OT: 2015 Recession?

[Coronita]

Bump…

I think the drunken stupor party over isn’t. It might be just starting… I wonder what Europe will do… Seems to me it’s going to force their hand….

http://americasmarkets.usatoday.com/2014/10/31/japan-pension-fund-ups-stocks-slice-in-investment-pie/

The Bank of Japan’s surprise move to boost its stimulus programs wasn’t the only news out of Tokyo to propel global stock prices higher. A giant Japanese pension fund also gave bulls reason to cheer when it said it plans to amp up its stock holdings.

The BoJ’s unexpected decision to fight deflation by mounting a more aggressive stimulus program, via bigger purchases of government bonds and purchases of stocks via exchange traded funds and real estate investment trusts, got most of the credit for today’s stock rally. A decision by Japan’s big pension fund to buy more stocks and less bonds amounted to what Citigroup calls a “double shock” of bullish news for global markets.

“The Bank of Japan and the Government Pension Investment Fund (GPIF) surprised markets,” Citigroup’s Asia Pacific investment strategist Ken Peng and Steven Wieting, the firm’s global chief investment strategist, told clients in a research note.

Indeed the double whammy of “additional significant monetary stimulus” — the BoJ increased its asset purchase targets by 64% — and a “major shift in asset allocation towards higher-risk assets” by GPIF sparked a big rally around the world and on Wall Street.

The reason: the BoJ’s additional stimulus is viewed as an economic positive, while the GPIF’s decision to up its stock holdings means there’s a new big buyer of stocks, which creates fresh demand for stocks. The GPIF manages 127 trillion yen, which equates to $1.13 trillion U.S. dollars.

Indeed, the big pension fund’s decision to double its target of stock holdings was also a boon for stock market sentiment.

The pension fund plans on doubling its holdings in both Japanese and foreign stocks, which would increase its total stock allocation to 50%, from 25%. A 50% stock allocation equates to roughly $565 billion U.S. dollars in buying power. See chart below for the new allocations, which include bigger helpings of stocks and smaller helpings of bonds. Pension funds like the GPIF, need bigger returns to meet their obligations.

[FlyerInHi]

I wonder about housing in San Diego. I’m shopping a fashion valley this morning. And I was disappointed to see tha crate and barrel and z gallerie are now closed. Are people not buying in San diego?

[spdrun]

Retail is a hard business to be in. Locations close, open, and move all of the time. Not a sign of anything ominous, necessarily.

[FlyerInHi]

I think furniture retail goes where’s there housing growth.
Hard to believe that all of San Diego cannot support a z gallerie store. I guess exciting homeowners don’t buy.

There’s one at Dos Lagos in riverside county where construction has resumed.

[The-Shoveler]

[quote=flu]

I think the drunken stupor party over isn’t. It might be just starting… I wonder what Europe will do… Seems to me it’s going to force their hand….

[/quote]

I would agree with this, the party just moved on to the next bar down the road (not likely to end any time soon IMO as well).

IMO they are not building near enough homes in SD so a large decline is just not likely.

marginal buyers with little to nothing down, not happening.

[poorgradstudent]

[quote=spdrun]Retail is a hard business to be in. Locations close, open, and move all of the time. Not a sign of anything ominous, necessarily.[/quote]

Mall stores are also struggling all around as part of a long term trend. Malls still get tons of foot traffic around the Holidays… and very little otherwise.

I’m personally slightly sad to hear about the Fashion Valley C&B closing only because my wife and I did one of our wedding registries there.

[FlyerInHi]

I find malls fascinating. They reflect our culture. I like to walk malls and shopping streets just to observe and window shop.

Lifestyles centers is what it’s all about these days. Restaurants that provide good value for the money and large portions are a big hit. People cook at home less. Also fast casual like Chipotle.

Downtown Summerlin just opened in Vegas (UTC like but new). I enjoyed walking around there recently and looking at the uses of LED lights. I think that LED will lead to a revolution in urban lighting, like neon did decades back.

[The-Shoveler]

Dang!, QCOM misses, down hard after hours.

Seems like SD housing always follows QCOM’s stock chart LOL. We will see.

[joec]

Generally, I tend to think it’s not as gloom as doom as some of the other posters here, but the idea that the Bank of Japan is just going to throw money at stocks to stimulate the economy sounds a bit strange/scary…

If earnings collapse or slow and governments are buying in “just because”, it seems like this is a last gasp of the market.

There’s no reason to buy, just that the government needs to buy to make the price go up higher…seems like pushing on a string/trying too hard.

[CA renter]

[quote=joec]Generally, I tend to think it’s not as gloom as doom as some of the other posters here, but the idea that the Bank of Japan is just going to throw money at stocks to stimulate the economy sounds a bit strange/scary…

If earnings collapse or slow and governments are buying in “just because”, it seems like this is a last gasp of the market.

There’s no reason to buy, just that the government needs to buy to make the price go up higher…seems like pushing on a string/trying too hard.[/quote]

But this is exactly what we’ve been doing over here for years, whether directly or indirectly. How much of our “growth” in recent years is simply due to the Fed’s machinations? I would argue that most of it is, in one way or another. And, yes, it is scary.

[spdrun]

BOJ increase in QE is a drop in the bucket compared to US QE. And it’s targeted to Japanese equities.

Draghi hath just spake. He’s promising a return to the ECB’s balance sheet of 2012 (big whoop). US stocks … flat. This is boring.

[FlyerInHi]

[quote=CA renter]
How much of our “growth” in recent years is simply due to the Fed’s machinations? I would argue that most of it is, in one way or another. And, yes, it is scary.[/quote]

What does it matter where the growth comes from? It’s people actually working, trading, doing commerce, exchanging money,… all productive activities.

[poorgradstudent]

[quote=joec]Generally, I tend to think it’s not as gloom as doom as some of the other posters here, but the idea that the Bank of Japan is just going to throw money at stocks to stimulate the economy sounds a bit strange/scary…

If earnings collapse or slow and governments are buying in “just because”, it seems like this is a last gasp of the market.

There’s no reason to buy, just that the government needs to buy to make the price go up higher…seems like pushing on a string/trying too hard.[/quote]

Japan’s local economy is weird. However a lot of their actions as of late are experimental and motivated more on politics than good policy.

By itself, BoJ can’t move the needle that much in the global marketplace. Japan has very different demographics than most of the world which can make their policies a little different, and their corporations have even more direct control of the government than ours do.

[poorgradstudent]

[quote=FlyerInHi][quote=CA renter]
How much of our “growth” in recent years is simply due to the Fed’s machinations? I would argue that most of it is, in one way or another. And, yes, it is scary.[/quote]

What does it matter where the growth comes from? It’s people actually working, trading, doing commerce, exchanging money,… all productive activities.[/quote]

The main area where GDP can be a bit misleading is military spending and activities. Some military spending is stimulative, but waging war is pretty costly. $1m spent on roads has more of a long term boost to an economy than $1m spent on tanks, although both contribute to the GDP equally.

Of course GDP is more of a snapshot than a picture of long term health or investment.

[CA renter]

[quote=poorgradstudent][quote=FlyerInHi][quote=CA renter]
How much of our “growth” in recent years is simply due to the Fed’s machinations? I would argue that most of it is, in one way or another. And, yes, it is scary.[/quote]

What does it matter where the growth comes from? It’s people actually working, trading, doing commerce, exchanging money,… all productive activities.[/quote]

The main area where GDP can be a bit misleading is military spending and activities. Some military spending is stimulative, but waging war is pretty costly. $1m spent on roads has more of a long term boost to an economy than $1m spent on tanks, although both contribute to the GDP equally.

Of course GDP is more of a snapshot than a picture of long term health or investment.[/quote]

Very true, poorgradstudent.

It matters very much where growth comes from, how it’s financed, and what the long-term effects of this growth will be. Saying that it doesn’t matter is like saying that taking on debt for consumption is equal to taking on debt for productive uses, like capital expenditures. One paves the way for true growth going forward , and the other almost guarantees lower growth going forward as that debt has to be paid off and there is no income stream to support it.

It’s like saying that speculative investment (buying up existing assets in the hope that prices will rise) is as valuable as investing in start-ups or companies that want to expand. They are NOT the same thing; one is zero-sum, and the other expands the economy. Too few people know this distinction, and we call both of these things “investing,” even though one can be very destructive because it causes damaging booms and busts.

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