We are at 87% bullish sentiment levels - it's time to unload equities.
The future does not bode well. You decide. Report from Deutsche Bank.
Posted Aug 20, 2009 11:15am EDT by Peter Gorenstein
Related: XHB, TOL, LEN, KBH, DHI, PHM
Karen Weaver of Deutsche Bank startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they'll owe more on their mortgages than their houses were worth).
Half of mortgage holders means about one-third of American households.
Aside from the mega-bummer of owing the bank more than your house is worth, underwater mortgages exacerbate another problem: foreclosures. In previous housing busts, being underwater led to a greater likelihood of default, and Weaver believes this the foreclosure problem will be much worse this time around.
In a recent report, Weaver analyzed all the various kinds of mortgages in the US and estimated that 48% of them would be underwater by 2011. This includes "prime" borrowers, of whom a startling 41% will be underwater.
>>>U6 Category- is the real unemployment number<<<
Only if by "real" you mean:
1. Different from the standard we have used since the 1940's
2. Different than the standard used by every industrialized economy, including us, Canada, the entire EU, Australia, NZ, Japan, etc.
3. Different from the accepted International Labor Organization Standard.
<The center of my argument was not to follow those who appear to have a future sighting ala "technicians" or Bob Prechter.>
See Below. At a minimum I provided some logic by combining Prechter thoughts and economic woes/challenges faced by not ONLY our Nation but every major country globally.
Re: Bob Prechter "Quite Sure" Next Wave Down Will Be Bigger and March Lows Will Break 19-Aug-09 03:34 pm
It's not just looking at one man's opinion and approach. One needs to include the current and future economic situation.
The current stock market of plus 50% doesn't reflect the current and future economic reality of our nation.
1) Real Unemployment is 20% not the rate the media reports as it doesnt include those who tapped out their EI Benefits.
Organization's are still shedding workers. More consolidation will occur as firm's in strong leadership positions purchase weaker ones due to low valuation.
2) The fed has pumped trillions of dollars and this hasn't translated to real jobs and GDP productivity. For every dollar spent did they get $1 in return? Not even close.
3) Who will pay for this massive FED Deficit? you, I and our children for many generations through taxes on already cash strapped and overleveraged consumer.
4) The past 10 years economic output GDP and stock, commodity and Real Estate markets was fueled by cheap credit - overleveraged consumers and organizations. But average real incomes have fallen over 10 years. Do you really believe that the next 10 years of GDP will mirror or exceed the past?
5) The next tranche of sub-prime mortgages is up for renewal. More foreclusres.
6) US Banks are not out of the woods yet. Commercial RE is the next explosion waiting to happen.
7) East European Banks are in a fragile state and ready to topple. This has inter banking lending reprocussions that will ripple across the globe and hit US Banks.
8) Our manufacturing and service jobs are continually being outsourced to India and China.
Where does one see optimism? 1-2 month macro stats doesn't make a trend.
U6 Category- is the real unemployment number and that is still understated.
IMHO Working at Starbucks or Burger King or Retail part-time isn't considered a real full time employment after depleting EI benefits and giving up finding a real full time job with benefits.
>>>Do you believe everything you read and not understand how the stats are calculated?<<<
Bob, you seem to be confused. I understand exactly how the UE rate is calculated...you were the one claiming it doesn't include people who aren't collecting benefits, and your telling me I need to understand the underlying calculations?!?!?
Bob, a few hours ago "doc_madbezos" posted a helpful wikipedia link about Prechter. Open the link and then scroll down to (Show) "Criticisms" and you will find some of Prechter's failures listed there.
One needs to understand underlying calculations and variables of the statss. What's included and not included and how much weight is put on the variables.
Do you believe everything you read and not understand how the stats are calculated?
This applies to any research or stat.