Re: [RT] Big Picture

["Bobh" <BHEISLER@xxxxxxxxx>]

I'm largely in your camp Kent.  But the one 
thing that is a troublesome wildcard is fiscal policies that could be 
adopted by a mostly clueless group of governors.  And so far what 
seems to be spewing forth from the majority of them is going to make Hoover 
proud.
 
Bob
 
----- Original Message ----- 
From: "Kent Rollins" <<A 
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To: <<A 
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Sent: Wednesday, January 01, 2003 2:54 
PM
Subject: [RT] Big Picture
<FONT face=Verdana 
size=2>> >Bottom line is that very little has really changed> 
>in the big picture during the past several years to> >pave the way 
for economic and business prosperity.> > This isn't completely 
true.  Businesses have done what they always do in> recessions: they 
cut expenses.  So when things do begin to turn up, much> more of the 
top line will fall to the bottom line.  This process have been> 
going on in businesses for well over a year.  It's one reason why 
capitalism> works so much better than socialism: we cut the fat during 
recessions.> > >Yes, some of the air has come out, but not 
nearly> >enough to radically alter the bull market belief 
system> >of continuous, unlimited, and effortless prosperity for 
all.> > Strongly disagree with this.  Many people have been 
forced to put-off or> come out of retirement because of what has been 
done to their retirement> savings.  And many others have had their 
savings cut in half or worse.  Once> burned, twice shy.  And 
many have been badly, badly burned.> > >I will remain bearish 
until a lot more air has been let> >out of the equity, housing, 
credit, and consumption> >(especially import) markets.> 
> Granted, housing, consumer credit and consumption remain a serious 
problem.> Consumers typically go into recessions strong as they have in 
this one and> consumers get weak in the midst of the recovery while 
businesses begin> growing again.  I think the key to the next 2 
years will be how severely the> consumers are hit in the next few 
months.  Consumers are way over-extended.> As for imports, imports 
will remain a problem for decades.  As long as the> Democrats keep 
pushing legislation to export jobs, the United States will> have to keep 
importing stuff.  In the long run, imports may be the undoing> of 
this country.  But that's the long, long run.> > >I have 
mentioned many times here that such a great> >bull market can only be 
corrected by a combination> >of price and time.> > Price 
and time leaves the option for the market to move sideways for an> 
extended period.  Let's not lose sight of that.  We don't have to 
correct> the excesses of the late 90's by going down further than we 
have.> > >More specifically to the shorter term, I am 
sensing> >fatigue on the part of the consumer> > 
Granted, this is coming (probably by spring) and the magnitude of the 
hit> will scope what comes next.> > >and there is no 
other Great Consumer which is going> >to bail out the world by 
consuming excess goods and> >services.> > Not 
neccessarily true.  The excesses in this country weren't 
experienced> around the world.  Some countries will begin to pull 
out of it.  I wouldn't> say there is a Great Consumer, but there 
will be some increase in global> demand.> > >I also 
believe that military operations in the Middle East> >are going to be 
far more difficult and prolonged than> >widely believed. The people of 
Iraq and surrounding> >countries are just not going to kneel down in 
front of> >the US military even though they may not mount 
overt> >and concerted resistance.> > QED.  We 
cleaned up in Iraq last time (granted that war was heavily slanted> in 
our favor as we look back on it, but at the time people were saying 
"Viet> Nam II" and "Iraq has the world's 5 largest army" (they rank much 
lower> now)).  We cleaned house in Afghanistan when people were 
talking about how> the USSR got it's butt kicked there.  I think we 
may be underestimating the> military effort in Iraq, but I think things 
will be largely wrapped up in a> few months and we will be down to a 
police force like we are in Afghanistan> now.  And I think it's 
possible that other countries will help pay for and> provide troops for 
peace-keeping ops in post-Saddam Iraq.> > >A home grown despot 
is always preferable to foreign> >rule and occupation.> 
> How about freedom?  What do people prefer more: a home-grown 
despot or> freedom?  Did you know they held elections in Afghanistan 
last year?  When> is the last time you heard anyone use the word 
"Taliban"?  They aren't> taking women into the soccer stadium on 
weekends, tying them to a post and> shooting them in the back of the head 
either.  We are a long way from> declaring success in Afghanistan 
but we are clearly on the road to creating> a stable, self-governing, 
free country.> > >Make no mistake, the plans are to occupy Iraq 
and> >use it as a platform to carry out operations throughout> 
>the Middle East while pumping as much oil as possible.> > 
Paranoia.  We are going to get in, kill or oust Saddam, set up a 
government,> and leave.  Without question, the global oil companies 
will go in and bribe> all the newly elected officials to sign huge 
E&P contracts.  The big oil> companies produce oil, not the US 
military.  And there are really almost> more opportunities for 
exploration and production around the world right now> than they can 
handle.  Iraq is just one more patch of ground that is too big> for 
any single oil company.> > >Need I mention that there is still 
a lot of crap on the> >corporate books, especially outlandish pension 
plan> >projections?> > This I highly doubt.  
Although there have been rumors about JPM for a long> time.  It 
wouldn't surprise me if some big bank goes LTCM.  The thing is,> 
they have had a long time to unwind dangerous positions.  It's a toss up 
as> to whether or not they were smart enough to get it done.  
Expecting more> monkey business on the balance sheets is just pure 
speculation.  And when> CEO's see other CEO's being paraded around 
in hand-cuffs, things get> straightened out.> > The real 
danger as we both seem to agree is the over-extended consumer.> This 
could hit the small- and medium-sized banks if the consumers get hit> too 
hard.> > >Bottom line? The next (interim) bear market bottom is 
probably 3-6 months> >away, although it is possible we could get a 
major bottom if the policy> >makers leave the market alone. The real 
bottom of the bear is some> >combination of 500+- SP points and 7 
years away. The next major bull market> >is probably 15+- years away. 
This remains an extremely dangerous equity> >market suitable only for 
nimble traders.> > My bottom line: there's no way in hell we're 
going down 500 more points on> the S&P.  We may retest the 
July/October lows and may even break them by a> bit.  But I think 
we're going sideways from here for years to come.> Definitely a 
traders-only market.  Bye-bye, Buy-and-Hold.> > Kent> 
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