where is the recession?

[stockstradr]

>> where is the recession?

My strategy for investing (or speculating!) can be summed this way:

An opportunity to make money exists when mass investor perception diverges markets significantly from the inevitable future conclusion of present and unfolding underlying economic conditions.

While the future is never truly certain, sometimes underlying market conditions all come together acting in concert to make a particular market future nearly certain

I want all of you to believe we are not in or near an economic recession. That will add to the mass mistaken perception that’s swinging financial markets at extreme, away from underlying economic fundamentals. That’s money in my pocket.

Rewind to October of last year. The S&P 500 had climbed up 25% in fifteen months, in blind optimism against a backdrop of the beginning collapse of one of the greatest real estate (and overall credit) bubbles of this century.

What is that? That my friends is opportunity, exceptional opportunity.

However, as the market climbed into Oct ’07, I saw I was down many tens of thousands on paper on bets I had previously accumulated, having expected the market would have already fallen by Oct. Do I dump and cut my losses? I admit I was rattled, but I steadied myself and objectively re-evaluated: is the market being irrational or AM I being irrational?

I concluded by rational analysis, and also by undeniable sense of the inevitable felt deep in my core: fundamental economic conditions were at total odds with market behavior, and a market correction was certain.

I did what I call “walking into the fire.”

As the market climb accelerated into Oct ’07, I tripled my short market bets, and added leverage in form of more PUTS.

You know how that played out. Zoom ahead: today we again have an S&P 500 that’s climbed up over 10% off the March bottoms where I dumped my shorts.

And again I find I’m down tens of thousands on new downside bets I had placed after the market had climbed back up “only” 5%.

This time I’m not even rattled. Got that déjà vu feeling? Last week with the market at 1400, I walked into the fire and bought more puts to open. Even if the S&P 500 goes straight up from here to 1500, I’ll just again double-down or triple-down my short bets because then the market will even be more at odds with economic reality.

This is easy money.

Now as for my short oil bets, I’m sure some forum hangers-on will remind me of that, but I never claimed short oil was a sure bet and I didn’t bet my chips like it was. I understood that move was a pure Vegas’ gamble. Some things are far from being easy money certain. Oil has moved up to $125, but I have never increased my short position beyond my initial bet. I’m not crazy.

[kewp]

This is easy money.

Not as easy as squeezing shorts from guys like you!

If you are gonna short, why not just buy one of the leveraged short ETF’s from ProShares? I made bank on SKF over the past year.

[kewp]

This is easy money.

Not as easy as squeezing shorts from guys like you!

If you are gonna short, why not just buy one of the leveraged short ETF’s from ProShares? I made bank on SKF over the past year.

[kewp]

This is easy money.

Not as easy as squeezing shorts from guys like you!

If you are gonna short, why not just buy one of the leveraged short ETF’s from ProShares? I made bank on SKF over the past year.

[kewp]

This is easy money.

Not as easy as squeezing shorts from guys like you!

If you are gonna short, why not just buy one of the leveraged short ETF’s from ProShares? I made bank on SKF over the past year.

[kewp]

This is easy money.

Not as easy as squeezing shorts from guys like you!

If you are gonna short, why not just buy one of the leveraged short ETF’s from ProShares? I made bank on SKF over the past year.

[LA_Renter]

If you were to go back to the recession in the early 90’s or 2002 you would still see packed parking lots and full restaurants. This is still S. California, there are alot of people here. This is strictly anecdotal.

I am in a sales management capacity with a commodity type product going into a variety of channels i.e industrial, service economy, energy/utilities and municipalities. Here is what I am seeing in regards to how these business are spending money, the numbers in the industrial, service and municipalities are soft. The service related businesses are getting hammered, that number is down 25%, I speak to my competitors on friendly basis and they confirm they are seeing the same thing. We are seeing layoffs in the industrial sector and that is a game of taking your competitors market share, my area has strong market share growth due to some aggressive initiatives and that number is about flat with last years numbers. The municipalities are ALL cutting back on expenditures, we are down 15% vs last year. The bright spot is energy and utilities, that segment is our saving grace we are up over 25% over last years shipments. All indications is that will continue through the balance of the year. There is a massive capital spend right now upgrading equipment at the refineries and related businesses.

With the exception of energy/utilites every single customer I talk to is hurting, commissions are down for sales people and the mood is sour. The first two weeks of shipments for May have been the weakest this year, hopefully that will rebound somewhat. This looks and feels like a recession to me, not a particularly bad one just yet but the last two weeks of shipments has me a little concerned.

[LA_Renter]

If you were to go back to the recession in the early 90’s or 2002 you would still see packed parking lots and full restaurants. This is still S. California, there are alot of people here. This is strictly anecdotal.

I am in a sales management capacity with a commodity type product going into a variety of channels i.e industrial, service economy, energy/utilities and municipalities. Here is what I am seeing in regards to how these business are spending money, the numbers in the industrial, service and municipalities are soft. The service related businesses are getting hammered, that number is down 25%, I speak to my competitors on friendly basis and they confirm they are seeing the same thing. We are seeing layoffs in the industrial sector and that is a game of taking your competitors market share, my area has strong market share growth due to some aggressive initiatives and that number is about flat with last years numbers. The municipalities are ALL cutting back on expenditures, we are down 15% vs last year. The bright spot is energy and utilities, that segment is our saving grace we are up over 25% over last years shipments. All indications is that will continue through the balance of the year. There is a massive capital spend right now upgrading equipment at the refineries and related businesses.

With the exception of energy/utilites every single customer I talk to is hurting, commissions are down for sales people and the mood is sour. The first two weeks of shipments for May have been the weakest this year, hopefully that will rebound somewhat. This looks and feels like a recession to me, not a particularly bad one just yet but the last two weeks of shipments has me a little concerned.

[LA_Renter]

If you were to go back to the recession in the early 90’s or 2002 you would still see packed parking lots and full restaurants. This is still S. California, there are alot of people here. This is strictly anecdotal.

I am in a sales management capacity with a commodity type product going into a variety of channels i.e industrial, service economy, energy/utilities and municipalities. Here is what I am seeing in regards to how these business are spending money, the numbers in the industrial, service and municipalities are soft. The service related businesses are getting hammered, that number is down 25%, I speak to my competitors on friendly basis and they confirm they are seeing the same thing. We are seeing layoffs in the industrial sector and that is a game of taking your competitors market share, my area has strong market share growth due to some aggressive initiatives and that number is about flat with last years numbers. The municipalities are ALL cutting back on expenditures, we are down 15% vs last year. The bright spot is energy and utilities, that segment is our saving grace we are up over 25% over last years shipments. All indications is that will continue through the balance of the year. There is a massive capital spend right now upgrading equipment at the refineries and related businesses.

With the exception of energy/utilites every single customer I talk to is hurting, commissions are down for sales people and the mood is sour. The first two weeks of shipments for May have been the weakest this year, hopefully that will rebound somewhat. This looks and feels like a recession to me, not a particularly bad one just yet but the last two weeks of shipments has me a little concerned.

[LA_Renter]

If you were to go back to the recession in the early 90’s or 2002 you would still see packed parking lots and full restaurants. This is still S. California, there are alot of people here. This is strictly anecdotal.

I am in a sales management capacity with a commodity type product going into a variety of channels i.e industrial, service economy, energy/utilities and municipalities. Here is what I am seeing in regards to how these business are spending money, the numbers in the industrial, service and municipalities are soft. The service related businesses are getting hammered, that number is down 25%, I speak to my competitors on friendly basis and they confirm they are seeing the same thing. We are seeing layoffs in the industrial sector and that is a game of taking your competitors market share, my area has strong market share growth due to some aggressive initiatives and that number is about flat with last years numbers. The municipalities are ALL cutting back on expenditures, we are down 15% vs last year. The bright spot is energy and utilities, that segment is our saving grace we are up over 25% over last years shipments. All indications is that will continue through the balance of the year. There is a massive capital spend right now upgrading equipment at the refineries and related businesses.

With the exception of energy/utilites every single customer I talk to is hurting, commissions are down for sales people and the mood is sour. The first two weeks of shipments for May have been the weakest this year, hopefully that will rebound somewhat. This looks and feels like a recession to me, not a particularly bad one just yet but the last two weeks of shipments has me a little concerned.

[LA_Renter]

If you were to go back to the recession in the early 90’s or 2002 you would still see packed parking lots and full restaurants. This is still S. California, there are alot of people here. This is strictly anecdotal.

I am in a sales management capacity with a commodity type product going into a variety of channels i.e industrial, service economy, energy/utilities and municipalities. Here is what I am seeing in regards to how these business are spending money, the numbers in the industrial, service and municipalities are soft. The service related businesses are getting hammered, that number is down 25%, I speak to my competitors on friendly basis and they confirm they are seeing the same thing. We are seeing layoffs in the industrial sector and that is a game of taking your competitors market share, my area has strong market share growth due to some aggressive initiatives and that number is about flat with last years numbers. The municipalities are ALL cutting back on expenditures, we are down 15% vs last year. The bright spot is energy and utilities, that segment is our saving grace we are up over 25% over last years shipments. All indications is that will continue through the balance of the year. There is a massive capital spend right now upgrading equipment at the refineries and related businesses.

With the exception of energy/utilites every single customer I talk to is hurting, commissions are down for sales people and the mood is sour. The first two weeks of shipments for May have been the weakest this year, hopefully that will rebound somewhat. This looks and feels like a recession to me, not a particularly bad one just yet but the last two weeks of shipments has me a little concerned.

[davelj]

In a metropolitan area as large and diverse as San Diego’s, the human eye is not going to pick up a recession looking at parking lots and restaurant crowds. Remember that in a recession unemployment might increase by 2-4 percentage points. You’re not going to “see” that. The economy might decline by a couple of percentage points per year. You’re not going to “see” that. But a business that has a 5% net profit margin and sees sales decline by 5% is going to “feel” that big time because their costs probably increased despite the decline in sales. As I often like to repeat here, “Everything important in economics happens ‘at the margin’.” The “margin” is not typically visible to the naked eye in terms of crowds, etc. But it shows up in the reported numbers, whether tax rolls, profits, etc.

One area that the naked eye does “see” the recession is in housing. The foreclosure signs, closed up mortgage/real estate offices, etc. are visible. That’s unusual. And it shows you just how bad things are eventually going to be.

[davelj]

In a metropolitan area as large and diverse as San Diego’s, the human eye is not going to pick up a recession looking at parking lots and restaurant crowds. Remember that in a recession unemployment might increase by 2-4 percentage points. You’re not going to “see” that. The economy might decline by a couple of percentage points per year. You’re not going to “see” that. But a business that has a 5% net profit margin and sees sales decline by 5% is going to “feel” that big time because their costs probably increased despite the decline in sales. As I often like to repeat here, “Everything important in economics happens ‘at the margin’.” The “margin” is not typically visible to the naked eye in terms of crowds, etc. But it shows up in the reported numbers, whether tax rolls, profits, etc.

One area that the naked eye does “see” the recession is in housing. The foreclosure signs, closed up mortgage/real estate offices, etc. are visible. That’s unusual. And it shows you just how bad things are eventually going to be.

[davelj]

In a metropolitan area as large and diverse as San Diego’s, the human eye is not going to pick up a recession looking at parking lots and restaurant crowds. Remember that in a recession unemployment might increase by 2-4 percentage points. You’re not going to “see” that. The economy might decline by a couple of percentage points per year. You’re not going to “see” that. But a business that has a 5% net profit margin and sees sales decline by 5% is going to “feel” that big time because their costs probably increased despite the decline in sales. As I often like to repeat here, “Everything important in economics happens ‘at the margin’.” The “margin” is not typically visible to the naked eye in terms of crowds, etc. But it shows up in the reported numbers, whether tax rolls, profits, etc.

One area that the naked eye does “see” the recession is in housing. The foreclosure signs, closed up mortgage/real estate offices, etc. are visible. That’s unusual. And it shows you just how bad things are eventually going to be.

[davelj]

In a metropolitan area as large and diverse as San Diego’s, the human eye is not going to pick up a recession looking at parking lots and restaurant crowds. Remember that in a recession unemployment might increase by 2-4 percentage points. You’re not going to “see” that. The economy might decline by a couple of percentage points per year. You’re not going to “see” that. But a business that has a 5% net profit margin and sees sales decline by 5% is going to “feel” that big time because their costs probably increased despite the decline in sales. As I often like to repeat here, “Everything important in economics happens ‘at the margin’.” The “margin” is not typically visible to the naked eye in terms of crowds, etc. But it shows up in the reported numbers, whether tax rolls, profits, etc.

One area that the naked eye does “see” the recession is in housing. The foreclosure signs, closed up mortgage/real estate offices, etc. are visible. That’s unusual. And it shows you just how bad things are eventually going to be.

[Author]

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