This is my “call.”
I can give you a dozen “reasons,” including:
+ Bernanke’s depressing speech.
+ Michael Panzer’s five more years of pain in housing.
+ Cramer intoning a list of improvements he’d like to see before things perk up — few of which are likely to happen.
+ Second mortgage misery. Almost 40% of homeowners, says the Wall Street Journal, who took out second mortgages-extracting cash from their residences to cover everything from vacations to medical bills-are now underwater on their loans.
+ Meredith Whitney on CNBC this morning talking about muni bond problems. Gruesome. She’s sticking with her old forecast of big defaults and even more firings. Municipalities and states employ 15% of us.
+ Carl Icahn’s statement on CNBC yesterday, “There could be a another mjaor problem. Will it happen next week, next year? Certainly nobody knows. I don’t think the system is working properly.”
+ Lousy unemployment that refuses to improve. Few are hiring.
+ Obvious stuff — From the Wall Street Journal’s article, “The Economy is Worse Than You Think,” The picture is even gloomier if we look in more detail. Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009.
+ No serious stimulus projects from Washington — Remember cash for clunkers, the home buyer credit? Yuch.
You get the idea. It doesn’t feel good out there — with one exception — Internet startups. (More tomorrow.)
My friends in money management are confused and following Todd’s Rule “When in doubt, stay out.”
They see no persuasive reason to buy. Their enthusiasm is lacking.
These ridiculous retail stores. Home Depot offered me a 10% discount on my checkout if I opened an account with them. I did. I’ll pay if off quickly. I won’t get zapped for any interest charges.
Most retail stores offer their own credit card. It’s madness. But, heck, it’s a free discount.
What happened to American Declaration of War? Read George Friedman’s (of Stratfor) latest well-done piece. Click here.
Favorite recent New Yorker cartoons. For our amusement in today’s squirrely world.
Harry Newton’s In Search Of The Perfect Investment says assess your equities. Dump most of them. This is going to be a rough ride down.
Yes, indeed, the bad news is accelerating Harry. It's the “Cockroach Theory” in action- for every piece of bad news that you actually see, a thousand more are in hiding. I wouldn't be comfortable investing in this economy at current prices.
Harry
These are the most comments I have seen from one of your columns. I will chime in. I too agree that Washington's policies and actions are helping the destruction of the economy. But alot of the problems were put in place first during Clinton's administration and especially during Bush's. Regardless of your political leanings, it's impossible not to acknowledge the Draconian role of the federal and state governments in businesses decline. And from my cheap seats in middle America, it is getting much worse much faster. Obama is delusional if he doesn't realize the long term problems he is creating. I am discouraged about the future for the first time in my life.
Philip
Harry, now Wall Street and the Media are recoginizing what the rest of us on “main street” have known for some time…that Obama's policies suck, his staff sucks and his ideas suck….there exist “No Hope and Change only for the Worse”…….Weiner stays because he's a democrat…..and it looks gloomy in equities…..now, isn't this the time to begin to look at the market…?…When the outlook is gloomy, then its an opportunity …..My cash reserves are looking now for “entry” points into sound companies….!! Your cartoons are great….David
Yes, your logic on buying when things are at the worst and blood is flowing makes sense. But it's a bit premature, don't you think? We have more to fall.
Rip1rock….the Media will do everything they can to prop up Obama for the remainder of his presidency. If you don't understand that then you don't completely understand the US media. Take Harry for instance, he laughs at the thought of a dominate liberal media…..don't you Harry?
There is an awful lot of gloom and doom right now- which would normally be a good contra- indicator to get back into the market. But not this time. Fundamentals are terrible. To say America is in a long term recession would be optimistic.
And with the amount that the stock market has risen in the last 2 years (due largely to QE2 and other government money pumped into Wall Street), stocks are over valued. Stocks are priced for perfection right now. And economic perfection we definitely don't have.
Eventually, prices will be low enough that you'll be able to pick up quality dividend stocks at a good price. But not at today's prices.
Harry, Maybe it's time for Obama to remind all of us Americans of his “Hope and Change” philosophy? By the way, I was just wondering, does “Hope and Change” also apply to Foreign Policy?…..Their's a rumor floating around that Robert Rubin was spotted walking around on the upper west side, any truth to this Harry? Anthony Weiner calling Bill Clinton for advice….priceless! Please congressmen Weiner don't resign, this is way to much fun.
Jon Stewart's Daily show has been making relentless fun of Weiner. Great material for comedians.
Harry……just remember Jon Stewart is a comedian, the same way Sean Penn is an actor. But Alec Baldwin he's so smart he's not only an actor but hopefully someday the new Mayor of NYC……wouldn't that be special, he's really a man's man….what a great guy….and stable too!
Municipal sales tax receipts are running ahead of projections.
Real Estate tax revenues have already taken the brunt of the hit, and will bump along the bottom. More foreclosures would actually be bullish for revenues, as the banks sell the properties and back taxes are collected. Muni outlook not as dire as last Fall…
Your call to get out, while ultimately correct, will likely bottom tick the current drop in equities. Folks wanting to get out should get a multi-day rally to do so…Way too oversold.
It is oversold.
bluewingcap…..I agree with your assessment but when you say…..”More foreclosures would actually be bullish for revenues, as the banks sell the properties and back taxes are collected.”………then I must counter by saying with the bank stocks getting hammered recently the last thing they want to do is accelerate any foreclosures and therefore expose their balance sheets. But eventually you will be correct…….they'll have no choice, and I still believe commercial real estate is going to be quite uglier than people currently perceive.
I agree with your placement on the cycle and your last two sentences in the post script.
Times are tough and getting tougher, I worry about civil unrest this summer. I keep remembering the pictures of Egypt—young men that have been unemployed for a long time—-then I look at our employment numbers ???
Jim, I'm sensing a little fear in you comment, do you really believe civil unrest is possible here in America? I wonder why gun and ammo sales have skyrocketed since Nov 2008? Jim, imagine being Sarah Palin cruising around the country giving speech after speech all the while the “liberal media” doing everything they can to vanquish her. I'm sure she's not at all concerned for her life.
HARRY – YOUR CALL -“IT'S TIME TO GET OUT OF MOST EQUTIES”. So what does that mean for your daily “stocks we like” chart featured on your website. Are you getting out of most of them?
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