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  • Stock_Creeper Is Always Right Again Because He Knows Everything [Edit or Delete]0 comments
    Feb 23, 2012 10:50 PM
    So far, all of my 2012 predictions are coming true

    A few highlights:

    >We're still in an epic profits, productivity, consumerism, earnings, and exports driven economic boom and in new era of economic petpetualism and multilateral asset class inflation affecting gold, oil, stocks, web 2.0 valuations, municipal bonds, and high-end real estate which have all risen together this year in lockstep (as I predicted they would).

    > With the 3rd year anniversary of the March 2009 lows approaching, the much maligned TARP program continues to pay dividends. QE 2 and Q3 have proven to be resounding successes. The US is now paying less interest on its debt than it was in the 90's thanks to perpetually low rates, due to huge inflows of liquidity from foreign governments, tax payers, and various institutions. Tax payers are earning back their bailout money in the form of one of the largest bull market rallies ever. To put this rally in context, the points gained by the DJIA since March 2009 (around 6300) is about equal to the gains between 1995 and 2000, yet the PE ratio for the DJIA is still only 13, and it did this in only three years instead of five. This is a testament to the enduring resiliency of the global economy and the efficacy and expediency of policy makers when faced with potential crisis.

    >Apple well above $500

    > Oil at $108 with no signs of slowing. The middle class being squeezed by surging living expenses and policy makers are powerless to do anything about it, not that they would want to due to the economically stimulative benefits (which I wrote about earlier this week here )

    The bleating by the media, blogs and 2012 candidates about the need for pipelines, alternative energy, and speculation regulation echoes the angst of 2008, and of course nothing will come of it. There are autonomous global macroeconomic factors outside of the control of policy markers that are relentlessly driving up prices. Trying to curb speculation is short of impossible because first you have to prove that speculators are maliciously driving up prices to an 'unreasonable level' and then you have to draw up legislation and then it has to be enforced, and then there will be loopholes will get around it, etc. The BIRC economies are still on fire and with regards to China the debate over 'soft' vs 'hard' landing boils down to one GDP point for an economy that is growing at 8-9% a year. Bernanke only looks at the bond market when evaluation inflation, dismissing commodity prices, and with the USA having the ultimate reserve currency status there is no need to create a mountain of interest rate repayments out of what is presently a molehill. Unless the media succeeds in fabricating another crisis, commodities will keep rallying with only very minimal pauses. Don't look to China, US consumers, or profits and earnings to 'soften' in 2012 and hence bring asset prices down because they won't.

    Gas prices are at $3.50 with no signs of backing down. Gas has been up for 16 days in a row, and don't get your hopes up, libs, that there will be another crash like in 2008. Oil & gas prices and stocks prices will defy the deflationists and recessionists and keep making new highs for the remainder of the year. The media and leftist blogs will prove unsuccessful this time around at contriving a crisis like they were able to do in 2010 (Greece, flash crash, Euro) and 2011 (Greece, debt ceiling, Europe).

    TLT still above 116.5 indicating huge demand for near 0% yielding US paper even with a 14th consecutive quarter of strong profits & earnings and massive asset inflation. You got 'crisis level' yields, but pertinent economic indicators say otherwise. What a great economy we're in when you can have profits & earnings growth that rivals the 80's and 90's and non-existent bond based inflation that is traditionally a side effect of such exceptional growth. Living expenses based inflation, on the other hand, continues its divergence from the bond market, as has been the case since March 2009.

    Oh what about those predictions based on the perfectly logical sounding presumption that surging oil and gas prices should hurt consumer spending and the overall economy?

    On the contrary, the very fact that the S&P Retailers Spider which as the theory goes is supposed to be hurt the most by oil surging prices and gas prices, is rising in tandem, proves that these populist motivated assumptions about commodities and consumer spending are wrong. Stocks are a future indicator and if the future for consumer spending is supposed to be bleak due to surging oil prices, why are they rallying? Maybe the unpopular reality is that surging commodity and living expenses isn't a ticking time bomb, after all. The reality is that rather than cutting back on total spending, consumers will decrease their personal savings rate to accommodate the surging inelastic living expenses based inflation (food, health care, education, insurance, gas, heating energy). A less likely possibility is that consumer discretionary spending will fall, but the market isn't alluding to this. As the chart below illustrates, Retailers just aren't losing much sleep over pain at the pump.

    Baring an existential event or a media generated crisis, gas is on its way to $5.00 gallon very soon and oil $130. The personal savings rate will go negative and there will be no double dip. The same trends that have been in place since March 2009 will continue.

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