The next tipping point

[carlsbadworker]

I just want to brainstorm with all the stock market and real-estate market bears here. With the DOW ready to challenge the 10,000 again sometime this year, I want to prepare for an exit strategy in the equity market. But I don’t know what will be the early sign of the bottom falling out on this economy?

I thought about a few, but none of them seems likely at the moment right now:

1. A quick rise in interest rate
I was rooting for this scenario before primarily on the condition that the Chinese economy will recover before the US and they will stop purchase US treasury debt. Their GDP did recover lately above 8% along with the rest of Asia economy. But do we see a sharp rise in treasury yield? No! And if you pay attention to the Chinese government media, they actually have split personality right now. One day they will cut lending to curb potential asset/equity inflation, the second day they will do all they can to support the GDP growth. With the Chinese still pile in the worthless greenback, I don’t see how there will be a sharp rise in interest rate.

2. Commercial RE crash
I heard a lot about it. But I still have not seen a lot of evidence that it impacts the lending of the banks, let alone threathens their solvency.

3. The stimulus ends
Well, that’s a nice wish, but will it ever happen with this government and this congress? Given all the government beaurocracy, I bet the bulk of the stimulus will not have even started when the economy recovers. Since this time around, Obama didn’t send out an one-time stimulus check. Why would the stimulus ever dwindle down sharply apart from the Cash-for-Clunker program?

4. The quick fall of dollar
This is related with 1. Also, the forecast is that because of the mass stimulus program around the world, the EU and many other developed economy will actually recover at the same time as the US (the first time in several decades) from the recession. So the currency market should be relatively stable.

5. The $100 oil
The commodity market (not only oil) certainly still has a tight supply. But anyone really thinks $100 oil is here again with 10% unemployment rate?

Anyway, I am running out of idea to find the next tipping point. What is your take on it?

[moneymaker]

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.

[moneymaker]

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.

[moneymaker]

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.

[moneymaker]

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.

[moneymaker]

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.

[Eugene]

#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.

[Eugene]

#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.

[Eugene]

#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.

[Eugene]

#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.

[Eugene]

#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.

[socrattt]

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.

[socrattt]

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.

[socrattt]

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.

[socrattt]

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.

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