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awallejr (80.08)

It's all about GDP in the end

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May 05, 2009 – Comments (16)

We have this constant debate between bulls and bears here.  Bears claim this is nothing but a bear rally and we will crash again.  Bulls are arguing that further highs are in the charts and you saw your bottom early March.  Both sides make their arguments. But in the end it really is all about GDP.  Anything goes with individual stocks.  Many factors, including GDP growth, will impact a stock's direction.  But it really is no coincidence that the market plunged as much as it did the last 6 months along with the biggest consecutive drop in GDP in over 50 years.

The ultimate determinant if we saw the bottom or not is what will GDP do in the future.  Bernanke, in his testimony today feels we have seen the worse in contraction, and it is quite possible growth can begin again end of year and continuing albeit at a low rate.  But hey, a small rate increase beats the hell out of a massive drop in my opinion.

Whether we crash again or slowly rise will be determined ultimately by those 3 big letters.  I am in the camp that the worse is behind us, but time will tell.

16 Comments – Post Your Own

#1) On May 05, 2009 at 2:11 PM, alstry (35.49) wrote:

Just wait until the uneployment numbers on Friday....you may want to run over to Camp Alstrynomics after seeing them.

Prepare my friend....prepare and don't fear.

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#2) On May 05, 2009 at 2:32 PM, checklist34 (99.79) wrote:

i am officially at this time in the "i got no idea where we're going next" camp.

but long term the markets trend from here will be higher.  1 year+, we'll be higher, certainly 2 years +.  Short or medium term (days or months) i haven't even any idea.

Alstry, your lust for self promotion is enviable in a way. 

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#3) On May 05, 2009 at 2:37 PM, alstry (35.49) wrote:

check...

it is not my lust for self promotion.....it is simply the facts.....in some ways I wish things were different.....

you know... the economy was growing....unemployment was decreasing....pensions were strong.....banks were solvent.....

but the facts are the facts.....and none of us can do much about them.....other than prepare.

look at awall....he tries and tries and tries....and still can't get his score about zero simply because he refueses to accept the facts that the GDP is evaporating.

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#4) On May 05, 2009 at 2:44 PM, awallejr (80.08) wrote:

Alstry, it will still be about GDP.  Unemployment rates are lagging indicators.  Now if you expect continued negative GDP at the rate of last 2 quarters, then yup, market will tank hard.  But if you think all the recent positives will impact GDP to the point of decreasing the decline and even moving it to positive territory, then you are looking at at least a stable market, if not even an increasin one.

Just watch the next 3 Qs now and see how the market precedes the results, either positive or negative depending on the results.  I am betting next Qs won't be as bad as the last 2 and we will slowly hit positives.

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#5) On May 05, 2009 at 2:44 PM, awallejr (80.08) wrote:

Alstry, it will still be about GDP.  Unemployment rates are lagging indicators.  Now if you expect continued negative GDP at the rate of last 2 quarters, then yup, market will tank hard.  But if you think all the recent positives will impact GDP to the point of decreasing the decline and even moving it to positive territory, then you are looking at at least a stable market, if not even an increasin one.

Just watch the next 3 Qs now and see how the market precedes the results, either positive or negative depending on the results.  I am betting next Qs won't be as bad as the last 2 and we will slowly hit positives.

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#6) On May 05, 2009 at 2:47 PM, awallejr (80.08) wrote:

Alstry, it will still be about GDP.  Unemployment rates are lagging indicators.  Now if you expect continued negative GDP at the rate of last 2 quarters, then yup, market will tank hard.  But if you think all the recent positives will impact GDP to the point of decreasing the decline and even moving it to positive territory, then you are looking at at least a stable market, if not even an increasing one.

Just watch the next 3 Qs now and see how the market precedes the results, either positive or negative depending on the results.  I am betting next Qs won't be as bad as the last 2 and we will slowly hit positives.

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#7) On May 05, 2009 at 2:48 PM, awallejr (80.08) wrote:

Damn, talk about spamming in my own thread.

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#8) On May 05, 2009 at 2:53 PM, awallejr (80.08) wrote:

And alstry stop with the score pointing crap.  CAPS is a game, I screwed it up not realizing closed scores still impacted scoring.  But since most of my picks are dividend stocks, time is on my side since those dividends reduce my basis. But if you want to discuss scores then someone like Andreylikesmtl has kicked your butt in just one month.

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#9) On May 05, 2009 at 2:53 PM, alstry (35.49) wrote:

awall....it is not that GDP is contracting....it is evaporating....and not just in America...but around the world....and it is not just evaporating....it is evaporating at the fastest rate in recent history.

I can only do my best to warn you with a factually accurate presentation of the conditions.......you must take if from there....

good luck.

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#10) On May 05, 2009 at 2:56 PM, dbjella (< 20) wrote:

awallejr's

Good post!  LOL about the spamming.

As for GDP, in your opinion, what effects do our country's debt effect GDP growth?

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#11) On May 05, 2009 at 2:58 PM, awallejr (80.08) wrote:

Actually predictions are turning more positive worldwide.  Mark Mobius has even predicted a major bull market in Asia year end.  and there you go, you are betting next Qs will be worse than last.  If they are you turn out correct.  If they aren't you will be proven wrong.

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#12) On May 05, 2009 at 3:08 PM, alstry (35.49) wrote:

Alstry is not in the prediction business....simply the fact analyzing leading to reasoned conclusion enterprise.....

and right now the facts are terrible and getting worse.

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#13) On May 05, 2009 at 3:11 PM, icuryy4me (< 20) wrote:

 "Unemployment rates are lagging indicators".

I think it is more accurate to say that a rise in employment preceeds and increase in GDP and that in decrease in GPD precedes a drop in employement.

Graph of data vs unemployment vs GDP taken from FRED

 

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#14) On May 05, 2009 at 3:15 PM, icuryy4me (< 20) wrote:

I'll try that again..

  "Unemployment rates are lagging indicators".

I think it is more accurate to say that a rise in employment preceeds an increase in GDP and that a decrease in GPD precedes a drop in employement.

Graph of data vs unemployment vs GDP taken from FRED

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#15) On May 05, 2009 at 3:28 PM, russiangambit (29.90) wrote:

It is about GDP and CPI, in the end. Though, government issued numbers always have positive bias.

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#16) On May 05, 2009 at 3:58 PM, awallejr (80.08) wrote:

dbjella

I don't have an answer to your question.

Icuryy4me

Interesting link.

russiangambit

Good point on CPI since that would impact investment choices, tho I submit GDP ultimately determines market direction.

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