Barrow Bits

2009 Predictions

Everybody seems to be offering predictions for the coming year, so why not me? So here it goes.............

• The stock market will stage an early year rebound largely surrounding the theory that at last we will have a national leader who has a brain.
• The economy will rebound faster than expected because Americans cannot resist the temptation to spend.
• Housing prices will rebound slowly but will show signs of life by the end of the year.  People still need a place to live and housing will take on a more rational reason for owning, and folks will stop using the "house" as a "bank".  This will have significant long-term implications for the economy.
• Oil prices will spike to more than $100 per barrel sometime during 2009 as mid-East tensions boil over.
• GM will go bankrupt in 2009.  There is no saving this pension liability pig.
• Alternative energy stocks will be hot in 2009. 
• Any early year rally should be viewed as an excellent selling opportunity, because the structural problems in the economy are so acute long-term commitments to equities could prove quite risky.

Finally, while 2008 was horrendous for me by any standard, I hesitate to say things couldn't be much worse, because that could happen.  Let's just say I hope it's a better year!!

Beware 2009 Predictions

It's that time of the old year when many predictions concerning the coming year are made.  Often times from people who should know better.  This is particularly true in the financial area where so many of the 2008 predictions were so lousy.  Perhaps the most stupid off-base prediction was made by Arjun Murti the esteemed oil analyst at Goldman Sachs who on May 5, 2008 proclaimed, " the possibility of $150-$200 per barrel oil seems increasingly likely over the next six-24 months".  Of course, thanks to a global recession, prices are now nearing the $40 mark, and some experts even see $25 as a possibility next year.  Then you have that fool (or worse) Jim Cramer who responding to a viewers email on March 11, 2008 said that "Bear Stearns is fine - don't take your money out". A couple of days later Bear Stearns was gone.  There are many other examples of ridiculous comments.  The point of this being, take all pronouncements by the so-called experts with a huge grain of salt. 

I Love the Yankees and if "you got, spend it"

I have been a Yankee fan all my life.  I was literally born in a hospital in the shadow of Yankee Stadium.  I have had season tickets for more than thirty years.  I love the Yankees.  Recently, it's been difficult being a Yankee rooter.  The team didn't even make the playoffs this year.  Seems in keeping with everything else going out of order in 2008.  The hated Red Sox claim title to the best in baseball for the past few years.  However, the tide may be turning.  The Yanks have spent nealy a half billion dollars in recent weeks in getting some of the biggest names in the game to be wearing pintripes in 2009.  The display of financial might by the Yankees was awesome and so refreshing in a time of financial failure and panic.  Maybe the Yankees can teach lots of people a lesson.  If you got it -----------spend it!!  Then maybe the economy would get a real stimulus.  Merry Christmas!

I'm not happy being right

I have been very right concerning the market this year, being consistently bearish.  This bearish outlook extended to yesterday when others were looking for a Santa Claus rally.  Actually, it hasn't been hard being right.  Just look aroundand you know and feel what's going on in the economy.  By now we all know folks who have lost their jobs.  We all see the closed stores and the for sale signs in front of homes that seem to have been there for years.  About the only hopeful thing that happened during this dreadful year was the election of Barack Obama.  Hopefully, this one man can turn things around with leadership and competence.  For my part, I think he will and that at least for the stock market things will get better in early 2009.  As for today's trading, I still don't look for any meaningful rally.

The rating agencies are a joke

I really get a kick out of the rating agencies.  They suddenly seem to be issuing daily warnings on many blue chip companies, the latest being Alcoa.  Where were they when all the junk mortgage securities were being issued?  The rating agencies are a joke.

Where is Santa?

For those expecting a Santa Claus rally, I have bad news.  It's not going to happen.  There are just too many negatives around for stock prices to show much progress in this holiday shortened week.  Indeed, after reading the papers and watching the talk shows yesterday the market will be fortunate not to have a major pre-Christmas meltdown.  In reality, I can never remember a worse economic outlook.  Of course, I was not around for the Great Depression but right now I don't know how things can get much work.  Lots of people will be losing their jobs in the months immediately ahead and while President Obama will do all he can to soften the economic malaise, he (contrary to many observations) is not the Messiah who with a lifting of his arms will cure the many economic and financial ills that have been festering for way too long.  On that note, have a great day everyone!

More Stimulus Needed

It seems that the economy is in even worse shape than President-elect Obama ever imagined.  According to reports this morning Mr. Obama  will seek even more stimulus from Congress in an attempt to stave off even worse job losses than originally feared.  Moreover, VP-elect Biden will be on TV this morning warning of the horrible state of the economy and how things will get much worse before they get better.  Meanwhile, the NY Times reports this morning how this housing mess can be laid directly at the door step of the worst president of my lifetime -George Bush.  About the only cheery thought on this depressing Sunday morning is that Bush will be gone in four more weeks.  A chance for a new beginning.  Finally, a Happy Birthday to my son Steven who warned about this economic calamity before I even realized it was upon us. 

"An Orderly Bankruptcy"

The Bush Administration is going out with a bang.  Having messed up virtually everything that they touched they are now touting " an orderly bankruptcy" for the auto industry.  Now does anybody really know what that is? This is getting surreal!  The real goal of any form of bankruptcy is to get the unions to get real.  There is no way the US auto industry can survive if labor costs of US companies  continue at a much higher level than foreign competitors.   That's it in a nutshell!  Brake the UAW to save the US auto industry. 

Good Summary

The article below provides backup to my argument that things are pretty bad out there and bound to get worse.

http://www.nytimes.com/2008/12/19/business/19markets.html?hp

A Bear Hug

As I suspected the market has been unable to sustain any buying momentum.  The Fed induced rally has given in to grim reality - the economy sucks!  Those who expect a recovery as soon as mid-2009 will likely be very disappointed.  Bulls just can't at this time make a convincing case for their optimism.