" or "Sheeple!!!!111!!!!!!""

So, please, by all means, refute my items above to present why you think this GDP number, and the overall health of the economy, is "good" and why you think it will continue to be so.

You are the best, we have established that.

Now give us a solid forcast for the next 6 months on where the market is going to sit and where our economy will be. In 6 months we can revisit this thread and read in awe of your vast knowledge.

 

[LegendKiller]

Originally posted by: Genx87

Originally posted by: LegendKiller

Originally posted by: blackangst1
Whatever you say man sounds like you me all figured out We can sit here and argue all day long back and forth, and you will still be nothing more than some portfolia manger and I will be nothing more than a CAT5 tech (LOL). Either way, we'll see. But to have to stoop to posting your creds on a tech messageboard shows me what a small man you are. *shrug* maybe not, but who cares?

Oh and BTW...3%? I'll need another 6 to trigger my stops so I really dont care. As I've said before Im waiting for a 20% correction. 3% does little to put a dent in my 36% gains for the year.

Why post it? Because people on boards think that because they don't know somebody, they know somebody. I know, that you know almost nothing about finance because all you can do is dittohead NonProfJohn and really your only support for my post was to call me a "sheeple", you provide no analysis, no debate, no facts, no logic, nothing. If this were the real world, I'd own your ass up and down and you'd not be able to dismiss me as a "sheeple" if you met me. Obviously you can act big by simply labeling people as such.

Why do I think the GDP number is a joke?

1. Inflation number that are headline numbers don't include energy and food, what really matters to consumers. My Milk Index has gone up 48% in 3 months (what it costs to buy a gallon of milk in Manhattan).

2. Debt is drying up. LBOs can't be sold. There is about 300bn in debt that needs to be sold and nobody is buying. THus, the underwriters have to hold the bag, meaning capital that would otherwise go to IPOs, withholding capital for secured borrowing pieces (Letters of Credit and Liquidity Agreements require capital to be held which isn't deployed). All in, this creates a credit crunch that will filter it's way down to consumers eventually.

3. Spreads are widening. Spreads have ballooned out for every corporate credit product. To get the Alliance Boots deal done KKR had to increase spread on some tranches by 85bps+. That's a huge hit to costs.

4. Countrwide's CEO actually included the Great Depression in his commentary. *NO* CEO does that. Granted he's known for some outrageous statements, it's still huge when CEOs compare any time to the GD. Considering even their Alt-A portfolio and Prime portfolio is starting to decline, it means that this is not a sub-prime contained problem. This includes the whole credit spectrum. Hedge funds everywhere are blowing up. Two at Bear, two in Australia, UBS and several other banks. Several underwriters are laying off their fixed income staff, including one of the most influential and respected guys in MBS research.

5. Capital One, Chase, BofA, and other credit card issuers are reporting higher balances on lines, but lower delinquencies. Some are even credited as saying that people who are in foreclosures are actually paying more on their CC's so they can live, and they think that is a *good* thing as it gives them more revenue. That's all and well, but it only highlights the fact that consumers are still spending more than they can make WHILE being essentially bankrupt. That means that the economy and it's consumption isn't driven by indogenous weath, but by exogenous debt spending. Debt spending is nothing more than taking income in the future and moving it to the present and paying a premium to do so. That means that if we use more income today, then we have to give up income tomorrow. Since we are borrowing at record levels, we will have to pay back at record levels.

6. More than half of the GDP gained in the last 6 years was driven by Mean Equity Withdraw (MEW). This again is debt spending that will have to be repaid in the future. Despite unheard of house appreciation levels and home ownership and wealth generation, equity in houses is STILL plummeting. Think about that for a minute. Housing has increased in value faster than any other point in history, we have spent all of that increase by taking on debt, and even despite that massive growth, we STILL owe more on our houses. Not to mention housing ownership has dropped for the past 7 months. What happens when housing completely tanks? Then you're going to see that home equity number go back up, but it's not because people have more money in their houses, but because far fewer people who owed more on their houses have lost them.

The debt train has frozen. This whole 7 years was fueled by it and now it's gone. Think about it for a minute.

Here is what I should have made in the last/next 11 years.

2000 - $10
2001- $5
2002 - $2
2003- $2
2004- $3
2005- $4
2006- $4
2007- $3
2008- $3
2009- $3
2010 - $3

That means that I *should* have made $42 in 11 years. Instead, here is what I did...

2000- $10
2001- $8
2002 - $8
2003- $9
2004- $10
2005- $12
2006 -$15
2007- $14

Now, in 8 years I have spent $86, or more than 2x what I should have spent in 11 years. What am I going to do in 2008-2010?

This is what you suckers, dittoheads, and headline lovers do not understand. We should *NOT* have spent that much money in the last 7 years. Our whole economy was built on credit and now that it's getting tapped out, we have to repay it, through negative growth.

You praise a good GDP number, I lament it because I know it's just one more number that will have to reverse eventually. THe longer we delay the inevitable, the worse and longer it will be.

Now, since you're such a knowledgable person in the area of finance and economics, I'll also educate you on debate, much like I had to do to Vic. When somebody like me comes alone and presents my case, like above, and has data to back it up, you refute those items with your own theories and facts. Then I counter your items. That means for every # above, you present your rebuttal. Naturally, those rebuttals would consist of things other than "OMG, YOU ARE SHOWING YOUR ePEEN!!!!1111!!!" or "Sheeple!!!!111!!!!!!""

So, please, by all means, refute my items above to present why you think this GDP number, and the overall health of the economy, is "good" and why you think it will continue to be so.

You are the best, we have established that.

Now give us a solid forcast for the next 6 months on where the market is going to sit and where our economy will be. In 6 months we can revisit this thread and read in awe of your vast knowledge.

Where the market will sit? I have a feeling we'll be above 12,000, but not too much above. I think by this time next year we will be solidly in a recession and you'll be hearing more about lending industry reforms than gay marriage or flag burning.

As for hard numbers? It's anybody's guess how low it will go. I just don't think we should be celebrating anything.

 

[Genx87]

Originally posted by: LegendKiller

Originally posted by: Genx87

Originally posted by: LegendKiller

Originally posted by: blackangst1
Whatever you say man sounds like you me all figured out We can sit here and argue all day long back and forth, and you will still be nothing more than some portfolia manger and I will be nothing more than a CAT5 tech (LOL). Either way, we'll see. But to have to stoop to posting your creds on a tech messageboard shows me what a small man you are. *shrug* maybe not, but who cares?

Oh and BTW...3%? I'll need another 6 to trigger my stops so I really dont care. As I've said before Im waiting for a 20% correction. 3% does little to put a dent in my 36% gains for the year.

Why post it? Because people on boards think that because they don't know somebody, they know somebody. I know, that you know almost nothing about finance because all you can do is dittohead NonProfJohn and really your only support for my post was to call me a "sheeple", you provide no analysis, no debate, no facts, no logic, nothing. If this were the real world, I'd own your ass up and down and you'd not be able to dismiss me as a "sheeple" if you met me. Obviously you can act big by simply labeling people as such.

Why do I think the GDP number is a joke?

1. Inflation number that are headline numbers don't include energy and food, what really matters to consumers. My Milk Index has gone up 48% in 3 months (what it costs to buy a gallon of milk in Manhattan).

2. Debt is drying up. LBOs can't be sold. There is about 300bn in debt that needs to be sold and nobody is buying. THus, the underwriters have to hold the bag, meaning capital that would otherwise go to IPOs, withholding capital for secured borrowing pieces (Letters of Credit and Liquidity Agreements require capital to be held which isn't deployed). All in, this creates a credit crunch that will filter it's way down to consumers eventually.

3. Spreads are widening. Spreads have ballooned out for every corporate credit product. To get the Alliance Boots deal done KKR had to increase spread on some tranches by 85bps+. That's a huge hit to costs.

4. Countrwide's CEO actually included the Great Depression in his commentary. *NO* CEO does that. Granted he's known for some outrageous statements, it's still huge when CEOs compare any time to the GD. Considering even their Alt-A portfolio and Prime portfolio is starting to decline, it means that this is not a sub-prime contained problem. This includes the whole credit spectrum. Hedge funds everywhere are blowing up. Two at Bear, two in Australia, UBS and several other banks. Several underwriters are laying off their fixed income staff, including one of the most influential and respected guys in MBS research.

5. Capital One, Chase, BofA, and other credit card issuers are reporting higher balances on lines, but lower delinquencies. Some are even credited as saying that people who are in foreclosures are actually paying more on their CC's so they can live, and they think that is a *good* thing as it gives them more revenue. That's all and well, but it only highlights the fact that consumers are still spending more than they can make WHILE being essentially bankrupt. That means that the economy and it's consumption isn't driven by indogenous weath, but by exogenous debt spending. Debt spending is nothing more than taking income in the future and moving it to the present and paying a premium to do so. That means that if we use more income today, then we have to give up income tomorrow. Since we are borrowing at record levels, we will have to pay back at record levels.

6. More than half of the GDP gained in the last 6 years was driven by Mean Equity Withdraw (MEW). This again is debt spending that will have to be repaid in the future. Despite unheard of house appreciation levels and home ownership and wealth generation, equity in houses is STILL plummeting. Think about that for a minute. Housing has increased in value faster than any other point in history, we have spent all of that increase by taking on debt, and even despite that massive growth, we STILL owe more on our houses. Not to mention housing ownership has dropped for the past 7 months. What happens when housing completely tanks? Then you're going to see that home equity number go back up, but it's not because people have more money in their houses, but because far fewer people who owed more on their houses have lost them.

The debt train has frozen. This whole 7 years was fueled by it and now it's gone. Think about it for a minute.

Here is what I should have made in the last/next 11 years.

2000 - $10
2001- $5
2002 - $2
2003- $2
2004- $3
2005- $4
2006- $4
2007- $3
2008- $3
2009- $3
2010 - $3

That means that I *should* have made $42 in 11 years. Instead, here is what I did...

2000- $10
2001- $8
2002 - $8
2003- $9
2004- $10
2005- $12
2006 -$15
2007- $14

Now, in 8 years I have spent $86, or more than 2x what I should have spent in 11 years. What am I going to do in 2008-2010?

This is what you suckers, dittoheads, and headline lovers do not understand. We should *NOT* have spent that much money in the last 7 years. Our whole economy was built on credit and now that it's getting tapped out, we have to repay it, through negative growth.

You praise a good GDP number, I lament it because I know it's just one more number that will have to reverse eventually. THe longer we delay the inevitable, the worse and longer it will be.

Now, since you're such a knowledgable person in the area of finance and economics, I'll also educate you on debate, much like I had to do to Vic. When somebody like me comes alone and presents my case, like above, and has data to back it up, you refute those items with your own theories and facts. Then I counter your items. That means for every # above, you present your rebuttal. Naturally, those rebuttals would consist of things other than "OMG, YOU ARE SHOWING YOUR ePEEN!!!!1111!!!" or "Sheeple!!!!111!!!!!!""

So, please, by all means, refute my items above to present why you think this GDP number, and the overall health of the economy, is "good" and why you think it will continue to be so.

You are the best, we have established that.

Now give us a solid forcast for the next 6 months on where the market is going to sit and where our economy will be. In 6 months we can revisit this thread and read in awe of your vast knowledge.

Where the market will sit? I have a feeling we'll be above 12,000, but not too much above. I think by this time next year we will be solidly in a recession and you'll be hearing more about lending industry reforms than gay marriage or flag burning.

As for hard numbers? It's anybody's guess how low it will go. I just don't think we should be celebrating anything.

So in other words you really dont know, even with all the vast wealth of experience and knowledge you love to shove in people's faces. Save us the arrogant lectures and try to be a bit more civil. It might get you further and require less typing for you.

I can just about gurantee most people tuned out about your 2nd post bragging about your 200 million deal and bloomberg terminals.

Ill make a small prediction. I think the market will stabalize at the 12,500-13,000 mark but the economy will continue to slow as feds keep the interest rate locked. If we dont see a recession starting by the 4th qtr I will be surprised. I honestly believed it was going to start this summer due to the housing slowdown and higher fuel prices. Apparently the markets and economy are starting to factor these costs into the margins.

It is coming, only a matter of time until it arrives. It is how our economy works.

 

[KentPaul]

that guy blackangst11 is an IT baboon. We have a few here too who they think they are important, writing software they dont really understand the application of, and that never quite works properly. lol

i think by year end equities will have done well, and credit markets will still be weak as liquidty is refocussed on asset classes with upside.... globally investment and growth is awash and there is not much spare capacity in the system, frankly to keep inflation contained the US and Japan need to stay weak.

Most hedge funds we speak to are positive, and at the end of the day our emerging market allocations are killing most other equity allocations this month.

we have also made a stack this year shorting sub-prime RMBS.

 

[JD50]

Originally posted by: KentPaul
that guy blackangst11 is an IT baboon. We have a few here too who they think they are important, writing software they dont really understand the application of, and that never quite works properly. lol

i think by year end equities will have done well, and credit markets will still be weak as liquidty is refocussed on asset classes with upside.... globally investment and growth is awash and there is not much spare capacity in the system, frankly to keep inflation contained the US and Japan need to stay weak.

Most hedge funds we speak to are positive, and at the end of the day our emerging market allocations are killing most other equity allocations this month.

we have also made a stack this year shorting sub-prime RMBS.

IT baboon? You do realize that this is an IT forum right?

 

[LegendKiller]

Originally posted by: Genx87
So in other words you really dont know, even with all the vast wealth of experience and knowledge you love to shove in people's faces. Save us the arrogant lectures and try to be a bit more civil. It might get you further and require less typing for you.

I can just about gurantee most people tuned out about your 2nd post bragging about your 200 million deal and bloomberg terminals.

Ill make a small prediction. I think the market will stabalize at the 12,500-13,000 mark but the economy will continue to slow as feds keep the interest rate locked. If we dont see a recession starting by the 4th qtr I will be surprised. I honestly believed it was going to start this summer due to the housing slowdown and higher fuel prices. Apparently the markets and economy are starting to factor these costs into the margins.

It is coming, only a matter of time until it arrives. It is how our economy works.

*Nobody* "really knows" where things are going, because it's impossible to predict all variables and peg a target, since it's impossible to guess every variable that goes into the market. However, unlike NonProfJohn and sparky up above, I can create a pretty good educated guess that doesn't paint as rosy of a picture. The mere fact that anybody that doesn't agree with them is automatically labled as a "sheeple" who just listens to the news only highlights the fact that they, themselves, are sheeple.

I find it ironic that somebody like him will just dismiss a person like me, when he can't even put together a solid analysis. In the real world a person like him would be dismissed pretty quickly from the conversation, since he doesn't know anything at all and can barely put together a cohesive theory. His main rebuttal, calling somebody a "sheeple" would be seen as hilarious. That's the only reason why I brought out any creds at all, because people like him would be put in their place quickly and efficiently.

 

[blackangst1]

OK a few points.

I agree numbers published in regards to GDP dont necessarily reflect the "real world". We all know PCE doesnt include energy or consumables (food only?). That doesnt mean the numbers are somehow bogus, or that it masks anything. It is what it is, based on what it reports. But you already know that.

Sure, the housing market is crap. We all know that too. I remember when I was looking at my first home in the late 80's, and a good friend of mine was telling me about all these crazy financing schemes he is starting to see, and that someday it would all collapse. Of course he was right. And of course, as you also know, personal spending has increased, saving has decreased, and wages have been flat for the most part. If I remember correctly (Im sure you can correct me) fixed residential investment has fallen something like 19% for the year? And we all know about foreclosures. Sure it sucks.

Also, as you know, service exports have been in decline for what...18 months or something?

And of course GDP inflator numbers. You already know this, but I also understand this is an indicator of inflation.

Im not stupid, LK. Im not the "sparky" you seem to think I am. Sure, Im a sonet engineer. That doesnt mean Im naive about finance. So youre some portfolio manager or something. So what? Of course you have more of an idea of the overall state of things. Of course! But your condescending attitude is really *****. OK, so we get together for a martini and you, as you say, own me with your in-depth knowledge of finance. So what? I'll own you while silently collecting your private data off of your laptop. *shrug* Who cares?

Your whole argument rests on debt. Why do you ignore equity? Shanghai Composite just hit an all time high. The yen is up. Of course, Australia is down to (I believe) record lows, as is Philippines. Those are the two I watch daily. You assume I just read the finance section of USA today.

Youre very arrogant. Oh and your comment of getting laughed out of the building "at your shop" is absolutely laughable. Compared to what I deal with on a daily basis "your" IT team are nothing but a couple high school hackers.

Lighten up man. You really arent that important, and you arent nearly as intelligent as you think you are. So you know more than some about finance? meh Relax man and dont take yourself so seriously. Besides, none of us do.

 

[umbrella39]

Originally posted by: blackangst1
PJ: Why bother posting anything positive...

.. when it's mostly bullshit

Hint: If you have to week in and week our for several years try and convince everyone how great the economy is, it probably isn't so good. Just an FYI