[Leanan]

Stephen Roach of Morgan Stanley points out that the economy is lot worse than the numbers would indicate. He calls it a "jobless, wageless recovery."

Reading between the lines, he expects a paradigm shift in the U.S. Americans will be forced to live on their dropping incomes, and that will result in much lower spending and a much slower economy. IOW, he's predicting a widespread and permanent drop in our standard of living.

The End of Labor

He blames it on globalization. I'm sure that's part of it, but I can't help wondering if peak oil is part of the problem.

[dbarberic]

Its real easy to get the Dow to 11K when you pumping the paper:

$this->bbcode_second_pass_quote('', 'J')anuary 9, 2006


M-3 has been launched into outer space, up another $56.3 billion last week, up $92.4 billion over the past two. This is some real horsepower. Over six weeks, the meaningless figure, ahem, is up $177.8 billion. These annualized growth rates are 28.7 percent, 23.6 percent, and 15.3 percent respectively. Those are the seasonally adjusted figures. The raw, non-seasonally adjusted, figure is up $293.3 billion over the past 12 weeks, on a pace to add 1.2 trillion in money to the economy.

[Leanan]

What? I thought there would be no M-3 data released any more.

Does this mean I should spend my money now, while it's worth something?

[dbarberic]

$this->bbcode_second_pass_quote('Leanan', 'W')hat? I thought there would be no M-3 data released any more.

Does this mean I should spend my money now, while it's worth something?

[duke3522]

Can someone post a good explanation of the M3 money supply please.

Duke of Indiana

[Leanan]

As I understand it, the M-3 is the total amount of U.S. dollars in circulation, including "eurodollars" - those held overseas. (They're called eurodollars even if they are not in Europe. Japan, China, etc. are all holding "eurodollars.")

[Revi]

Maybe the US went for trade concessions. The Geely was featured on last night's news, and other Chinese car makers like the Cherry want in too. That would really spell the end for Ford and GM. At least they get good gas mileage. Maybe that's why the Chinese backed off on their threat to dump the dollar. They want our car industry, what's left of it...

[Dukat_Reloaded]

I don't know why GM is going up. I read time magazine and the chinese have a nice little hatchback car which retails for US $3,750. I don't think GM could compete when these cars start comming in. Insiders are most likely proping it up to sell.

[Grimnir]

Isn't moving money from bonds into stocks the standard thing investors are supposed to do when they're expecting inflation? And hasn't Bernanke basically said his plan is to inflate down the debt?

[strider3700]

when expecting inflation you move into any stock that is a good inflation hedge or some other investment. Gold is the inflation hedge of choice for many. Gold is up about 15% in the last 3 months or so...

[o2ny]

As of writing this, the Dow is down over 200 points on the day- one of the biggest daily drops in quite some time. It seems fourth quarter corporate profits haven't been quite what people were expecting.

I'm not sure what all the causes are- but certainly oil approaching $70 has been a factor. Maybe a mini-crash here will wake up some of the folks on wall street to the 'high cost' of high energy prices.

[Grimnir]

In the past, these 100-200 point Friday declines have disappeared on Monday after the markets close for the weekend and investors have 2 days to just mull things over. You really need drops on this scale happening for a solid week or so before you can be sure something's happening.

[Osurac]

I was thinking the same thing as Grimnir. When everyone comes back Monday after a weekend of killing brain cells and hardening of arteries it will be business as usual. The thing that kills me about the stock market is it is all based on guesses and feelings, no science. It's legal gambling.

[Eli]

This tine it might be different because we have seen a large rise in gold. That gold rise has been fueled by people saying we are heading down the shitter. Iran just came out and said they want to reduce the OPEC out put by a million bpd, that aint good.

If over the weekend the guy who invested in gold and oil tells his buddy who has always thought he was nuts "I told you so" we may see a bigger drop next week.

[DigitalCubano]

What a *ahem* fun day on the markets. Luckily, my portfolio is still biased towards energy, but I did liquidate one of my tech darlings today (guess which one). It's ok, I'm not married to any of my stocks, Even that dog that I had to put down today returned ~200% since 2003, so I can't be too bitter.

I'm not jumping to any conclusions just yet, but I have the feeling that this is more of the sell-off that the market was due than the market hitting a top. I mean, Motorolla takes a hit for no other reason than they can't roll out phones fast enough. Apple takes a hit despite recording record earnings. IMHO, expectations were getting out of hand. I hope that today's meltdown shakes out the nervous speculators with long positions and forces the analysts to revise their forecasts in lieu of the Iranian issue.

[Aqua]

I would agree with a slight rally next week under normal circumstances judging with how the market gets talked up on anything these days. However I have a sneaky feeling we are going into a period of economic uncertainty with Iran upping the anti substantially with statements like this.

http://www.forbes.com/home/feeds/afx/20 ... 64068.html

+ $70 oil is not an uncertainty next week and that could well beat some economic reality into the markets. I've noticed the extreme reactions to even slightly below expectations results these days myself, there is a lot of freyed nevres around at the top.

[LadyRuby]

Nothing makes sense to me, I've stopped trying to guess what will happen next.

[Aqua]

Know how you feel Ladyruby things seem to be getting pretty crazy these days, you can never call one way or the other. I've just have this really strong feeling that the status quo of the past ten years is breaking down. If anything else the markets will be "interesting" this year. Goodbye stability hello uncertainty.

[Kingcoal]

Buy on rumor, sell on news. The market was over bought and sold off on the news. News has to be excessively positive to avoid a sell off. I'm 43 years old and have seen this many times before. Normal stock market activity.

[Aqua]

King coal I’m not far behind you age wise and I have also seen this many times but I also feel something is spooking the wider market and normal market behaviour can no longer be relied upon. Articles like this do not enhance my confidence.
http://news.bbc.co.uk/1/hi/business/4633720.stm

Note the last comments at least and think what $75 a barrel just could do to market sentiment let alone $80. My prediction for 2006, Major uncertainty due to developing geo political developments interfering with normal market behaviour including a possibility of a stampede But that’s just my interpretation we will all know soon enough.