I am still waiting KID for you to explain who got the money that the FED has put out there and who is going to have to give it back now that the easing is over? You told me I was wrong so can you explain it to us. I didn't get the money and no one I know got the money. Did you get the money? If the banks got the money they are going to have to give it back. That means they will have to sell something. Last time the banks had this problem their money was tied up in the mortgage market. Now the money is in the stock market. Maybe you can explain how this is going to end. The FED has never done this before so I do not know. You like to bring a lot of humor to this site but losing your money is not funny. This bull has been going on for 5 years. Do you think it will go on forever? Jim Cramer mention this morning that the monetary crisis is temporary. The problem is all these markets are tied together and whatever one of them does effects other markets. Jim say he has seen this before but he has never seen what the FED has done before. The FED has never done this program before. Can you give us a little assurance that everything will be OK?
Biker, while I enjoy the repartee between you & Kid on most all topics, I've got to say that if Kid or anyone else knew how all of this is going to play out, they should either be running the Fed, or they should keep their mouth shut and use that certainty to make a killing.
The bankers got the money (how many billions or trillions? HUGE PILES, anyway) to fix their balance sheets and they did so, and their bonus payments too (a whole different rant, I won't go there on this post). Lending to get the economy moving again trickled down upon us slowly, it seems. So will we all get rich now that the bankers have had their fill at the trough? Doh ... do bankers ever have their fill at the trough?
The market in general will go back down, eventually, and it will go back up then too. How far down? How soon? How long down? You presume tomorrow; it started on Friday in fact. Well the last five days makes it look like you're right. But the next five days may shift the other way, or may confirm the prior five. IF I look at the last five YEARS, we're still frothy (to use a technical term that a Fed Governor might use), but we're also in a slowly recovering US economy. I can remember the 1st time the DOW hit 1,000. OH MY, they were predicting DJIA= 20,000 in the near future, and that was back in the early 1980s, I think. The DOW next hit 1000, what, 10 years later! Long term two things are fairly constant: The market will go UP and we'll all be dead.
Now that I've given all the easy answers, let's see if Kid tackles the hard ones. ;)
You seem to realize the banks got the money but when I posted this KID told me I was wrong. I don't know who KID thinks got the money but I was hoping he could explain this to us. Think we will have to wait until the market starts up again before we hear from KID. He only likes to come out when the market is going up. One thing for sure the banks will have to sell something to get the money to pay back the FED unless KID is right and someone else has the money. Hoping KID can explain this.
I just took a look at the data, BIK; (Yahoo DJIA max graph, Jan value from 1992 to 2014). 22 periods, I looked at year over year average % change up or down. The average for the whole period was UP 9% year over year. FIVE Down periods, average down = -14.3%; 17 UP periods, average up = 15.9%. In any given year, max down = -36.8% ('08 to '09); max up = +40.4% ('95 to '96). There was one year at no change (up +0.01%, '04 to '05). We COULD see a down this year to make all of this look trivial, of course. Or we could see a long term average year, plus or minus 15%.
Harry Truman said: "Give me a one-handed economist! All my economists say, On the one hand on the other. " The following validate Truman:
According to the IMF, the quantitative easing policies undertaken by the central banks of the major developed countries since the beginning of the late-2000s financial crisis have contributed to the reduction in systemic risks following the bankruptcy of Lehman Brothers. The IMF states that the policies also contributed to the improvements in market confidence and the bottoming out of the recession in the G7 economies in the second half of 2009.
Economist Martin Feldstein argues that QE2 led to a rise in the stock market in the second half of 2010, which in turn contributed to increasing consumption and the strong performance of the US economy in late 2010. Former Federal Reserve Chairman Alan Greenspan calculated that as of July 2012, there was "very little impact on the economy." Federal Reserve Governor Jeremy Stein has said that measures of quantitive easing such as large-scale asset purchases "have played a significant role in supporting economic activity".
Guess you agree with me that the banks got the money so now they have to pay it back unless the FED changes it's policy. Don't know where the banks have their money invested but probably not much in housing. They can make more money playing the markets. Maybe in China, Turkey, Argentina, Europe,........only the banks know where the money is now. The FED wants it's money. I know everyone likes the fundamentals of UTX but all these stocks will look good at a market top. When the bears raid the brothel they take all the girls. They should have put these bankers in jail 5 years ago but they didn't so now we have to see the same old game again. I do not have much money in the market but this scares me. The FED already has the rate at Zero so that takes away much of what they can do. The real problem that needs to be solve is the top 1% have all the money. It is hard for people to buy things when they do not have any money. We need to change the rules so the top 1% do not have all the money and I am not sure they are willing to do that. The bankers have the politicians in their pocket. We have the best government money can buy and that is the problem. Hope it does not take a revolution to solve this problem. This will not bother you KID because you always make the right trade but others will loose their money.
I am predominantly a conservative Republican (Reagan type) . Harry Truman was a great President that had to make a very tough decision in pursuit of ending a horendous war. His choice saved millions of lives. He would be ashamed of the Democratic party today. He would be ashamed of both parties today. I support the 3 party system..........a party of Friday night, a party on Saturday night and a party on Sunday afternoon after church.
Kid, I tend to agree with the IMF folks. Without the QE stimulus (especially given the intransigence in the GOP) we might all be in bread lines today. I share Biker's (and others') concern that there is no long term free lunch.
I've long been a proponent of demographics being one of the key drivers of the economy. Right now, we've got the bulk of the boomer generation trying to save like mad for their retirement, and the boomers' kids in the household formation stage, consuming heavily if they can do so. That boomer pig-through-the-python is not yet ready to be excreted; so investment demand will remain strong for another X years (x being an unknown, but let's say X is also the roman 10). Decent economic fundamentals, probable strong product demand (and in this discussion the product is equities and other investment options) indicate that we'll see an ongoing equities growth for some years to come.
IF I were full retired and forced to live out my existance on what I have TODAY, I'd likely be less bullish.
CTB, the two-handed thinker ;)