Dow tops 14,000

#1
volinbham

volinbham

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#1
The DJIA top 14,000 this morning - not sure if it will stay there but this is another historic milestone.
 
#3
#3
It's really too bad that the economy is in such bad shape. :crazy:
 
#4
#4
Do you guys think that the higher interest rates are discouraging investment in real estate, and encouraging more market investments?
 
#6
#6
Lexvol said:
Do you guys think that the higher interest rates are discouraging investment in real estate, and encouraging more market investments?
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capital definitely flows away from debt heavy investments in rising / high rate environments. Returns in real estate are enormous if interest expense is not there to eat the gains.
 
#7
#7
I agree with BPV and also suggest that the housing market was overheated.

The DJIA is up 12% in 2007.
 
#9
#9
volinbham said:
I agree with BPV and also suggest that the housing market was overheated.

The DJIA is up 12% in 2007.
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Lot of poorly done spec housing arrived on the scene when one could borrow at 5% to build a house and sell it prior to completion because mortgage rates were absurdly low. Result, overdone housing market in many areas and flood of cash leaving that sector of the RE market.

The Dow definitely rises with a surge of buying power added, but much of what we've seen is stronger corporate earnings driving the market. I believe a lot of those returns are due to the massive amount of capital investment that corporations made while they could borrow at near Japanese banking rates. Corporate cost of capital will remain low for years for those companies that loaded up at 5%. Heck, that's near the gov't borrowing rate.
 
#12
#12
As I've repeatedly said, consumer sentiment polling is worthless and quickly losing favor with the investing community.
 
#14
#14
CSpindizzy said:
But not with the consumers who are the ones buying the goods being invested in.
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such a limited number of consumers and not particularly represetative. Give me all the statistical analysis you want, but the consumer polling is less and less relevant because it is not the leading indicator it was believed to be and is often at odds with reality.
 
#15
#15
It's representative of the nation as a whole. Less relevant? Is that why every time one of these readings comes out it affects the markets? I guess those idiots on Wall Street are not as up on whatever true indicators are as you.
 
#16
#16
CSpindizzy said:
It's representative of the nation as a whole. Less relevant? Is that why every time one of these readings comes out it affects the markets? I guess those idiots on Wall Street are not as up on whatever true indicators are as you.
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because the markets, given that they're rife with unsophisticated investors and move somewhat based upon the psychology of that crowd, move on any news. The sophisticated trading crowd tries its best to project the psychology of the remainder. They win some and they lose some.

I spent my time on Wall Street in corporate finance. I was too stupid to understand most of the concepts, but know where polling data lies in the minds of those analyzing, trading and dealing at the institutional level in securities. Smartest money on the street is in the bond markets and they don't move on sentiment data.
 
#17
#17
Apparently Consumer Sentiment is up:

FreshPlaza: Global Fresh Produce and Banana News

Consumer sentiment climbed by far more than expected in early July to its highest in six months due to a surging stock market and reluctant acceptance of high gasoline prices, a survey showed on Friday.
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"We're a bit surprised at the Michigan numbers, given where oil prices are and the problems in the housing sector. It perpetuates this on-again, off-again feeling about the U.S. economy," said Shaun Osborne, senior currency strategist at TD Securities in Toronto.
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#18
#18
A little more info on the measure:

Consumer Confidence: A Killer Statistic

In analyzing any consumer sentiment index, it is most important to determine the trend of the index over several months. Simply put, the trend graphed out over four or five months is critical. Keeping this in mind, one needs to remain astute and block out news bits such as "the index is at 80 so things look gloomy" or "the level of consumer sentiment is up slightly from last month". The trend over several months - not a comparison of this month to the same month last year- is the undeniable benchmark. Commentary that focuses only on the single monthly figures, without looking at the developing trend, is misleading.
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#19
#19
And last week we had links showing it wasn't so rosy....so what's your point? It's trended down. Several gauges show this.
 
#20
#20
CSpindizzy said:
And last week we had links showing it wasn't so rosy....so what's your point? It's trended down. Several gauges show this.
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A couple points.

1. The trend is up and down and ties closely to 2 things: gas prices and the housing market. Since both have stabilized (or sunk in so to speak) you see the large jump this month. The view of the market (and the analysts) is that there is no real trend - the measures flip between index numbers suggesting optimism and pessimism.

2. Related to #1 is the impact on the market - typically the market moves on surprises (higher than expected/lower than expected) more than on absolutes. If the indicators were consistently pessimistic, it would drag on the market and eventually the economy (since the #s are forward looking) - if they were consistently posit they would push the market and eventually the economy. However, the biggest short-term market impacts are when the indices don't match market expectations.

3. The Consumer Confidence Index has been trending up over the same time period that the Consumer Sentiment Index has been trending down.



Bottomline, we really don't know how consumers feel about the economy at this point in time.
 
#21
#21
Look at the political polls. These have been done in smaller universes all over the country and just about all of them show low confidence in the economy. These larger polls done nationwide are harder to gauge but the regional polls show a more precise view. Again, as we discussed before this is all about preception. But again perception is what people vote and act on. So regardless if the stock market says otherwise, people's viewpoints are what matters.
 
#22
#22
CSpindizzy said:
Look at the political polls. These have been done in smaller universes all over the country and just about all of them show low confidence in the economy. These larger polls done nationwide are harder to gauge but the regional polls show a more precise view. Again, as we discussed before this is all about preception. But again perception is what people vote and act on. So regardless if the stock market says otherwise, people's viewpoints are what matters.
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Great point. Let's dismiss the market because that would be too solid as an indicator of the value of expected returns there, especially since the vast majority of invested capital is institutional and controlled by pros. Let's rely more heavily upon imprecise and inconsistent polling data to help us shape our decisions concerning the economy.
 
#23
#23
CSpindizzy said:
Look at the political polls. These have been done in smaller universes all over the country and just about all of them show low confidence in the economy. These larger polls done nationwide are harder to gauge but the regional polls show a more precise view. Again, as we discussed before this is all about preception. But again perception is what people vote and act on. So regardless if the stock market says otherwise, people's viewpoints are what matters.
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Do they say low confidence in the economy or lower confidence? There's a big difference between a change in sentiment and absolute sentiment.

The two most used indicators are the Consumer Sentiment Index and Consumer Confidence Index. Neither shows pessimism based on the index numbers. They have shown ups and downs but those ups and downs are around neutral to optimism levels on the index.

The 3 month moving average for the Sentiment Index shows 87.93 (March/April/May); 86.9 (April/May/June); 88.67 (May/June/July).

The CCI has bounced up and down around 105 (100 is the base line between optimism and pessimism) for the last 6 months at least.

There is a big difference between a change in sentiment (which is hard to track currently) and overall sentiment. Most of the news of June was about a change in sentiment compared to May.
 
#24
#24
BigPapaVol said:
Great point. Let's dismiss the market because that would be too solid as an indicator of the value of expected returns there, especially since the vast majority of invested capital is institutional and controlled by pros. Let's rely more heavily upon imprecise and inconsistent polling data to help us shape our decisions concerning the economy.
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More proof you are not reading my posts. But repeating myself has not shown effectiveness so you can just live in your convoluted world.
 
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