Skip to comments.Optimism About A Recovery Starting To Fizzle [The Worst Is Yet To Come?]
Posted on 08/17/2009 11:55:13 AM PDT by Steelfish
Optimism about a recovery starting to fizzle Observers expect stocks rally to end as economic reality starts to set in
Aug. 17: As stocks see their biggest drop in more than a month, a CNBC panel discusses if this sell-off could be the beginning of a more significant market correction. CNBC
John W. Schoen Senior producer,msnbc
What happened to all the optimism?
Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is leveling out.
Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound and share prices could be due for a bigger pullback after a 50 percent surge since March.
"The market has gotten way ahead of the reality on the ground, Pimco's Mohamed El-Erian, co-chief executive officer of the largest bond fund manager in the world, told CNBC Friday. "We are yet to see a durable and sustainable recovery, but the market has gotten ahead of the process by pricing that in."
On Monday, some investors echoed those second thoughts, sending stocks 2 percent lower and stalling a rally that had pushed the market up 15 percent since mid-July.
The initial exuberance followed economic data over the past few weeks showing that one of the worst recessions since World War II many be ending. Job losses slowed in July. Many forecasters believe the U.S. Gross Domestic Product will likely turn positive again in the third quarter after steep declines since the recession began in Dec. 2007.
The relentless retreat of housing prices seems to be slowing. And massive infusions of government cash the $787 billion economic stimulus package, the $700 billion bank bailout and the Federal Reserve's $1 trillion intervention in the financial markets
(Excerpt) Read more at msnbc.msn.com ...
“The Federal Reserve itself claimed the economy is leveling out. “
Yes, before the next leg down.
The only people celebrating a “recovery” were the Obama administration and we all know how they tend to “mis-speak”
Fantasy. The idea that we are gonna recover as of now needs to be added to the junkyard with the perfectly good clunkers.
Jobs & Debt. America hasn’t been stellar in producing private sector jobs this decade.
The worse is yet to come.
I have seen speculation that the runup in stock prices has been fueled primarily by the investment banks with money from the TARP. If that’s true and small investors entered the market with the expectation this was a true rally instead of a govt funded bubble they’re in for a real surprise.
EXACTLY as predicted as far back as last winter....
A slight increase in economic activity, that the media would try and trumpet for the glory of Obama, even when every indicator says otherwise, followed by a SHARP fall off in late-September, early October. There is NOTHING holding up our economy at this point except GOVERNMENT SPENDING.
We aren’t anywhere NEAR the bottom of thing. It’s going to get worse, before it gets a WHOLE HELLUVA LOT WORSE!
“”The market has gotten way ahead of the reality on the ground, “
I don’t understand what’s kept the market afloat. Socialism is bad ju ju for free markets to prosper. I expect things to get worse if we don’t turn this out of control federal spending around. It’s not enough to stop health care, bailouts and such. We actually must start SHRINKING the size and scope of the federal government. We’ve already taken on enough to sink this ship, any more just assures it will sink faster.
>What happened to all the optimism?
The Federal Reserve itself claimed the economy is leveling out.
Something like getting smacked in the face with a cold wet reality fish called record unemployment claims, lousy jobs data, and poor retail sales...
“America hasnt been stellar in producing private sector jobs this decade.”
Actually for a lot longer than that.
The lesson here is that EVERYTHING comes from just two sources of wealth creation, manufacturing or mining, BOTH of which the Democrats have spent 3 decades trying to destroy in the name of the planet.
If you want an example of how Democrat feel-good legislation can kill jobs, look no further than the American lightbulb industry, with 35,000+ mostly union jobs lost since the bill passed that bans incandescent light bulbs...
>if small investors entered the market with the expectation this was a true rally instead of a govt funded bubble theyre in for a real surprise...
Maybe not - they can sell and take profit from their buys at their low points.
Small investors, usually 401K or IRA account holders, tend to get in on the rally late and hang on too long. Perfect pigeons for something like this.
Agreed...the fundamentals for a sound recover for the economy do not exist at this time.
Indeed their attempted intervention may actually be further harming the economy.
“The lesson here is that EVERYTHING comes from just two sources of wealth creation, manufacturing or mining, BOTH of which the Democrats have spent 3 decades trying to destroy in the name of the planet.”
I especially love the wealth creating “Cash for Clunkers” program. Creating wealth by smashing things! Hell lets just smash all cars that are over a year old and not of green nature. We’ll be rich!!
These people are truly nuts! Anyone that follows them is even more nuts.
Read same thing. But I hope the banks made some money, at least, and can use it to pay back some of the TARP!
Good point - I would never stash equities in such places in this economy...
"I'm not surprised."
It’s not just the spending but how it’s being spent. FDR built dams. Eisenhower built the interstate highway. Obama fixes potholes.
That sums it up in my opinion!
If there is no value in the market then those bankers are “making money” off the backs of naive investors.
Face it...the big money on the left was inflating the market long enough to try to ram health care through. They can’t keep it up forever.
Speaking of ‘wealth’.
The current situation is due to an emphasis on ‘value capture’. (Or Stealing From Each Other) Wall Street, Government, F.I.R.E. economy taking value from one but not returning value to producer. Eventually, like a ponzi scheme, you run out of other people’s money.
The real method of producing ‘wealth’ is ‘value creation’.
(or making something valuable and trading it for equal value) REAL ‘spreading the wealth’. All sides win! Labor, raw materials, capital equal productivity noone looses.
If you apply these hypothesis to economic principles, could you answer the problems in our current dilema?
Could the ‘Free Market’ function again if the directive was to ‘create value’?
Is there a treasury auction soon? Seems each time there is one, the market goes down and everyone rushes to ‘secure’ Treasuries!
What about agriculture?