[Q_BE]

Today, after flirting with this since last Monday during the intra-day, we saw a tiny boost to a new high for 2010, 11215.13.  Of course, I would have preferred this last week, or even a few weeks ago, but I'll take it, and I will continue to root for another 335 points on top of that.

After the Republicans re-seize most of Congress? Surely you don't want the Dow to reflect positively on the election of those wascaly Wepublicans in anticipation of 2012?

Q-"What's bad for America is good for Democrats; what's good for America is bad for Democrats"-BE

[DruulEmpire]

This will be a difficult concept -- but I'm not you.  Way back when this thread saw the Dow first plummet past 11111, I kept wanting it to stop -- and yes, during the Bush Administration, mainly because I thought the point had already been made about Bush's watch and I simply wanted the country to get its bearings back.  That was my biggest failure here, setting floors that the Bush economy kept on crashing straight through -- but I set those floors out of an abiding hope in the economy itself, almost regardless of the public sector.

(Didn't your own Rush Limbaugh once write a book with a chapter heading about his prosperity having nothing to do with whoever happens to be President?  Whatever became of that view, anyway?  Guess it was easy to have that view during the Clinton years ... )

The reason it's me keeping this thread going and not you (besides my love of arithmetic -- and by the way, it seems not so long ago you were sort of complaining, Golly, how much longer are you maintaining this thread?) is because I do not mind at all keeping track of the 4600 new points, the approximately 70 extra percent, the Dow has seen since March 2009.  (Yet I've also admitted that you could pile on criticism on the Unemployment Thread that's still lying around here somewhere.  An archconservative suddenly compaining about unemployment is awfully suspicious, but you have as much right as anyone else.)  I would also point out the 112th Congress hasn't even been installed yet, and that it's probably not going to see much of anything that can be called policy, regardless of whatever you or I call good policy or bad policy  -- after all, you don't have the Senate, and the President still has his veto.

The Dow tends to dread change, any change -- left, right, whatever.  So the limbo stretching before us may be as good a medium as any for the economy to keep slowly creeping its way back up to, I hope, 11776, at which point I semi-retire this thread.

There are people on this Earth who are less petty than you.  You might start appreciating it.

[DruulEmpire]

Back on January 14th of this year, I made (what was then) my one bad upward prediction.  I wanted 10872 by March 9.  That prediction failed.  However, it was met and exceeded just two weeks later.  So as some exact thing to bet on, I lost -- but as a general indicator of how things are going?  Still pretty neat.

Now here I am, half a year after I wanted 11550 by October 29.  I didn't get that either, certainly not on schedule.  But once again, have I necessarily missed by that much?  For the Dow has just closed today at 10434.84.  This leaves just 116 points to meet that old October 29 prediction, and 233 points to fulfill my new Christmas Eve prediction.

A little cynicism has served me well so far, and I continue to find it very appropriate here.  The Dow generally prefers that nothing change in any real direction -- well, boy, that sure does look like the next two years in Congress.  At the same time, now we're hearing some "Oh, let's extend the tax cuts to the very rich for a couple of years anyway" -- and since the Dow is very much a game of and for the very rich, it may not be so coincidental that they're feeling a bit celebratory, hence the rise.

As long as people start investing again.  That's mainly what I care about here.

[Q_BE]

Now here I am, half a year after I wanted 11550 by October 29.  I didn't get that either, certainly not on schedule.  But once again, have I necessarily missed by that much?  For the Dow has just closed today at 10434.84.  This leaves just 116 points to meet that old October 29 prediction, and 233 points to fulfill my new Christmas Eve prediction.

Not to nitpick or anything, but I'm sure you meant 11434.84. Easy mistake to make; I'm not ragging on ya, and I'm certainly in no mood to respond to your half-hearted condescension.

Q-"In this instance, I want to say your predictions were right"-BE

[DruulEmpire]

THANK YOU!

And by the way, I even owe you a little bit of an apology for last week.  Sometimes I don't catch all the financial news, so I'm guessing your "When the Fed speaks, the Dow quivers" comment on October 29 was with regard to the new money infusion, which I didn't even pick up on.  All by itself, it just struck me as weird -- a rise of a few points as a commentary on the Fed's power?  Or maybe a snarky sarcastic comment on its NOT being powerful?  Besides which, I've been too used to hearing LIBERAL complaints about the Fed.  I think the lesson from all this is that the Dow is no surefire "black box," a formula that you can always stick a number in to always get an instant and predictable answer.  The gain of 330 points since last Thursday may have been a delayed reaction to the infusion -- or, it may have been the ultrarich celebrating their possibly getting their tax cuts.  Me, I like to think it was simply my predicted curve finally kicking in.  Who knows?  There's a lot of psychology to this -- some may say the Dow had no business gaining back so much so fast, that this is surely another bubble, but I'm more inclined to look at its 6547 level as simply a pit of panic, and now true evaluation has -- hopefully -- begun to assert itself.  The Dow reflects a non-Soviet non-centralized (except in the cases of merger centralization and "too big to fail") economy, and if I may speak from experience, predicting it is a rollercoaster.

Another lesson may be: a good enough hypothesis may be worth waiting a few days for.  

[Shara]

so let me get this straight: when the lower classes suffer the dow is high?

[SamV]

The Federal Reserve has made this promise to step in and buy back some 800 billion dollars in bonds, to weaken the dollar and hopefully loosen up the banks and other institutional lenders so they will inject more capital in to the money supply available to borrowers in an effort to spur corporate growth and ultimately increase the number of jobs. That has made many traders giddy, if it works. Of course the downside is a weaker dollar means prices on consumer goods will rise, and the people who save their money in fixed securities such as savings accounts, CD's, money markets, will see their interest rates drop (not that the current rate is all that high for them now).

Combine that with most corporations reporting their quarterly returns are above their expected returns, and it is little wonder why the stock prices have taken off.

Of course, the reason corporate profits are higher despite the broad reduced demand for most goods and services is that man-hour efficiency has peaked under the current conditions of reduced employment. It now takes less man-hours to produce the same amount of goods or services as was produced before this last economic contraction. This is another reason for companies not to hire back the people they let go.

So until demand results in significant growth (i.e. business expansion) to overcome this higher man-hour efficiency there is little need   
for businesses to put on more full-time people. Any jobs being added in the economy (like the current reported 150k last month) are mostly either temp jobs, or seasonal jobs, and very few full time jobs. And with the Repubs now in control of the House, and most state legislatures, I predict that the level of unemployment in this country will remain high (above 9.0%) for quite some time to come. Especially as local governments shed more government employees (police, firemen, first responders, teachers, maintenance crews, secretaries, etc) as they cut spending to balance their state and municipal budgets, dumping them in with all the private workers who have been unemployed now for weeks and months, as they all now have to compete for the same limited number of available jobs.

But don't worry the Repubs and Tea Partyers will cut taxes and cut spending like they campaigned on and that will solve all these job problems.  

[Q_BE]

Although I'm sure that last point was meant as a snark against the Republicans, I agree with your post, SamV. The Dow is being artificially pumped full of dollars to make the economy (read the Dow) look good without actually being good. This is all to prep Obama for his 2012 re-election campaign, as the Fed will be buying 100-billion-dollar increments of these bonds over the next eight months (600 billion supplemented with some 250 billion in unspent TARP funds). The availability of money isn't the issue here—banks, businesses, and people are sitting on trillions of dollars in cash, waiting out whatever boondoggles the Obama Admin is going to trot out next.

This may sound obvious, but the economy needs some conspicuous consumption right about now (people to buy and sell products to produce a PROFIT), and with taxes looking to head higher, people aren't about to stick their necks out right now…

…and somewhere out there, Obama's going "Dammit."

Q-"The Dow makes me think of cows"-BE

EDIT: If you're in for a little economic reading, try Wikipedia's article on the velocity of money. What the Fed is doing is adding money to the economy, or fleshing out the denominator. However, the number of aggregate transactions, or the numerator in the velocity equation, is going down, down, down because the American people are scared of what the government is doing under the Obama regime. Without adequate transactions, the amount of money isn't going to matter; it's when the money is spent, and if that ever occurs with vast quantities of this cash before the Fed starts pulling itself back, inflation is going to skyrocket. Mark my words.

[DruulEmpire]

Words duly marked.

I wanted 11550 by October 29, and today just grazed that during the intra-day, hitting 11549 before closing at 11533.  So it would now be relatively easy to vindicate that prediction only two months too late -- a mite tougher, though, to assure the remaining 134 points to get my 11667 in time for Christmas.  'Twill be an interesting week.

Wed 12/22 update -- the good news: vindication.  I wanted 11550 nearly two months ago and it finally arrived, as today's Dow closed at 11559.  My prediction was off, but the trend held.  I wanted 11550 to indicate a gain of over 5000 points, over 76%, since the "O-low" of 6547 back on March 9, 2009.  The worrisome part now is: can my later prediction come true with 108 more points by Christmas?  That's looking much more dubious.

I've been aware for decades that the Dow rising and people getting fired tend to run together.  I'll be happy to retire this thread, hopefully within the next month or so, and perhaps revive the Unemployment Thread while starting something new about stock picks.

[pedonbio]

so let me get this straight: when the lower classes suffer the dow is high?

Yes. The so-called "Reagan Revolution" unhooked U.S. financial markets from the real U.S. economy, and the political class lacks the will to reconnect them.

[Q_BE]

Yes. The so-called "Reagan Revolution" unhooked U.S. financial markets from the real U.S. economy, and the political class lacks the will to reconnect them.

If they did right now, the Dow would plummet. Obama doesn't want to look bad, so there you go.

Q-"Here comes 2012"-BE

[DruulEmpire]

I'm not following Q's "doesn't want to look bad" claim -- I mean, if Obama is nothing but a socialist zealot, then he would just go ahead and screw everything up and not care about how it looked, right?  I mean, this back and forth of "Oooh, they're sneaky -- but oooh, any minute all Hell will be sprung upon us you betcha!" gets tiresome, at least for those of us who DON'T have Alzheimer's.

Anyhow, I guess I thought the Dow might be open a few hours today, but no.  So it made it up to 11573 -- but that still leaves it 94 points shy of that Christmas Eve level I wanted.  Another missed deadline.  But I am nothing if not a glutton for punishment, so a last one for the road -- 11776 by the close of Thursday, January 20, 2011.  And if that's three bad predictions in a row, at least two of them won't have been so bad.

[DruulEmpire]

Too late to cash in on, but a little vindication nonetheless today, as the Dow closes at 11670, thereby exceeding my Christmas Eve hope of 11667.  This also leaves only 106 more points to gain during the remaining twelve trading days so as to meet my final prediction for this thread.   

[DruulEmpire]

Today's close at 11722.89 comes just a whisker below what I've been calling the "Clinton bull high" of 11722.98 on January 14, 2000.  I made my final prediction by not only matching this high but leaving it a small but comfortable margin, so there are still 54 points yet to be gained.

What's wild is that we've cycled back to a level we were at eleven years ago.  Some of that loss was the dot-com bubble but that mainly shattered the NASDAQ.  There was further loss after 9/11, yet oddly enough the Bush era low came in over a year after that attack.  Then came a surge which turned out to be little more than "mathemagic" which evaporated when scrutinized, leaving us with what I've called the "O-low" of March 2009.

I'd like to think we have a steady footing -- but this eleven year cycle occurs on the same day as the 112th Congress officially arriving.  There was a time when I could look forward to great gains, but I'm done with that.  Between the empty calories we glutted ourselves with by 2008 and the dismal prospect for the next two years, I'm no longer in any hurry to rise anywhere.  I got nervous, and justifiably so, the last time we hit the 13000s and am in no rush to hit those again.  Something like 12960 by Halloween 2012 will suit me fine, and if we go any higher I will want to be extra certain of the solidity of the credit bolstering that.

But for right now there are ten trading days left and 54 points left to clear, so fingers are crossed ...

[pedonbio]

I'm not following Q's "doesn't want to look bad" claim --

He's a troll.