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December 15, 2006

Rosenberg reviews 2007 "Year of transition", Fri., Dec. 15, 2006, 8:16 AM

There are code words used by the sell-side that are unmistakeable as to their meaning. For example, a downgrade to "hold" means "sell"; "prices are drifting" means they are declining; and, when Ben Bernanke says "We are in transition" it means "Bogeys on the radar " take cover!"

In transitioning from one Bull cycle to the next Bull cycle, the only thing in between is a Bear cycle. But, in the vernacular of the Financial Entertainment shows, the new term is "landing" " as in soft versus hard. In the touchy-feely-stroking-schmoozing world of make-believe, the new lingo is Goldilocks and soft landings.

As the Dow zeros in on 12500, I believe that the Gnomes have the target in sight (that's code for We The People") and the bomb bay doors open. In terms of soft or hard "landing", I think the issue is whether these are H-bombs or merely A-bombs.

In any case, here are the views of Merrill Lynch's economist, David Rosenberg. Download ML Dec 14 Rosenberg views on 2007

I think the Bulls need to clip and pin this item on the side of their monitors.


001o004.gif

And for those who think the U.S. housing industry crisis has abated (ie, Goldilocks again), why not clip and paste this illustration on your desktop? As Rosenberg says, "When it comes to the housing market, we are in uncharted territory."


001o005.gif

So, if Rosenberg is right, this equity market may soon implode due to the U.S. economic slowdown, including housing related issues. Others argue it's the IPO's and high-leveraged takeovers, or maybe a $WTIC that could zoom over $80, $90, $100, that will sop up the excess liquidity. But maybe it could be the inter-related wage and price inflation, or possibly a crashing $USD and a $GOLD price that pushes up through $800, $900, $1,000.

There is no shortage of issues facing the Bulls, or credible people like ML's Rosenberg sounding the alarm.

But is anybody listening, or are they content to hear stories of "transition"?

Posted by Posted by Bill Cara on December 15, 2006 08:16:21 AM | Category: Cara Today in the Market , Economics

Discourse

Not that I am dubious about the new market highs, just that I see too much money looking for a home. However, pouring money into inflated equities is not my idea of a retirement home. I have not had this much cash sitting around in years. I am maybe 25% equities, 10% bonds and the rest in cash. With a small gold position.

Posted by: ErnestM [TypeKey Profile Page] at December 15, 2006 10:21 AM [link]

hello from germany,

here is a good quote from greenberg after his visit to kudlow/cnbc

"It's said you should never argue with a crazy person. I'll add that you should never argue about a crazy market

also worthe reading the rest!
http://www.marketwatch.com/news/story/brains-bull-market/story.aspx?guid=%7B794CC3CB%2DDB1D%2D4C57%2DA2C8%2DFE7326154352%7D

Posted by: jmf [TypeKey Profile Page] at December 15, 2006 12:14 PM [link]

An alternative view http://hedgefundmgr.blogspot.com/


"I continue to believe steadfastly high bearish sentiment in many quarters is mind-boggling, considering the S&P 500's 16.3% rise in less than six months, one of the best August/September/October runs in U.S. history, the fact that the Dow at all-time highs and that we are in the early stages of what is historically a very strong period for U.S. stocks after a midterm election. Bears still remain stunningly complacent, in my opinion. As I have said many times over the last few months, every pullback is seen as a major top and every move higher is just another shorting/selling opportunity.

As well, there are many other indicators registering high levels of investor skepticism regarding recent stock market gains. The 50-day moving average of the ISE Sentiment Index is right at the 200-day moving average. Nasdaq and NYSE short interests are just off record highs. Moreover, public short interest continues to soar to record highs, and U.S. stock mutual funds have seen outflows for most of the year, according to AMG Data Services. Finally, investment blogger sentiment is still very bearish. There remains a high wall of worry for stocks to climb substantially from current levels as the public remains very skeptical of this bull market.

I continue to believe this is a direct result of the strong belief by the herd that the U.S. is in a long-term trading range or secular bear environment. There is overwhelming evidence that investment sentiment by the general public regarding U.S. stocks has never been this poor in history, with the Dow registering all-time highs almost weekly. I still expect the herd to finally embrace the current bull market next year, which should result in another meaningful move higher in the major averages as the S&P 500 breaks out to join the Dow and Russell 2000 at all-time highs. I continue to believe the coming bullish shift in long-term sentiment with respect to U.S. stocks will result in the “mother of all short-covering rallies.�


Posted by: TheAdonis [TypeKey Profile Page] at December 15, 2006 1:03 PM [link]

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