5 Signs Irrational Exuberance Is Back

Motley Fool ^ | 10/14/09 | Alex Dumortier

[TigerLikesRooster]

5 Signs Irrational Exuberance Is Back

http://www.fool.com/investing/general/2009/10/14/5-signs-irrational-exuberance-is-back.aspx

Alex Dumortier, CFA

October 14, 2009

At a time when many pundits or "investors" are grasping at straws to justify the market's run, I'm seeing an increasing number of buds of "irrational exuberance" (in the words of the maestro bubble-blower Alan Greenspan). It's as if the crisis was a sharp but fleeting pain that investors wish to relegate to the status of a bad memory. To give a jolt to our market nervous system, here are my top five signs that exuberance is returning to the market at an alarming rate:

1. Stocks are overpriced.

/snip

2. Junk has run.

/snip

3. The VIX is cheap.

/snip

4. The carry trade is back.

/snip

5. A smart guy said so.

/snip

[TigerLikesRooster]

Ping!

[Erik Latranyi]

Can’t dispute this premise.

Sales revenue is still falling from Q2 to Q3.....that is not a recovery in progress.

[Diana in Wisconsin]

Container shipments on both coasts are down; railroad cars are sitting empty. Office/retail space all over the nation is sitting empty, with construction loans due very soon. Semi hauling is way down.

The Bush Tax Cuts are set to expire. Another 500K will have lost their jobs this past month when the accounting comes due November 6th.

After the ‘Cash for Clunkers’ scam for new home sales goes away, the housing market will sink some more...

It isn’t going to be pretty.

[Yo-Yo]

Or:

EDITORIAL: Why Dow 10,000 is really 8,600

The sinking dollar explains rising stock market

To get an idea how important these drops in the value of the dollar have been, if the dollar had not declined against the Euro, the stock market likely would only be at about 8,600.

[dennisw]

 

Glenn Beck got this from one of his economic "deep throats" who knows the way the world works
This was on today's show

 

1. Fresh from Glenn Beck show a very good explanation of economic affairs
2. Under Jimmy Carter the money supply was jacked up 13% to stimulate the economy
3. Stagflation set in so Paul Volcker tightened up the money supply by jacking up rates to 20%
4. So 20% cured 13%
5. This time around the money supply has been increased by 130%
6. The Fed is loaning banks and Wall Street money at essentially 0% interest
7. The Vast majority of this money is retained and not lent out so the money velocity is way down....
8. thus the economy has not been stimulated so much
9. What the banks actually do with most of this this free 0% Federal Reserve money is turn right around and buy T-Bills and get a profit thus building up bank stability and profits which have been awful
10. Ben Barnanke and Tim Geithner's game plan is that once the economy gets stimulated and up and running they will recall all that money they put out there when they increased the money supply by 130%
11. this is done by increasing interest rates
12. So if Paul Volcker used 20% rates to cure a 13% increase in money supply.........
13. Then what rates cure a 130% increase in money supply?
14. 40%? 60%?
15. These rates are politically impossible so instead Obama and the Fed allow hyper inflation of a 20% annual rate

 

 

T Bill yield curve http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

October 2009

Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
10/01/09	0.03	0.10	0.15	0.37	0.87	1.36	2.20	2.82	3.21	3.95	3.97
10/02/09	0.04	0.10	0.15	0.37	0.88	1.38	2.22	2.83	3.24	3.98	4.01
10/05/09	0.04	0.08	0.15	0.36	0.88	1.38	2.21	2.82	3.24	3.98	4.01
10/06/09	0.05	0.08	0.15	0.37	0.91	1.43	2.25	2.85	3.27	4.03	4.07
10/07/09	0.06	0.09	0.14	0.34	0.87	1.35	2.16	2.77	3.21	3.96	3.99
10/08/09	0.03	0.06	0.15	0.35	0.90	1.40	2.22	2.83	3.27	4.05	4.09
10/09/09	0.04	0.07	0.16	0.38	0.98	1.50	2.36	2.98	3.40	4.20	4.22
10/13/09	0.04	0.07	0.15	0.35	0.91	1.42	2.28	2.90	3.34	4.14	4.16
10/14/09	0.05	0.07	0.15	0.35	0.96	1.47	2.36	3.01	3.45	4.26	4.28
10/15/09	0.06	0.07	0.15	0.36	0.97	1.50	2.41	3.05	3.49	4.29	4.31
10/16/09	0.06	0.07	0.17	0.36	0.97	1.49	2.37	2.99	3.43	4.22	4.24
10/19/09	0.06	0.08	0.18	0.38	0.99	1.50	2.36	2.98	3.41	4.19	4.21
10/20/09	0.05	0.08	0.17	0.39	0.95	1.44	2.30	2.93	3.35	4.14	4.16
10/21/09	0.05	0.07	0.17	0.40	1.00	1.51	2.38	3.01	3.42	4.20	4.22
10/22/09	0.02	0.06	0.15	0.38	0.97	1.50	2.39	3.03	3.44	4.22	4.24
10/23/09	0.02	0.07	0.18	0.40	1.04	1.57	2.46	3.10	3.51	4.27	4.29
10/26/09	0.04	0.08	0.18	0.41	1.06	1.61	2.53	3.17	3.59	4.35	4.37