Thread: Market Talk / Dec. 11 - 17

Our account deficit is approaching 7% of GDP and New Zealand's was 8% of GDP and their currency (kiwi) lost 17% against the USD. Will S&P down grade us (cutting their own necks) and will the dollar plummet? Many foreign countries have cut back on buying our bonds making it harder for us to "borrow" enough money to pay the bills as a country. Our inability to pay the higher bills are being fueled by war, excessive government spending, trade deficit, and tax cuts. This should drive gold up, the USD down, and bond rates up.

In order for the account deficit to decrease I think some of the following must happen.

1. Close trade gap.
2. Pay down our debt. (Bonds)
3. Increase government spending. (Raises GDP)
4. Raise taxes. (In order to increase spending or pay down debt.)
5. Corporations need to quit setting on all of their cash and start investing in their businesses. (Increases GDP)
6. Sell more home. (Increases GDP)
7. Consumers must spend more. (Increases GDP) But, they need good middle class jobs and need to get off of the credit card.

Credit seems to be the common evil. Our government is spending more than they have coming in and so are our citizens.

Account deficit = Trade imbalance + certain other types of payments to foreigners such as payments, remittances, interest, and dividends.



http://tinyurl.com/cxvq8

Talk about sitting on cash- nonfinancial companies in the S&P 500 could have some $700 billion in cash by the end of 2005. General Electric recently announced they are increasing their share buy back anothetr $1 billion to a total of $5 billion and have increased their dividend. GE has replaced GM as an economic and market leader. With the tax extension program through 2008 a good part of the account deficit will resolve itself via economic growth - and the longer it takes the more the Dow will rally. I've been happy with relief but am starting to get optimistic - I can smell the profits of an ongoing bull market. And besides EWP folks are still bearish - great!

Dennis

Looks like we could see a panic short squeeze today - Dow futures are holding up 42 points and the Nikkei was up 345 and the Dax is up 42. I wouldn't want to be short, it's hard enough just staying long.

Wow! If everything holds course the I Fund should cha ching! USD down about .5% this morning.

Here’s a interesting bit. Was speaking to a friend this weekend and he saw a report where a very large number of the oil wells/platforms were not going to be repaired or in many cases replaced. Most of those wells are “marginal wells� and would not be cost effective to put back into production.

Not that these wells are major producers but cumulatively I have to wonder how much they take off the table.

I have mentioned this before and I do believe we are going to see an advance to 574 on the Wilshire....(S fund)by end of year....we should see some sort of correction in the market starting on Friday......then take a few days to continue up to the target....

In retrospect, the Delphi, GM, Ford news of late will get us starting the new year off to a dismal start.......I see Delphi is trying to reduce everyone's wages by about 60% or maybe go out of business...the only thing about this is the Officers of the company are getting raises. I suppose everyones bills will drop in half also.....if not, then expect some of what should be expected, a depreciation of the area and of the country....people can't pay their bills and will go into bankruptcy....and then maybe to jail....for doing what, watching their country turn on them....in order to make a buck...

Whats goes for GM goes for the country....

:dude:

Well I'm sure not doing what I did last Jan 1st week and get all in stocks just to watch the entire month go down the toilet and lose all we gained in December! Very disappointing start of 2005 and it really hasn't been that great a year. To be up about 5.5% I call myself lucky!

I'll definitly be out of stocks by EOY

:dude:

The Dollar Index is down 1.2% from Friday.
People in the I-fund are going to get a BIG payoff today.

Greg wrote:

The Dollar Index is down 1.2% from Friday.
People in the I-fund are going to get a BIG payoff today.

I sure would like an early Christmas gift!:PI'm in for 60%.

Jeff

Greg wrote:

The Dollar Index is down 1.2% from Friday.
People in the I-fund are going to get a BIG payoff today.

Or tomorrow.