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« Exhaustion Gap | Main | Congress Continues to Kill the Golden Goose of Innovation UPDATED »

Friday, March 26, 2010


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Hello Yelnick, thanks for the interesting post. You make very good observations there.

Meanwhile, Shanghai turned up as proposed yesterday. And here's the update for S&P500:


GDP revised down to 5.6 (which I think was below estimates). I wonder what the excuse will be this time? Maybe just to confuse everyone they will say its because the rate was revised up to 5.9 last time! But overall are readers here surprised? Na - didn't think so.

Mamma Boom Boom



There's a nice Monthly bond chart here, showing the entire bull market to-date.



No one cares about such a small GDP revision for Q4. I'm afraid that you are looking into your rear view mirror (on this).

The market place does not look into the rear-view mirror when driving down the road. The market place looks forward.


'I'm afraid that you are looking into your rear view mirror' - story of my life Machael! I knew I was going wrong somewhere. Thanks for putting me straight.


Well, right now we usually see a negative earnings "warning" from companies that need to make such an announcement just before the end of the quarter. Thus far, we have not seen even ONE single earnings warning.

Meanwhile, we have come off of two of the strongest consecutive earnings quarters (according to Thompson Financial)literally in history . . . and are now looking at an $80 number for 2010 S&P earnings. Put a 14 multiple on that and you get 1120. Put a 15 multiple on it and you get 1200.

Right or wrong, that is what portfolio managers are looking forward to . . . and current market prices appear to reflect that.


Short-term, a simple C=A on the SPY would target 115.55 for a possible low.

A (61.8) of A would target a "C" of 116.27

We just traded 116.40 as of 12:56PM Eastern.


The market re-tested 116.25 SPY at 2:03PM Eastern and market has now come back into positive territory.

C= (.618)A


According to the US debt clock, the US Debt/GDP ratio is currently at 88.3%. The US debt is already in the PIGS arena.


Garth, good point about GDP to deficit already above 80%. The 90% number is actually "deficit held by the public" which excludes intra-governemnt holdings (ie social security and other trust funds).  Right now debt held by the public is only 53%.  It is debt held by the public reaching 90% of GDP that should concern us. 

From the link in my post comes this explanation: 

In their book, This Time Is Different (Eight Centuries of Financial Folly, Princeton University Press, 2009), Carmen Reinhart and Kenneth Rogoff make two critical points:
…If there is one common theme to the vast range of crises we consider in this book it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risk that it seems during a boom……Although private debt certainly plays a key role in many crises, government debt is far more often the unifying problem across the wide range of financial crises we examine…And, the number they peg as being very serious is debt at 90% of GDP. Once debt hits that level, a serious financial crisis is much harder to avoid.


ObamaCare may be the straw that breaks the camel's back or it may not be, but the camel is already freighted down with a lot of straw.

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