Some see Dow setting new high in 2005

For those who follow the stock market, I thought this was interesting.

http://story.news.yahoo.com/news?tmpl=story&cid=677&e=22&u=/usatoday/20050103/bs_usatoday/willdowrecordof1172298fallin05

That those who think it will reach new highs should contact me about lovely lake-front property I have for sale in New Mexico.

whether it's for sale or not, I don't know.....

But I'll put my money on it going either up or down - you're right on target, Bemildred!

But I will be very surprised if it goes sideways this year.
We live in interesting times.

Bush is printing money using the debt side of the ledger book. I cannot tell you when the hyper-inflation will hit, but I certify to you that it will come.

Do you think that Shrub is printing more $$, thus increasing supply? I know from basic economics about supply and demand, so theoretically shouldn't this further devalue the dollar?

Sounds even more like a credit card government mentality than I thought. Not that I'd expect different from a country so mired in debt they don't realize the consequences of future events which could affect their situations directly.

But he is creating money and increasing the supply nonetheless.

This may come as a surprise to you, but, when you borrow money from a bank, that money is created at the moment you sign the loan! When they loan you money, and they write you a check, they have loaned you money that they likely do not have. They *do* have an asset on the books to cover it, though; Your debt!

In a similar fashion, when Bush borrows 100 Billion Dollars (!) additional (!!) to fund this stupid, criminal, useless, dangerous war, he sells bonds to investors, and the investors write him a check, usually creating money in just the way a bank does. This is even worse from an economic point of view than simply printing money because you have to pay the debt back, eventually, and when you do you are nearly forced to print the money to do it unless you can fob the debt off onto another lender. Eventually the money inflates and cheapens the debt such that you can pay the national debt out of your pocket, but a loaf of bread costs a cool million.

I predict Bush will be blamed

Even at DU.

8000 Euros

On 10/2002 1 Euro = $1 USD
Today 1 Euro = $1.36 USD

"Hey, the market is gonna take off... come trade in your SS account for a piece of the action!* "

*brokerage fees will apply

Selling the market instead of products and services is how such big corporations managed to loose all their worker's investment/pension $$, end up filing for bankruptcies and basically going under AFTER CEOs and other high ranking management sold off most of their stock holdings while still touting them to others.

Same game, different pocket book targeted for theft this time around.

I just read yesterday that the US business community is planning on spending millions of dollars to frame the argument for reform. Contrasting this is 5 million dollars the AARP is spending to counter the privatization argument. I don't recall the amount business interests were planning on spending but I do remember the AARP's 5 million seemed like a paltry amount in comparison.

Thanks, havocmom, for reminding us what the US "news" media is really for!

We are talking US MEDIA here, as in the propaganda arm of major corporations. They really would like to get everyone pumped about investing in the market again. They need to overcome memories of financial injuries caused to less than well heeled investors by things like the collapse of ENRON and other giants who cooked books to LOOK good on paper so they could sell more PAPER.

I repeat, too many US corporations are more interested in selling stocks than they are in selling their products/services. That mean their real business is not widgets or whatever, but image. They market image and too often that is all illusion.

A lot of Americans lost a lot of $$ investing in companies who lied to make good stock ratings and sell more PAPER. The corporations have not suddenly become interested in product/service again. They are just looking for more ways to sell more PAPER. Since the neocon/corporate takeover of the government, they are wetting themselves at the thought of all the $$ set aside in SS. Wow, if they could get their hands on that, happy days here again, at least in board rooms and posh homes!

Would they try trickery and wistful reporting via their media henchmen to get the public interested in putting nest eggs in their tender, caring hands again? Oh, I think so. Would Wall Street play along with a ruse to get Social Security funds diverted to the private market, where all those Wall Street guys get commissions? Oh, they just might go along with the shell game.

There are a lot of rich bastards who have already stolen millions from workers/investors and would really love to have payroll taxes coming into their private coffers. Sure would save them a lot of time and energy. They will say/do anything to sway public sentiment. They own US MEDIA, and USA Today's endorsement of Kerry is not relevant.

somehow propoganda for major corporations.

I simply pointed out that the story posted above was a USAToday article and that the paper backed Kerry (who does not approve of privitization).

People on this board seem to LOVE conspiracy theories.

the sale of stock so they spend most time and effort on looking good on paper. No THEORY that many companies doing that end up in the toilet, taking investor $$ with them. It is no THEORY that they want MORE $$ invested.

There is no conspiracy and it is no theory. The way business has been, and continues to be, done of late is FACT.

IF someone does not swallow the pap you are trying to feed them, it does not make them a conspiracy theorist. Some folks just plain make good observations.

Why is it so important to you that we swallow MSM about market PREDICTIONS when those predictions come at a time the junta and the Corps are trying so hard to get us to take a SS poison pill? Why would we listne to the same MSM that beat the drums for war with Iraq and many other falacies which have done much damage to our nation and world?

If I do not agree with you, fine, attack my position, give facts and.or evidence of the error in my conclusions. When you throw down the gauntlet of inferring disagreement is conspiracy theory you are beating a whole different drum than constructive discourse and I shall take serious offense. I do not think I am alone in that little quirk about maintaining that we are allowed to disagree without being attacked as conspiracy theorists.

DEMS - generally open tent, open minded, not exclusive sort of political people. That's me.

Denigrating those who disagree with a position is not especially constructive and is a tactic we see used by other groups. Not especially constructive to use it here abouts.

The SS "deform" is intended to get another stock market bubble going,
like the 401k laws did, by pumping a bunch of fresh money into them.
But these points of view are not mutually exclusive, both are true,
first it sells the "deform" and then it drives a new bubble. And
of course, we love a good stock market bubble.

making the market look appealing to the average worker again.

That's exactly what I was thinking too

blow-up in 07-08. Of ocurse I've never purchased a stock in my life and never will.......lol. My guess is therefore worth what you paid for it, much like "professional" stock forecasting.

Interest rates will be much higher by years end, and the market will reflect that. My guess is that this is a huge bear trap in the making. I would be very cautious about investing in the market going forward.

not a great return -

but these are just models with more "ifs" than you can shake a stick at.

Based on History, slow and stable growth is rare - big ups and big downs are the norm.. Indeed 2004 was an abnormal year as the return fell into that 1% to 18% range that folks call stable!

And in Euro's, the market is so far behind the glorious Clinton days that I expect 8 years of Bush will mean 8 years of "dead money" -if we are lucky - "dead money" is that lovely street phrase for no earnings or growth in value so one has a reason for holding!

before Bush's first term?

Clearly, cash or it's equivalent would be king if interest rates rise. Real Estate on the other hand, is the "elephant" that is about to tip over and crush those beneath it. Anyone holding onto property they can't afford, especially with variable interest rates, had better think about what's about to happen. If you bought recently, hoping to take advantage of the "Booming" housing market, I have a '99 Dot Com stock to sell you for $100/Share.

REAL STUPID...

This happens every time the market gets overloaded with bullish sentiment, especially among day traders. They all get euphoric about the market and over do it, then are forced to sell when the rain starts to fall. I'm looking for strong support for real growth...

I would think a track record of accuracy might go a long way in validating this prediction. Otherwise, it's a wild guess.

Also, if the red ink republicans fail to put a lid on spending, and Iraq ends up being a long term budget line item, the federal gov't will start having to pay greater return on the bonds. So, as that upward pressure on bond rates happens, the risk premium in the market must increase, or the money all flows to to bonds. (It's what happened in the mid-80's. Only mergermania and arbitrage propped up prices.) If it doesn't, then bond rates will rise even higher, putting greater debt service on the federal gov't.

If it does, then the extra money flowing in will have the supply/demand effect of more cash chasing after the same investment value. But, since the value of an equity is tautalogically fixed as the (total outstanding shares x current market value), the market will rise, but only artificially, since nothing will actually be supporting those higher prices. (No rise in productivity, profitability, overall consumption, etc.)

So, a rise in the market is predictable for deficit spending periods, but not to the point where someone could pick a number, unless they have some special methodology. I didn't see anywhere in the article that the "experts" have a track record of being this precise.
The Professor

... in the secondary equities market. (I regard IPOs as the 'primary' market.) At least borrowed money (bonds, etc.) is actually expended on real needs. The Greater Fool equities market inflates market capitalization and increases the burden on labor to feed the beast. This is the 'investement' banking scam that's increasingly decoupling the circulation of equities from an acutal cash flow to enterprises. (I'd sure like to see consideration of a 1% sales tax on the secondary sale/exchange of stock.)


On edit: We're already seeing high P/E's ...

Alcoa: 19.23
AIG: 16.08
AmerExp: 21.13
Boeing: 14.97
CitiGroup: 15.39
Caterpillar: 17.75
DuPont: 22.72
Disney: 24.80
GE: 23.99
GM: 7.42 (!)
Home Depot: 19.51
Honeywell: 21.05
HP: 18.16
IBM: 20.78
Intel: 19.71
Johnson&Johnson: 20.64
JP Morgan: 18.07
Coca Cola: 21.96
Mickey D: 20.37
3M: 22.86
Altria: 13.16
Merck: 11.45
Microsoft: 36.26
Pfizer: 22.10
Procter&Gamble: 22.81
SBC: 13.59
United Tech: 19.09
Verizon: 18.89
Wal-Mart: 23.35
Exxon: 14.06

In my view, these P/E's are symptomatic of a saturated market for "blue chip" stocks. These are the Dow 30 Industrials ... not "growth" or speculative stocks. Such P/E's are probably harbingers of increased off-shoring. This isn't good, imho.

The numbers are fairly clear. One other negative factor in federal borrowing, however, is the reduction in venture capital for new technologies and start-up firms as the risk premium shrinks. Also, not a good long-term sign of economic robustness.

Your P/E numbers are evidence of equity inflation, absolutely. I think we're of like mind on this one. The index will rise, and won't represent a great deal of real growth of value.
The Professor

I'm anything but an economist, but I'm habitually analytical (as well as synthetical).

While I agree the impact exists, I'm not sure that federal borrowing has as large an impact on the availability of venture capital as it might have had in the past. While the secondary equities markets provide very, very little direct capitalization of enterprise (compared to dollar volume of trades or aggregate market capitalization), venture capitalist firms are one of those pathways, at least in the high tech sector like Silicon Valley. Their play is converting established equity positions into new venture positions. If they're successful 10% of the time, those successes more than pay for the 'failures.' I don't see them in the bond markets much at all.

I think the greatest immediate impact of federal borrowing is on state and local/municipal bond rates, on building loans and mortgages, and on car loans. (Consumer credit is now mostly off in its own Cloud Cuckoo Land.)

Much of this 'immediate' impact has been postponed - stored up like floodwaters behind a dam - where the Social Security Trust Fund is the dam. When the Trustees need to cash in those notes, the Treasury will be faced with compounded borrowing problems. They're not only going to have to borrow to cover then-current federal deficits but they're going to have to borrow to cover the refinancing of the debt being cashed in by the Social Security Trust. This is not a "Social Security" problem; it's a federal fiscal responsibility problem - like waters being released from the bottom of the dam at the same time it's still raining. The "flood zone" isn't prepared for it, and people are going to drown.

I think the "method to the madness" of the equities community in pushing the Bushoilini 'privatization' scheme is to capture a continuing supply of 'investment' cash from SS accounts when many/most of the capital-flush folks will begin to regard the bond markets as better deals due to the steadily increasing rates (flood waters). I'd be willing to bet that 'private accounts' will afford few if any bond fund options. I'm willing to bet they'll be almost solely equities market oriented.

The future taxpayers (our children) are going to take it in the ear. Big time. (Especially because corporations aren't going to be paying them very well as they attempt to sustain inflated capitalization.)

lying, of course! what did you think?

Inflation from the exponentially increasing debt will kill the economy. It sucks as it is, but it'll be horribly worse within the next few years. Oh well, it's not my fault; I voted for Gore and Kerry.

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The President can affect the budget, and this President is the worst ever and managing the budget. We went from record surplusses to record deficits in four years. That's amazingly poor budget skills. Now he's talking about "cutting the deficit in half." Wow! That means we'll still be adding tons of money to the national debt, but we'll be doing it at a slower pace. Gee, I'm impressed. I'm going to tell my wife that next year, I'm going to still buy tons of stuff with credit cards so we can pay for them later with interest, BUT, BUT, I'll just do it at a slower pace than this year!!! Woohoo!

And the explosion of the national debt -- primarily due to Reagan, Bush Sr. and W -- certainly can hurt the economy. And it will. So, Presidents can affect the economy with their fiscal policies.

But, anyway, welcome to DU! :hi:

The Federal Government factory town. The DC Metro area is virtually recession-proof. There's a huge employer in town that gives out generous pay and benefits, and you never have to worry about the factory re-locating overseas.

I'm making an unfortunate prediction that the housing industry will go BUST this year and millions of overpriced homes and homeowners will suffer as a result!!

are right now, and that will negatively effect the economy unless job growth is huge this year. Another weak jobs growth year and higher interest rates will lead to a crash.

stories about people predicting good economic news are so common they're boring, aside from being useless in understanding the economy.

beyond all possible recognition.

"Some see Enron as the business model to emulate"
"Some say the sky's the limit for WorldCom"
"Some see the dotcom boom as lasting forever"
"Some see Dow reaching 30,000 by the end of bu$h's first term"

How soon they forget. Must be a new generation of sheep out there.

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so it doesn't collapse as Boomers (except me) start drawing down.

also, more and more people are not dying of cholera.

And more plunder and more ability to screw the consumer and the worker. No oversight. Endless lies and theivery for those who wish to.

Coming soon.

Barring LIHOP #2 or the economic meltdown which is almost inevitable within the next decade once the baby Boomers start retiring, that might be the case.

The smell of Greedy Theft is in the air and everyone wants to get in.