To those who understand the markets.....please explain

gringoloid says on Feb 26, 2008, 11:25:

the stock market is a 'giant discount machine' for corporate profits, not a thorough indicator on every aspect of the market. most companies on the dow are well diversiified globally. the one company i worked for in the dow average and know pretty well, is very lean, mean,and filled with green.....buying enormous amounts of their own stock back for the past several years. that is a long list of bad news you gave us but most of the dow companies are really very strong.

people like me, not able to sell our homes which is gloom and doom for me doesn't affect the dow too much.

brians, you want to kick a few words in here?

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LDW says on Feb 26, 2008, 11:42:

fecherklyn.......there are as many opinions out there as there are market watchers.......so what its worth.......I will give you mine.

"January foreclosures up 57% compared to 1 year ago."......Proof that senior management in our major banks do not have a monopoly on brains....quite the opposite actually.

"Home prices (USA) declined by 9.1% in Dec (v/s 12 months ago), the most in 20 years according to the S&P Case/Shiller Home Price index.".......................Many factors...such as the sub prime mess (see above), poor economy (unemployed people cannot pay mortgages) and demographics (we are getting older and many of us want to dump our big expenses homes).

"The PPI rose 1% in Jan (against 0.4% expected)"..........The Fed is loweing interest rates making money cheap, which means inflation.

"The "Core" PPI rose 0.4% in Jan (double the rate expected)."....see above

"Consumer confidence dropped to a 14 year low in Feb (75 v/s 82 expected)"......see above

"Crude oil prices turned higher at $ 100.91".........well that's good news for Bush and his cronies (Halliburton????). What is curious is that oil producing Texas is really suffering in their housing market, which one would think would be bolstered by ther $100 oil.

"Home Depot reported weaker quarterly earnings that missed forecasts and said 2008 will be "challenging"..................Unemployed people who cannot pay mortgages will not be fixing their houses either.

"The US$ was falling against the euro"..........The Europeans have, for the most part, stayed away from Bush's blunder in Iraq. Mind you, over the longer term they have more serious demographic problems than we do.

"The only possitive news I spotted were a handful of "healthy"company financial reports including IBM, Macy's and Nordstrom. But I wonder how much of welcome reports were due to the effects of a weak dollar? Similarly, these positive reports could/ should (?) be contrasted with releases from Kellogg and Hershey's notifying price increase due to surging costs of commodities.".............Yes....bad news for people who use commodities. Good news for those who sell them. Example....wheat are soybean prices are high, but then it's about time farmers made some money.

So.............there you have my take on it.

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rocinante says on Feb 26, 2008, 11:58:

Hard to get a objective information - I don't think he was asking for political opinions...

Fletch, bottom line: Today's news is months old. In so many words analysts forecasted today's news months ago - meaning that market already reacted to today's news.

Brians and other experts that Mr. Loid recommends can expand.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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LDW says on Feb 26, 2008, 12:15:

I really fail to see how anybody can be totally objective. In any economy, what is good news for one guy is often bad news for the other guy, and politics, for good or ill, play a role.

I am sure there are a lot of potential home buyers out there who are very happy to see home prices dropping. There are lots of people who are very happy to see $100 oil. There are lots of people who have taken short postions (or purchased puts) on certain stocks and/or futures who are very happy that things have transpired as they have.

There has never been a national economy in the history of mankind that has kept everybody happy, but as I mentioned above, there are some very happy wheat and soybean growers right about now.

This reminds me of the stock market dump in 1987. Some doomsayers were predicting another depression, but in the overall economy, most wealth that was lost in stocks was regained by those who held bonds. It was a redistribution of wealth.

I would hazard a guess that there some happy soybean and wheat producers in rural North America who are using their new-found prosperity to buy up some cheap property. Redistribution of wealth.

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rocinante says on Feb 26, 2008, 12:31:

LDW: Agreed. However the guy simply wanted to know why the DOW was up when the news was shitty. This has nothing to do with Haliburton, the state of Texas, Iraq, Bush Cronies and people not being able to sell their homes for the huge profit they want because the market moved away from them.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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LDW says on Feb 26, 2008, 12:37:

Yes.....rocinante.......and.....for some.............the news has been very very good.

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rocinante says on Feb 26, 2008, 12:43:

LDW - The news he posted was news that is shitty for the DOW. Get it? He wants to know why news shitty for the DOW had a postitive effect on the DOW.

I was just keeping on topic in an unbiased manner in an effort to answer the guy's pointed question about the market.

No big deal. Continue your politically biased posts - it's human nature.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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jonas says on Feb 26, 2008, 12:44:

My understanding is that the current inflation and moneyprinting is what keeps the stockmarkets afloat. The Fed is most likely to continue on their course to further lower interest. This helps the markets. If you want to be on the safe side, look at Gold which climbed to $950 again today.

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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jonas says on Feb 26, 2008, 12:50:

And the Euro at 1.4976 to the Greenback as we are speaking
but I think you should move this thread to offtopic...

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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rocinante says on Feb 26, 2008, 12:54:

Lower interest rates? WHY? Jonas the US Federal Reserve should be worried about the Colombian Peso and not the entire economy of the US. Don't they know there are about eight hundred expats living in Colombia who are depending on the dollar at 2300? The US needs to correct this COP fluctuation right away as it is ruining the entire economy. It's all Bush's fault that we have to pay more for a Pilsen.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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RAAAY says on Feb 26, 2008, 12:55:

Jonas..............move it to the off topic.....why...??

Movements in the dollar/peso are very relevant to a lot of folks in Colombia.............either they are buying property........living on a US pension...........or perhaps they might want to buy an imported sofa........

$1 is around 1870...................imported sofa anyone ??

.........Its useless to argue with ignorance

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jonas says on Feb 26, 2008, 13:03:

RAAAY now where in the topic does it mention the COP ????

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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RAAAY says on Feb 26, 2008, 13:07:

Jonas.........." the topic "................shit..........I never read that part....

.........Its useless to argue with ignorance

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jonas says on Feb 26, 2008, 13:09:

Isn´t it US investors trying to diversify their currency portfolio that strengthen the COP so dramatically? That is why I see the Peso gaining strength against all currencies.

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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gringoloid says on Feb 26, 2008, 13:10:

ahhh, jonas, you made my day! $950 gold......keep the good news coming, i want to sell at $1500!

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rocinante says on Feb 26, 2008, 13:12:

jonas couple that with Colombia's recent (5 years) surging economy and recent (5 years) political stability...

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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LDW says on Feb 26, 2008, 13:18:

rocinante....which part of the DOW are you talking about? There are some commodity producers on the DOW. News for them is good. I am sure Exxon Mobil is happy. I am sure that Alcoa is happy.

News is also good for those on the DOW who have significant earnings denominated in foreign currencies.

I have to assume that overall, the news was NOT shitty from the perspective of most holders of DOW stocks. Otherwise, why would the broad index have gone up?

.............or maybe it's because there is enough shitty news out there that people have concluded that the DOW is best place to put their money????

.........flight to quality maybe??

And yes....my politics are biased. Everybody's politics are biased.

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rocinante says on Feb 26, 2008, 13:24:

Not talking about parts of the DOW - just talking about the DOW, a NYSE index, as a whole vs. the US news that the OP cited. Not a big deal we are splitting hairs. The OP has his answer.

I'm pretty a-political. My views are not that biased but you do make some valid points which are well taken.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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fecherklyn says on Feb 26, 2008, 13:30:

It is true....my question did not (directly) concern exchange rates although I am as much at their mercy as many of us on this forum.

Rocinante has come closest to relaying the point of this post....Why today has generally bad financial/economic data motivated the markets to jump, rather than fall? I ask this question because on many other days the daily "highlights" determine the day's trend. What makes a market movement ignore some news in preference to other?

So far, Rocinante's suggestion that most of today's news has already been expected and discounted in previous market levels. This makes sense to me.

But I wonder if "rose-tinted" glasses do not prevail sometimes on the market floor. Is it not possible that the interests of all those "connected" with the financial markets are to see rising levels? Is it not possible that after a certain period of morosity and market weakness there is a simple desire by those involved to "turn things around"?

Naiive questions no doubt...but I do not profess to be a financial whizz-kid.

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LDW says on Feb 26, 2008, 13:36:

Rocinante....precisely.....I was talking about the DOW as a whole too...

I agree with you on one thing for sure. I want the Fed to preserve the value of the dollar vis a vis the peso....or at least I want the Canadian dollar to maintain its value, because my retirement income in Colombia will be denominated in Canadian dollars mostly (some in US$).

However, I don't think it will happen. There are more pressing political imperatives.

I hope that retirement day will come in about November of 2009.....or even sooner.

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rocinante says on Feb 26, 2008, 13:52:

LDW if your income is pegged to the dollar and no other source of income is possible through diversification (non USD correlation) than you may want to consider retiring in USD based Ecuador or Panamá where the only thing you need to worry about is the inflation of those countries.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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rocinante says on Feb 26, 2008, 13:56:

"I ask this question because on many other days the daily "highlights" determine the day's trend." Fecherklyn

Sometimes John Q Public retains a substantial percentage of a company's float. Certain news will cause a dumping in these cases and the stock will move. Also Ex Dividend dates cause moves that may seem to be tied into the news when in actuality they may not be. If a stock has been volatile and options expriation Friday is a day or two away... margin calls and covering shorts can also single handedly cause a ruckus. Also there is news that is not forecasted by analysts such as politicaly related items or weather and although far and few, AOG (acts of god or disaters). These will have same day effect.

I'll be the first to admit that this is vague. It really depends on a case by case basis. But is it so common for a company to report stellar earnings, announce a favorable contract or lawsuit and still the stock tanks.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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rocinante says on Feb 26, 2008, 14:03:

"Is it not possible that the interests of all those "connected" with the financial markets are to see rising levels? Is it not possible that after a certain period of morosity and market weakness there is a simple desire by those involved to "turn things around"?" Fecherklyn

What goes up must come down and vice versa? Who knows what charts the big traders and institutional investors are looking at. If we knew that and could see the specialist's book we'd be LOADED!

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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fecherklyn says on Feb 26, 2008, 14:06:

Thanks Rocinante, I think that says it all.

Moral....There is little point being a Cassandre?

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LDW says on Feb 26, 2008, 14:08:

Rocinante......

Actually, my first choice would be Argentina (I love places like Bariloche, San Martin de los Andes, etc.), but since my wife of 30 plus years has family in Valle del Cauca, that would be a non starter. The best compromise I have is Armenia, which I prefer to Valle del Cauca because of the great weather. Armenia is close enough for us to see them, but far enough away that we can have some degree of privacy when we want it.

My income will be in terms of the Canadian dollar for the most part, which vis a vis the US dollar has done very well in recent years. Because of its gain, I am already way ahead of my projections from a few years back.

My retirement income in Canadian dollars will be enough that even a 25% gain of the peso against the US$ will not seriously hamper my retirement in Colombia. I won't be driving around in a Mercedes, but I will be playing golf and eating 3 meals a day. I might even choose to do something there for a few pesos to occupy my time.

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wendell13 says on Feb 26, 2008, 14:45:

Rocinante...you hit the nail on the head about the importance of the Colombian economy with regards to the US..But there may be 799 US expats living in Colombia if the dollar goes much lower

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BillBigD says on Feb 26, 2008, 17:25:

Dow- the reason it increased today was the announcement by IBM to repurchase $12 billion worth of stock in 2008. IBM stock was up 4% today

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rocinante says on Feb 26, 2008, 17:28:

IBM moves it. Wendell you are not alone.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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poco says on Feb 26, 2008, 21:10:

Quote: So far, Rocinante's suggestion that most of today's news has already been expected and discounted in previous market levels. This makes sense to me.
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I agree that bad news has been discounted. This has caused the market to act like a compressed spring. Ie: News that isn’t as bad as expected is GOOD NEWS. I think large moves are possible, bad thing is they are possible in BOTH directions. I believe the market has an upside of 10% with a 5% down side over the next 6 months.

The DOW WAS down about 17 Percent in 4 months (low 11,650, Jan 22). Opinions are split, many believe the Dow will retreat to that level in the near future before any sustainable attempt to regain recent losses.

Oil - The U.S. GDP (all goods and services) has become less dependent on oil prices. Services are a bigger portion and have produced higher wage jobs. ie: Running a blast furnace to produce steel is very expensive compared to Air-conditioning 1000 programmers on a per unit energy cost basis.

Inflation - Historically, inflation is quite low today. 1979 or so it was 15 or 16 Percent, now that's inflation. I Remember 10 PLUS percent CD's, federally insured up to $100,000. I knew one person who’s company retirement plan paid 3% over prime, Ha,, imagine prime at 15%. Bad thing was,, at the time, you were sinking 5% "in the hole" at the 10% rate.

Food commodity prices. Seems these can be passed along and the increases would apply to the actual commodity content of a given product. Heinz exceeded their numbers and the CEO interview had a positive outlook.

"When you men get home and face an anti-war protester, look him in the eyes and shake his hand. Then, wink at his girlfriend, because she knows she's dating a pussy." Quote - General Tommy Franks

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