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Last minute fill in:
This morning I’m on Bloomberg TV, from 11:00am to noon, on the show Open Exchange. We will be discussing the Housing, the defensive rotation, the slowing economy, and of course, Fed Chair Bernanke’s Jackson Hole Speech. (it will be posted here at 10:00 am)
Should be fun.
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UPDATE, August 25, 2006 12:30pm
Boy, that speech was a whole lotta nuthin. To think thats what people were holding their breath for: a wonky look at global economic integration. Nothing about inflation, housing or U.S. growth. I’d call that a bog "nothing done" there.
Also, there’s nothing like being in an all glass building during a tornado alert . . .
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Global Economic Integration: What’s New and What’s Not?
Remarks by Chairman Ben S. Bernanke
At the Federal Reserve Bank of Kansas City’s Thirtieth Annual Economic Symposium, Jackson Hole, Wyoming, August 25, 2006
http://www.federalreserve.gov/boarddocs/speeches/2006/20060825/default.htm
Barry, can you reiterate your predictions for the Dow, S&P and the NAZ? Aren’t you calling for close to 30% drops between now and year-end for each of the averages?
As we haven’t had much of a downturn during the summer, do you still see Q3 and Q4 being that bad and guidance being that bad along with it?
My portfolio has a lot of low P/E stocks on it (dominated by energy and industrials still). Your predictions would bring the S&P P/E to around 12 or so right? Is that really realistic? Won’t the Fed jump in to cut rates if they see that much damage in the markets (assuming you are calling for a MAJOR slowdown in the economy).
I guess my question is, are you still solid with your beginning of the year predictions?
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BR: A few details and squirrely caveats on that – I do not believe in predictions, and wrote a column to that effect called The Folly of Forecasting – it advised taking what pundits say with a grain of salt, myself included.
The media being what it is, I end up doing the forecasts stuff because its good PR, it is fun, and I get to push up against the Conventional wisdom, which is wrong as often as not.
With those weasely caveats out the way, I think that the odds of a 30% correction are much greater than most people assume. From 1966-82 we had five corrections of 30% or so over those 16 years.
In January, against a consensus expectations of 12% gains, I wrote the 3 part “Cult of the Bear” series – it looked at why we should do fine in 1H, and why we could run into trouble in 2H, as well as the various reasons and ways the markets could take a hit:
Also, P/Es have historically ended their compressions in the hi single digits or lo teens — so 12% is not a bad guess.
From a friend : “ECRI WLI growth rate just in at -1.6, down from -1.4% (last week’s reading)”.
Read Ben’s speech. Simply boring and unimpressive. Found nothing revealing, no independent thought by Ben, and nothing I didn’t already know. This was a surprise. Seemed like he was speaking to a group of college freshmen.
Mark, a little more on that:
“The ECRI Weekly Leading Index (WLI) paused at 135.2, for the week ending August 18. The smoothed, annualized growth, however, inched further downward to 1.6% from last week’s 1.4%. Last week’s index was revised slightly from 135.3 to 135.2, but the growth rate was left unchanged.” (source: economy.com)
A/P-
Thanks for the clarification. Any explanatory text with that?
Yeah. What’s it all mean Mr. Natural? I mean Pete.
I think the quote I used from econ.com left off the negative signs on the -1.4/-1.6
“ECRI’s Weekly Leading Index (WLI) is a composite index constructed of seven USA weekly economic series (M2, JOC-ECRI industrial materials price index, initial unemployment insurance claims, mortgage applications, S&P 500, 10-yr Treasury bond yield, and bond quality spread). The limited availability of weekly data constrains the number of variables in the composite index, but this has not hurt the WLI’s predictive power. The weekly frequency of the WLI makes it a very timely gauge of the economy’s direction”
Dear Barry:
Nice job on Bloomberg. They are usually so booring. You made it worth watching. At my beach house community, we dont’ get CNBC on cable, only Bloomberg. Do you really own Safeway or any other grocer?
Robert
When Lakshman Achuthan was interviewed by Kudlow earlier this week he said the index was not pointing toward recessioin.
I remember thinking it sounded like he wanted to qualify the statement in some way, but of course Kudlow cut him off.
Sorry I missed the BLOOM. Might a Kudlow capitulation be a trailing indicator? I won’t miss that! LK, still love your taylor. Oh, anyone remeber the tornado that went down main street Nashville yrs ago. Lots of people caught short without extra pair of shorts that day. Amazing no one was killed.
Don Hays sees 30% stock rally. What’s his credibility?
Don was great in the 1990s. I love the structure of his 3 prong analysis.
Then he went all political after 2000 — became a major W cheerleader, and cheerleaders of any type lose lots of cred with me.
He’s been uber Bullish for the past year
that storm was insane…
I’m doing my summer 2L stint at a lawfirm in the 666 building in front of roosevelt field mall(all glass)…that was gangsta…I was like, ‘ I don’t think we’re getting out of here alive…then i found out there were two tornadoes in Nassau after i got home..Oh well we needed the rain…
ONE