So, just to make your day, I thought I would review a few factors that should help you judge just how well the stimulus package, bank bailouts, and Keynesian monetary policy has worked, and let you judge for yourself whether this is a bull or a bear:
Unemployment and part-time employment rates are increasing steeply, indicating that the "stress test" levels of 8.9% will be passed, and will continue on an upward course well into 2010.
Retail sales, while somewhat ameliorated, are still negative, after a record negative 4th Q 2008, suggesting that we haven't solved consumer confidence yet.
A new wave of home foreclosures is beginning - predictable, as all those option ARMs that didn't increase to "real" interest rates from the initial tickler rates are about to do so.
Small business sentiment on the economy, measured by financial surveys from respected indendent organizations, is plummeting.
As one might expect from the above, small business capital expenditures are collapsing as well, with only 15% expecting to invest more, compared to 40% last year.
Commercial real estate delinquency rates are the highest since 1934, and retail vacancies are at 9.5%, the highest in decades. Rents have dropped 1.8%, and apartment vacancies are at 7.2%, while 25 million square feet of office space was vacated in the 1st Q, and has not re-rented.
World trade is contracting rapidly, and will continue, as the IMF is projecting financial losses to reach 4 Trillion (up from an estimate of 1T less than a year ago). 39% of that will occur in Europe, and more than 30% in the US. Only 1/3 of that debt has been written off thus far. Most bear markets historically have bottomed at about 10X PE, yet stocks are still overvalued at more than 50X - not a bull signal.
I don't give advice on investments, but if I were to make a choice between playing an ETF betting on the bull market or buying a good book on how to protect your assets in a depression - well, let's just say I bought my son and daughters a book. And it is not a book on how BHO and Timmy have saved the economy from disaster!
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More on Banking Stress Tests:
1) Stress Testing Under Worst Case Scenario - "SCAP" program uses consensus forecasts of mainstream economists, NOT a worst case scenario (prior test use Great Depression or similar shocks).
2) Capital levels are NOT OK as reported by Geithner- the 19 largest banks control 63% of assets at risk, and only 3 have the ability to withstand even the above mild scenario.
3)Big Banks did NOT make solid profits at reported in news for 4Q, but used deceptive accounting and government loans to mask truth.
4)Insurance is NOT safe as government says - AIG is stil shaky, and not the only one, and not just from derivatives and mortgages, but from other investments, the global real estate market - all have a great variety of investments, all at risk. How much? 375 Million policies are at risk for 19 Trillion.
5)The economy is NOT showing signs of recovery - this is a bear rally, there is a deteriorating macroeconomic risk, continuing systemic risks, record instability, and a serious credit crunch and crisis, with a huge and growing federal budget deficit.
6)Listen very carefully and ask questions before holding stocks someone tells you will "come back" - this ain't 1987.
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