[Buggy]

$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('DantesPeak', 'U')nlimited new cash, plus unlimited deposit insurance, plus unlimited guarantee of interbank lending (not yet all annnounced everywhere, but likely).

[DantesPeak]

$this->bbcode_second_pass_quote('seldom_seen', 'H')ere's a question I have for a day like today where the government goes in and buys up a bunch of stocks to pump the market. If the govt realizes a loss on this stock purchase, obviously that's written off to the taxpayer.

What if though the government actually makes a profit? Does that profit go directly to the banks? Or does Hank Paulson just keep that as a bonus?

[nobodypanic]

$this->bbcode_second_pass_quote('Buggy', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('DantesPeak', 'U')nlimited new cash, plus unlimited deposit insurance, plus unlimited guarantee of interbank lending (not yet all annnounced everywhere, but likely).

[Micki]

I started calling for a relief rally...was it mid-last week?
I even walked my talk. I went long on ASX index and got stopped out on Thu but got back in Friday and it is looking nice.
Stops need to be set carefully now as a retest of lows is on the cards (and given that there is some distance to my entry, I can put the stop slightly on the positive side) until we had at least a minor pullback confirming that it won't fall for now. I am sticking my chin out and state I expect a multi-month relief rally, which may be interupted a number of times but I expect we'll be higher a few months from now than we are now.

I real terms I am not expecting new highs and maybe not even in nominal terms.

Let's see how it goes.

[Buggy]

[/quote]
except you won't, will you? which makes your entire argument more than just 'some' tounge in cheek. [/quote]

I suppose you're right. But that does not negate the millions on welfare who already have.

[DantesPeak]

$this->bbcode_second_pass_quote('Micki', 'I') started calling for a relief rally...was it mid-last week?
I even walked my talk. I went long on ASX index and got stopped out on Thu but got back in Friday and it is looking nice.
Stops need to be set carefully now as a retest of lows is on the cards (and given that there is some distance to my entry, I can put the stop slightly on the positive side) until we had at least a minor pullback confirming that it won't fall for now. I am sticking my chin out and state I expect a multi-month relief rally, which may be interupted a number of times but I expect we'll be higher a few months from now than we are now.

I real terms I am not expecting new highs and maybe not even in nominal terms.

Let's see how it goes.

[seldom_seen]

$this->bbcode_second_pass_quote('DantesPeak', 'T')here is no bonus program for government employees based on trading.

[nobodypanic]

$this->bbcode_second_pass_quote('Buggy', ' ')
I suppose you're right. But that does not negate the millions on welfare who already have.

[seldom_seen]

$this->bbcode_second_pass_quote('DantesPeak', 'W')ithout any major bankruptcies, the rally could last up to two months. Granted there will also be sharp falloffs, as it is quite likely at least some hedge funds are bankrupt and some companies probably also have huge losses from Lehman, etc., yet to be disclosed.

It's too early to guess what will happen in 2009.

[Sixstrings]

$this->bbcode_second_pass_quote('', 'V')irtual money is the Bomb!!!!! I am presently calculating when I too will begin receiving my share of the virtual money train. Then I can stop going to work and just buy buy buy!!!!

[Revi]

Everything was at peak value late last year. Now everything is worth about half of what it was. Stocks, PM's, oil, houses, cars and lots of other things.

I think a little rally is in order.

Stocks can go up a bit, oil will be dragged along behind, precious metals may even benefit.

For a little while.

Maybe for a month or two.

Happy days are here again. Or are they?

[Snowrunner]

I think this rally will last until the next round of bad news starts and then it will all go down again.

The belief right now seems to be now that everybody is on board it can only succeed. I still don't see that.

It would be interesting to see in the markets who was buying today and what they have done in the past, I am guessing this would not be a very promising view :/

[drgoodword]

As long as the housing market in the U.S. and internationally is still correcting, a signficant amount of the money being poured into banks will evaporate with failing mortgage assets (both mortgages and MBS).

And now we have a consumer-led recession where the consumer has lost a great deal of wealth in the housing and stock crash, and is so spooked that he is even borrowing less for the first time in years.

Bear market volatility superspikes aside, we will continue our deflationist descent in GDP and almost all markets for many, many months.

(Then we hit the backside of the oil depletion curve...and there's plenty of threads on this site describing that journey.)

[Buggy]

$this->bbcode_second_pass_quote('Sixstrings', '')$this->bbcode_second_pass_quote('', 'V')irtual money is the Bomb!!!!! I am presently calculating when I too will begin receiving my share of the virtual money train. Then I can stop going to work and just buy buy buy!!!!

[Buggy]

$this->bbcode_second_pass_quote('drgoodword', 'B')ear market volatility superspikes aside, we will continue our deflationist descent in GDP and almost all markets for many, many months.

(Then we hit the backside of the oil depletion curve...and there's plenty of threads on this site describing that journey.)

[firestarter]

This is a global coordinated event. I think Libor comes back enough to free up credit markets as far as the eye can see (at least until there's a bond market dislocation).

Speaking of the devil, I'm not so sure about treasuries, though. It seems to me that since all the FCB's are on board, the bond market won't dislocate like it would have if this was done unilaterally by the U.S. Will it eventually? Probably.

Therefore, I think for the short term we easily retrace the past nine days of losses.

Ultimately, however, I think the unintended consequences will, sometime in the not too distant future , give us the mother of all crashes.

S&P at 500 by early next year.

[DantesPeak]

$this->bbcode_second_pass_quote('firestarter', 'T')his is a global coordinated event. I think Libor comes back enough to free up credit markets as far as the eye can see (at least until there's a bond market dislocation).

Speaking of the devil, I'm not so sure about treasuries, though. It seems to me that since all the FCB's are on board, the bond market won't dislocate like it would have if this was done unilaterally by the U.S. Will it eventually? Probably.

Therefore, I think for the short term we easily retrace the past nine days of losses.

Ultimately, however, I think the unintended consequences will, sometime in the not too distant future , give us the mother of all crashes.

S&P at 500 by early next year.

[something_awfull]

Now the markets have bounced and the bankers won't be left to live in poverty, is it fair to say that the value of the market is now artificially high and when somebody realises its true value, that the market will go down,down,down? Are we basically being setup for the mother of all crashes?

[Keith_McClary]

$this->bbcode_second_pass_quote('Revi', 'E')verything was at peak value late last year. Now everything is worth about half of what it was. Stocks, PM's, oil, houses, cars and lots of other things.

[TreebeardsUncle]

Ok.
There were a number of indications that a bottom was reached last Friday.
Number 1: Volume of trading was huge.
Number 2: There was a lot of forced selling in the form of margin calls,
hedge fund redemptions, stop loss sales, etc.
Number 3: There was capitulation selling by retail investors.
Number 4: After hitting a low of 7800, there was a very strong intra-day rally, with the DOW only ending down slightly due to people's concerns about remaining long over a highly uncertain weekend.
Number 5: The NASDAQ was up. Folks often buy into the small caps first in a turn rather than the big players as they figure they can pick up better bargains with the small companies.
Number 6: The Bulls held the line in a number of companies, particularly Apple, Citigroup, and BofA.

What happened today?

This over-sold snap-back rally was conducted on a day when the bond market was closed. Folks bought because the Europeans guarantied inter-bank lending and deposits, as well as buying stakes in a number of big banks. Traders were starting to sell the rally but then when the US and Japanese governments back-stopped the investment by the Japanese bank, Mitsubishi?, in Morgan Stanley, they continued to buy. By the time the DOW was up 300 to 500 points, the traders just followed the herd up being afraid to miss the opportunity to get in and momentum pushed the market up.

What happens tomorrow?

The rally will continue, but the market will not come up as much as it did today. Expect another 400 points ascent in the DOW. A test will be whether the credit markets unseize. As the credit markets have been driving the stock markets and government policy this is a critical part. The DOW has lost its predictive powers and has become beholden to the outside debt. (Note total debt relative to GDP is now around 360% versus around 250% in 1929 before the first Great Depression.)

What happens Wednesday?

The rally will start to tap out. Profit taking will become more significant as the DOW tests 10,000. There is a good chance the market overall will be flat. Expect the euphoria to pass that evening.

Thursday

There is a good chance there will be slight to moderate selling, but probably not more than about 300 points worth. Expect the focus to start to shift to earnings and continued tightness in the credit markets.

Friday

A key test will be to see how well the rally holds up over the weekend. Are folks ready to maintain long positions? There isn't much more the governments can do other than massive nationalizations and cash injections (the latter of which are highly inflationary). If confidence declines at this junction, expect recessionary concerns to mount. Oil will likely moderate again in price at this point.

October 20 - November 10th

This is generally time that the stock indexes hit their yearly low as mutual funds do window dressing (reallocation of assets into companies that are doing well and/or have good reputations and people want to see in their portfolios), options expire, banks sell and take losses that are written off on their taxes, and third quarter earnings come in below expectations. Expect their to be a dip at this point, probably around October 27th to the 8400 to 9500 range. The DOW will test the lows achieved on closing on October 10th, but there is a strong chance it will not go lower.
Earnings will generally fall below expectations with noted exceptions in a few electronics and software companies, oil services, and pharmaceuticals. Note already Maxim is continuing
to do well. Expect Apple and Oracle to surpass Intel and Microsoft.

November 10th - December 5th

The market will remain choppy, with a moderate but protracted recession developing. At this point with the national banks having been supported, losses will be concentrated in transportation, retail, and housing. Rising unemployment, falling housing prices, and concerns over slowing discretionary consumer spending will lead to several more moderate dips in the indices. Regional banks will have mixed results, with a few failing or being bought out.
Materials will do adequately. Industrials will have a moderate decline. Consumer discretionary stocks will have relatively high P/Es.

December 6th - 24th

The above-described conditions will moderate superimposed with an anticipatory run up to the Christmas sales season which will

December 26th, 2008 - January 15th, 2009

disappoint leading to the third major dip in all domestic equity indices but not surpassing the low realized on October 10th. Yes, retailers will close more stores, particularly Mervyns and Pennies. Target, Walmart, Costco and the other discounters (Dollar Tree etc) will do substantially better.

January 16th - May 15, 2009

After a disappointment in natural gas plays which will not see the run-up earlier anticipated due to concerns about a tight winter heating season, one will begin to see a substantial run-up in oil servicers and drillers.

May 15th - July 15th, 2009

Oil services reach their seasonal high. Rig should be back to $120/share, Diamond Offshore to $110/share, HP to $65/share, Noble to $55/share, Smith International to at least $70, Ensco to $60/share, and NOV to around $55/share. Expect CAM, Core Labs,
Atwood, etc to be up around 20 to 30% from their current levels.

Apple should reach $120 to $130/share, Freeport McMoran $55 to 60/share, and PZE at least $15/share.

July 16th, 2009 - October 31st, 2009

Again we will enter the late summer doldrums and the third quarter decline.

November 01, 2009 - January 15, 2010

The recession will moderate. The Christmas sales season will be better than the previous years. The DOW should be trading around 12500 to 13,000 by this time.

2010 - 2015

Instead of a smooth run-up and boom, there will be difficulties in finding the next big thing as folks will be a bit turned off of both the housing, and stock markets. There will be renewed interested in the bio-medical arena due to demographics (aging boomers) and in altnerative energy, the latter of which will be generally disappointing, particularly hydrogen and ethanol.

2015 - 2025

Here is where Peak Oil really starts to bite. Moving to natural gas and coal to serve as either a feedstock for conversion to liquid fuel or as a source of electricity will be more expensive than gasoline is now. Expect another recession in 2017 - 2018 due to these impacts. Driving is going to become less Democratic. Cellulitic ethanol will not scale in a manner sufficuent to replace oil or avoid increasing food (It will compete with wheat growing and range land) and possibly housing (by raising the cost of particle board, plywood) costs.

2025 Plus

Folks on this board (peakoil.com) have already addressed that. I will look into it again later.