San Diego Housing Bubble News and Analysis

The next tippng point will be food. Coffee has been fallling for a long time,i know it's not really food, now it is starting to rise. Food in my opinion has been undervalued for a long time,8-10 years. Now when food prices go up everyone will feel it and that will start the inflationary cycle.

#1. Keep in mind that the Chinese are not the only player. Their total US debt purchases account for maybe a third of our trade deficit. The other two thirds go to Japan, the rest of SE Asia, Saudi Arabia, etc. etc. The United States have trade deficits with half of the world.

Also, significant declines in foreign purchases of US debt may have more effect on exchange rates (strengthening renminbi and weakening dollar) than on interest rates.

Most likely, the Chinese will not do any major movements in this area unless world economy is sufficiently stabilized.

#2 should not have much effect on the rest of the economy.

#3. That's a risk, but it would take a 2/3'rds conservative majority in Congress or a Republican president to revoke the stimulus. Not a real possibility before 2011.

Re: #4, that would probably be good for exporters and foreign companies. So that depends on your equity structure. My own portfolio is heavy on both: AA, RTP, TXN, SI ...

#5. $100 oil without an adequate fall in unemployment would start making me worried. At $150 I'd start selling.

Not sure what impact it will really have but my guess says that gold challenging $1K could have an impact on the future of the markets. It may not be much of a telling sign, but it does show us that many investors are making the move back to portions of the commodity market for safety purposes.

I believe the dollar is on the brink of a major downward move, but we will have to wait and see. As far as commercial real estate, my guess is the banks won't come knocking as fast as we think. Banks have learned a hard lesson from the residential market. If they play the cat mouse game playing with supply and demand they could spare huge losses, at least that is the thought.

As much as I think we will have some changes this fall my prediction is that 2010 will be an ugly year financially for America. If I were a betting man, which I am, I would cash out of equities put a little money in gold stocks and relax. Not much else can be predicted with the manipulation game in place.

I think we are still on a downward trend: unemployment, advertising spending down, discretionary spending down, company projects slowed or on hold, fewer cars on freeway, Costco sales strong in food and not big screens, etc.

So I am looking for the opposite of the down tipping point, but for signs of a recovery. Not to hijack your thread, however it may help in identifying your exit point.

Our nation needs to make things to grow. A return to a solid manufacturing base. With this will result in higher exports, stronger dollar, etc. Cheaper energy is a huge factor here as well.

So when I see these things happening and a backbone in our foreign policy ( read energy independence and exit from being the worlds police to ungrateful countries ) will produce a positive change in our economy and attitude.

Question: What are you going to do with your money once you exit?

Departing from the other thread of cashing out, I am inclined to play in the TIPPS or inflation adjusted treasury bonds guaranteed by the Treasury.

I haven't lost all hope in America ;)

Thoughts?

Taking a Cue from what Hobie was saying,

But with a little different twist,

Now this is all just my thoughts,

I say that once the economy does start to recover, it will only take about a quarter or so for it to take off like a rocket (maybe a slow one anyway),

We (the American people) have been putting off buying so much of everything ,

Car’s, computer’s, TV’s even homes (heck I know a lot of native born USA people stacking generations of families in homes) , folks that is just not natural for Americans.

There is a lot of demand for just about everything building out there people.

Again these are just my opinions.

Well. That's exactly the reason that I am still almost fully invested right now. I think cash itself is an investment vehicle and I don't want to hold too much in that basket either.
I think it really depends what will be the dominant risk that will make equity market less attractive at that time. If it is deflationary, then cash is not a bad choice. If it is inflationary, then maybe some commodity bets. As for government bond, I actually started a small position to short long-term treasury last week. 4% for 20-30 years bond? I do think those investors are having too much hope in America.

Let's see, the Chinese gov't is telling their citizens to stock up on gold and silver, and in America were being told to borrow and spend.

The S&P is currently averaging @ 140x earnings.

Yah, NOR-LA-SD I think your right on track.

The consumer is toast folks, get a clue!

Late october-early Nov. equites crash followed by a new surge in unemployment i.e another round of deflation. Followed by additional money needed by the banks and probably nationalization. They coming back to big government with hat in hand should garner enough support for government takeover.

The big question is: will the world still allow the dollar as reserve currency or will the US empire be broken up.

Dow 6500 December...

You can't stop what's comin. It ain't watin on you. That's vanity...

Gulp.. Arraya, I hope this scenario doesn't play out.

But if it does, sure would play hell with the Christmas spending while at the same time make America very weak in the world's eyes.

We still need to keep an eye on the Israel/Iran situation. If Iran lights off an nuke or any aggression to Israel we'll be in another war.

Many people predicting varying degrees of an economic implosion are probably right; it just takes a long time to play out - it's moving in slooow moootion...

You correct Iran/Israel could be a HUGE tipping point. Though, I do believe it has been Israel threatening aggression for the past year. Not saying Iran wouldn't, just Israel has been telling the world they are going to bomb them. Whomever draws first blood should be held accountable for the global repercussions. UN just stated that the nuclear threat was hyped. Can you say oil $200...

Swine flu is another that could start a market panic and equities crash.

Either way the stimulus will run out and deflation will take hold again and will see what the Fed will do to counteract and how the world responds. So far, public debt as taken the place of private to continue monetary growth and that can only go on so long.

China has said they are going to stop dealing in OTC derivitives, which is another huge hit to the banks.

Also, Japan elected and anti-dollar regime with promises to stop buying our debt.

A delicate balance we have in the world now. What ever happens it will never be the same.

I am beginning to think Rich should rename this blog , the coming economic Armageddon and catastrophic asteroid impact blog,

I really loved this one,
Really amped the anxiety level

http://www.youtube.com/watch?v=-zvCUmeoHpw

http://www.physorg.com/news114104984.html

That was awesome! The rest of the world is toast but I think it looked like San Diego made it out unscathed. It's different here ya know.

Source?

Which part of S&P? I just checked the four stocks I mentioned earlier. With the exception of AA, whose forward P/E is 26 because of low aluminum prices (something that may well change if world economy fully recovers), all others are in 11-18 range. MSFT is at 13, INTC is at 16, BA is at 11. These ratios seem perfectly reasonable to me.

That the Chinese Gov't is encouraging citizens to buy Gold/Silver is widespread knowledge, but here is one quote:

"For the past half a century, the Chinese had the lowest per capita consumption of gold in the world. Next year, Chinese gold demand will likely surpass that of India.

This year, the government banned silver from being exported… and by July, it was being promoted as an “investment” to the Chinese public on the 6 o’clock news.

You do the math– how does that affect global demand if just 10% of Chinese begin to perceive silver as an investment?

Will the Chinese turn into goldbugs overnight? No. Over the next 5 years? Probably, yes.

I like your long-term silver option strategy for this reason. Even the smallest shift in Chinese investor/consumer preferences can dramatically alter global demand and commodity prices.

From what I’m seeing from the ground, the Chinese government is engaging in one of the most explosive financial marketing campaigns in history. Instead of Maoist propaganda, though, they are attempting to change the entire perception of gold/silver in the Chinese public.

Simply put, the Chinese government is trying to trigger a national gold craze…and it’s working.

The Chinese public now has gold trading platforms on steroids.

You can buy silver bullion or gold bars at any Chinese bank in four different sizes. Wealth management products tied to gold are skyrocketing in popularity, and the public can now instantly buy, sell, and trade gold 24 hours a day in five different forms with different eight types of services."

My S&P number came from here:

http://chartoftheday.com/20090821.htm?T

That seems to be the ratio of S&P market cap to cumulative annualized Q2 earnings. Not a very reliable measure.

To illustrate. Suppose there are two companies, Boeing and Citi. Boeing reports quarterly annualized profit of $10 bil. Citi reports quarterly annualized loss of $10 bil. What would be the appropriate market cap, and the appropriate index value, given these earnings?

The correct answer is 0 and 0...

chat of the day wants a credit card number and money to see where they get their info or to read anything other than two paragraphs. That alone disqualifies them as a valid source of info. If i have to break out a credit card to view something on the internet, somebody better be naked.

Classic TG...

That made my week...
I think I will put that on a t-shirt...

Lucky In OC

Chinese gov't is telling their citizens to stock up on gold and silver

http://seekingalpha.com/article/159962-c...
http://www.dailymarkets.com/contributor/...
http://www.bullionbullscanada.com/index....
http://etfdb.com/2009/gold-threatens-100...

"These actions are the latest indication that China has lost confidence in Western economies and is desperately trying to both protect its own gold reserves and encourage its citizens to diversify savings out of paper and into hard assets."

Quite a few good replies. So things to watch for are:
1. Fed rate (treasury rate) increase
2. Food price increase
3. Weakening US dollar
4. Political landscape change (conservative takes control)
5. Oil price increase
6. Company profit falls, layoff accelerates
7. Israel/Iran situation
8. Swine flu pandemic
9. Super comet hits the earth and kills at least half of the world population

I don't see how gold/silver price rises will affect US economy, maybe indirectly via the less purchase of US debt.

So does that pretty much summarize everyone's worry? Therefore, on the other hand, that if none of the above shit happens, the rally may continue?

I did notice that no one is saying that residential real estate market will have its bottom fall out pretty soon (or price will soon again decline sharply). That will be pretty unimaginable if I posted the question one year ago. The mood about the housing market seems have changed really fast.

Just watch the COT report and when the commercials get heavily short in the Naz or SP, exit.

All that other stuff is just noise with no direct consistent relationship to price movement in stocks

Simple

Do it, get me two, XL. I need a few more funny shirts to go with my "more cowbell" and "donger need food" mainstays.