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Thursday, August 6, 2009

The Recession is Over!

Made you look! And it was written by an economist, it must be right.

And Goldman sees 1100 (well well, they must have some more chum to spread)

And did you see this cover? [EDIT: Yes I realize the "pin" pointing toward the balloon. Yet ironically when you actually read the story inside it sidesteps the whole metaphor of a balloon about ready to pop! (doesn't really talk at all about the deficit that I can recall) So yes, as I say in the last paragraph, these stories seem "hedged" yet they are still certain enough to state that "The recession is over" on the front cover. Thats all people see. And so it still is quite a bit contrarian in that sense. I'm not sure it will get any "better" contrarian. Like I said, even the media is catching on and we are, afterall, in year 9 of a bear market of social mood.]

I first seen this Newsweek cover in EWI's weekly newsletters recently. They of course explain that when the national media proclaim things such as this, your likely near the top. That's just the way it works. The Media is always the last to jump on a trade.

I actually then found a copy of this Newsweek in my work's breakroom and read the story and no where, and I mean no where, do they mention the fantastic debt bubble the government is inflating. The story talks about how much coin the gummint is shoveling around but they don't even mention the fact that its like swiping a giant credit card. (fingers in ears -- LA lA LA LA LLA LA LALAL LAL lALA L!!) Eventually credit cards go bust including the US Treasury.

Economic indicators lag the waves. We may still be "recovering" with economic data, and the market may be starting its Primary wave 3 down. And you'll wonder why! Don't let the "news" fool you. The market doesn't trade on news.

And the government can lead nothing, fix nothing, nor plan anything. They are the herd. Every action they take will, in fact, reinforce the Primary wave 3 down. Laws will be passed on the way down that only exasperates the problems and reinforces the fear.

And for those that are angry about the "controlling entities" such as GS, no worries, social mood is already souring on them. I also think Google and likely Apple will also be turned on. (They'll be mad why you still need to take out a small loan just to buy a MAC when they already have billions - they'll be seen as greedy) Companies with billions in cash will be attacked by the mean the Government. And it will reflect in their stock prices.

But Dan! Wait a sec, the Fed will just keep printing money and keep it all going! Umm, I wouldn't be so sure about that. A fearful populace that goes defensive in its spending and deflating 30 years of toxic debt will produce a delayed reaction in the Government. Congress will eventually feel the wrath of the public and may just turn on the Fed. It has been abolished numerous times in this country. Don't think it won't happen again! At any rate, the government will finally be last on board to the "trade". They'll find fiscal discipline in the coming years (but it won't matter - debt destruction is a form of fiscal discipline).

But you can see its all a delayed reaction when it comes to the government. The Fed is just spending like its 2006! They are a lagging trade in this market. They'll tighten up. They'll have no choice. The herd will likely demand it and the people running the Fed will also be feeling the same defensive mood. It won't matter anyway because the debt is already on a one-way track and the train's brakes are broken. The coal burner door is stuck shut after just moments before someone threw a huge slug of magnesium into the mix.

If you insist on "fundamentals" I give you one: A boatload of crumbling debt! The indicators you see recovering are based on sentiment and yearning for the good times. People have indeed picked up their socioeconomic activities yet most of these are yet again sustained by the illusion of credit. And most of it is on "Uncle Sam". However, Uncle Sam is three sheets to the wind and going out with a bang baby! He's got a rented red Ferrari and a bottle of tanqueray and the libido is in overdrive and its off to the nightclub again!

The stories I linked above are the beginning of a topping pattern. Are they enough evidence? Somehow I think we'll see a lot more if we do indeed break above 1007 after a B wave correction period (if that comes heh). The stories still "hedge" their bets a bit too much. Kind of like your humble correspondent does at times - heh. But maybe that's all the sentiment is capable of producing. Maybe its so bad that even the media is wising up finally.

Let us trade up to 1030-1040 and see if the stories are hedged the same. Heck I am not even sure this thing won't just explode down right here and now. Now thats a hedge.

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