Stock market today

[spdrun]

DOW -318
NASDAQ -90
SPX -38

Emerging markets were a cause for concern that was broached, but not seriously worried about — looks like they may be the next source of instability. Will the Fed keep the QE3 spigots open on the 28th in order to soothe the anxiety, or go ahead with a $10B cut as likely intended?

[ucodegen]

The Fed seems to be intent on re-inflating the real-estate ‘bubble’. Wages have not gone up significantly, unemployment rate is understating employment(those who are unemployed past 6mos are not counted), underemployment may be significant, yet we are getting increases in RE prices approaching 25% annually. I wouldn’t call this ‘healthy’.

I think they are going to probe the market response with a statement that they ‘may’ continue QE for another quarter to prevent softening of the market. If the market responds upwards with this statement, they will delay easing QE. If the market responds with a drop – can’t predict but suspect they may ease off, though not as aggressively as planned (not that the reduction is really that significant in light of how much money has been ‘stuffed’ into the market). The only real ‘inflation’ I have been seeing is in RE and food prices (in that order).

–at least this is what my tea leaves are telling me. Swirl the cup again and they may read differently.

[spdrun]

*Were* getting property price increases. And by “we” you mean San Diego and possibly some other Western cities. National average was more like 10-12%, with increases of maybe 1-5% in the Northeast.

[joec]

Yay, stocks are are down a “mere” 3% now? Seriously, would like a drop of 20%+ personally…

Course, I am not fully invested yet and have been waiting for a larger pull back.

[Coronita]

I wish the price of a porsche 911s would go down…

[paramount]

Harry Dent: Market will top out this spring, followed by a 6 year bear market. Dow could go to 5k.

But then he also stated dow 40k by 2008.

I’m hearing that emerging market currencies are falling hard against the dollar – not sure what that all means.

[an]

DOW to 5K will mean recession worse than what we saw recently. Which means we’ll see housing price < than what we saw this last bottom and unemployment >10%. Yeah, that’ll be fun.

[spdrun]

Negatory on the unemployment being fun, but if housing prices fall to the last bottom, it would be a good opportunity. At this point, we have mechanisms in place to prevent foreclosure for bona fide owner occupants, so I don’t think it will be as rough as 2008.

[an]

[quote=spdrun]Negatory on the unemployment being fun, but if housing prices fall to the last bottom, it would be a good opportunity. At this point, we have mechanisms in place to prevent foreclosure for bona fide owner occupants, so I don’t think it will be as rough as 2008.[/quote]I guess sarcasm doesn’t work well over the internet. It’s all inter-related. You can’t have a massing housing price crash without a great recession/depression. If you have great recession/depression, you’ll have high unemployment. You can’t have housing price crash if all the home owners get to stay in their house for free and not be evicted.

[spdrun]

Someone will always want to buy or sell. If $numberofwillingbuyers < $numberofsellers by a large margin, then prices go down. Last spring's mini-bubble had as much to do with a buyers' frenzy as with restricted inventory. Market slows down, economy slows down, buyers will set on their hands and ask whether it's a good idea to buy now.

[an]

[quote=spdrun]Someone will always want to buy or sell. If $numberofwillingbuyers < $numberofsellers by a large margin, then prices go down. Last spring's mini-bubble had as much to do with a buyers' frenzy as with restricted inventory. Market slows down, economy slows down, buyers will set on their hands and ask whether it's a good idea to buy now.[/quote]People don't sell unless they can buy another. People can't buy if they don't have a job. People don't sell if they're underwater. They won't sell if they have no equity to help them buy their next house. So, you'll never have # of sellers > # of buyers, if you have people able to stay in their houses for free. We’ve seen that happen recently.

[spdrun]

People do sell short. People also move, don’t want to be bothered, etc.

If Watt pushes through principle forgiveness, we may end up with a lot fewer people underwater even if prices drop. Those would become normal, non-short, equity sales after they get principle (vs rate-and-term) mods.

[CA renter]

[quote=AN]DOW to 5K will mean recession worse than what we saw recently. Which means we’ll see housing price < than what we saw this last bottom and unemployment >10%. Yeah, that’ll be fun.[/quote]

Not fun, but entirely possible, IMHO. This is why the reflation of the credit bubble was such a bad idea. They encouraged even more speculation, which was the problem in the first place.

Should have let things settle back to normal after 2008, save for some real jobs programs, infrastructure, and energy-related spending. We were almost there, but then they goosed everything back to bubble levels again. Now, we have even more debt than we would have if they had let things fall, and we are in an even weaker position because people have been dealing with declining wages and using up their savings for so many years. Best to get bad things over with quickly instead of prolonging them for years or decades.

IMHO, we are going to be in a deep recession by 2016/2017.

[livinincali]

[quote=AN]People don’t sell unless they can buy another. People can’t buy if they don’t have a job. People don’t sell if they’re underwater. They won’t sell if they have no equity to help them buy their next house. So, you’ll never have # of sellers > # of buyers, if you have people able to stay in their houses for free. We’ve seen that happen recently.[/quote]

What about the real estate investors/speculators that bought with all cash. Can they sell?

[livinincali]

[quote=CA renter][quote=AN]DOW to 5K will mean recession worse than what we saw recently. Which means we’ll see housing price < than what we saw this last bottom and unemployment >10%. Yeah, that’ll be fun.[/quote]

Not fun, but entirely possible, IMHO. This is why the reflation of the credit bubble was such a bad idea. They encouraged even more speculation, which was the problem in the first place.

Should have let things settle back to normal after 2008, save for some real jobs programs, infrastructure, and energy-related spending. We were almost there, but then they goosed everything back to bubble levels again. Now, we have even more debt than we would have if they had let things fall, and we are in an even weaker position because people have been dealing with declining wages and using up their savings for so many years. Best to get bad things over with quickly instead of prolonging them for years or decades.

IMHO, we are going to be in a deep recession by 2016/2017.[/quote]

I tend to agree but I personally think the main street sector of the economy won’t be much worse off than if currently is if the stock market bubble pops. This time around the bubble isn’t employing many people (i.e. why the recovery has been so weak so far).

[Author]

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