Ftse Just Keeps Going Up ... Why?

[ronpember]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

[jac]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

i bought in march too. still in, will take some profits soon

the basic issue is this. everyone was way too bearish, thinking we were in for a repeat of the 1930s. but back then we had no welfare state to support families, no bank bailouts, taxes were hiked to balance the budget and interest rates kept high to keep the US on the gold standard

this time we've seen record policy easing. and it is working in emerging economies (ex eastern europe). car sales are back at record highs in brazil china and india after falling 2nd half last year - partly due to lehman credit crisis but also due to their own central banks raising rates to combat inflation - remember oil was $150, inflation in double digits and shortages of food was leading to riots!

so the world economy isn't as bad as the uber bears believe.

we're now in a govt debt bubble. but as i found out the hard way on housing markets, debt bubbles can last for longer than you think!

still see subtrend growth next year but over the summer, growth will be better than most expect as industrial production starts to recover. companies had to cut production by more than sales in 1q as inventories had built up. but they can now push production back to an albeit lower level of sales than last year

[porca misèria]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

Gilts down despite printing money.

Could this be a move from big institutional investors from gilts to equities? If so, it's good news: the market telling the government to come out of denial, and benefiting the real economy at the same time.

[BelfastVI]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

Massive increase in sales of rice, pasta, tinfoil and shotguns. Propping up the retail sector.

The markets cant understand it.

[tiggerthetiger]

[gravity always wins]

The ones who didn't see it coming in the first place are still in charge and they still can't see it coming.

[Ash4781]

http://uk.finance.yahoo.com/q/bc?s=%5EFTSE...&q=l&c=

5yr chart

[STRLondon]

Money is going into the stockmarket because no one trusts the government. The government is buying bonds, that same money is then going into stocks. As usual, the government (tax payers) is getting the bad asset in the bonds. The bond market may collapse under the fear of inflation. Who is going to lend anyone money for more than a year at rates of less than 5%?

When they get paid, they might get far far less purchasing power back from their money, and its trapped in. Im pretty scared. I bought on the downside, bought at the bottom, held on to most my stocks, but they are still going up. Where will this end? The banks basically got a LOT of our money, and speculated it all on the stock market in a highly leveraged way, doesnt it feel great to know that if you buy some stocks now, the bankers have made a mint out of you?

an example

CFM hit a low of 1.97, and hit over 10p a share today. Could still be a long way to go, but if one of these huge banks shorts the stock, sells all their stock, its going to go back down a long way. So buying in this market just seems crazy to me, but Ill hang on to what I have.

[sleepless]

Generally there is a rally Dec - May. FTSE 30% down yoy in Dec so lots of bargain hunting. Also ISA needing a home March April. Falls are often July - Oct.

IMO, sell in May/June, buy back in summer depending on economics. Expect volatility around 4000. (could go to 5000 or 3000 by year end

[rollercoaster]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

Maybe the market is just a bit skewed as loads of bankers have gone on holiday to Mexico .......

[Peter Hun]

i bought in march too. still in, will take some profits soon

the basic issue is this. everyone was way too bearish, thinking we were in for a repeat of the 1930s. but back then we had no welfare state to support families, no bank bailouts, taxes were hiked to balance the budget and interest rates kept high to keep the US on the gold standard

this time we've seen record policy easing. and it is working in emerging economies (ex eastern europe). car sales are back at record highs in brazil china and india after falling 2nd half last year - partly due to lehman credit crisis but also due to their own central banks raising rates to combat inflation - remember oil was $150, inflation in double digits and shortages of food was leading to riots!

so the world economy isn't as bad as the uber bears believe.

we're now in a govt debt bubble. but as i found out the hard way on housing markets, debt bubbles can last for longer than you think!

still see subtrend growth next year but over the summer, growth will be better than most expect as industrial production starts to recover. companies had to cut production by more than sales in 1q as inventories had built up. but they can now push production back to an albeit lower level of sales than last year

Yes, but how does the lack of financing available for the hundreds of companies that need it this year and next come into it?

My understanding is something like $750billion has to be raise by companies around the world and none of it is available or can be generated.

As a consequence, unless a company is AAA it won't be able to re-finance and will go bust.

The collapse of so many companies, together with the 20% of the world's trade that has vanished for every will destroy any prospect of a return to the la-la land of valuations or profits of yesteryear

[Gone baby gone]

Ftse Just Keeps Going Up ... Why?, Swine flu, US GDP down, etc etc - don't get it???

It's known as the vicmac64 effect.

[nohpc]

I don't know why but the market bears are throwing their toys out of the pram big style!

Personally I think we are at the start of a multi year bull run. Stoc ks and shares have got nothing to do with fundamentals. They will be the next sheeple bubble and we must be prepared to ride it.

The market was down 40% from it's peak and level with it's peak 10 years ago. Doesn't get much worse than that.

I'm still sitting on the sidelines with more angst by the day hoping for one more tanking so I can buy in but not sure if it's going to come or not.

[D.C.]

http://uk.finance.yahoo.com/q/bc?s=%5EFTSE...&q=l&c=

5yr chart

Well, when you put it like that...

Doesn't look too healthy does it?

This 2 month rally has put us back up to the lows experienced last October, still a fairly dire situation...

[libspero]

I don't know why but the market bears are throwing their toys out of the pram big style!

Care to link us up?

I don't recal any major toy throwing recently

[interestrateripoff]

Coke?

There is a lot of money out there with no where to go. It could be stock prices are being held up artificially because there is a "boom" in share prices and they are good "investment".

[Optobear]

As per title - anyone got any views? I sold out a couple of weeks ago believing that bourses had had a good run since the lows of March... how wrong was I!

The government are printing money at a tremendous rate to offset the collapse in banking. More money around, same number of BP shares, price of BP shares goes up. What is hard to understand?

[durhamborn]

Coke?

There is a lot of money out there with no where to go. It could be stock prices are being held up artificially because there is a "boom" in share prices and they are good "investment".

Shares have been in a bear market for around 13 years due to malinvestment ie property.I think we will see a 10-15 year bull market going forward lead by Asia.

Falls ahead maybe but i think equities will be the best performing asset class over the next 10 years.

Houses the worst.

[Peter Hun]

Shares have been in a bear market for around 13 years due to malinvestment ie property.I think we will see a 10-15 year bull market going forward lead by Asia.

Falls ahead maybe but i think equities will be the best performing asset class over the next 10 years.

Houses the worst.

Shares have been a crap investment over the last 10 years, I don't see that changing.

[D.C.]

Care to link us up?

I don't recal any major toy throwing recently

The last toy throwing I can recall was the bank profits announcements.

That was fair enough really, when things are bad just change the accounting rules and lie about it :angry:

[Confounded]

http://uk.finance.yahoo.com/q/bc?s=%5EFTSE...&q=l&c=

5yr chart

25 Year chart is more telling.

[gallivant]

Makes sense when you think about if you want a place to put your cash.

Houses not expected to rise in the next 2 years - Not many people see a 5%+ growth in this sector

Savings accounts/bonds are very poor rates (Think about the general populace who are getting less than 1% and are now saying "This is pathetic - where can I get a better rate")

Large cash rich organisations that are a FTSE100 regular are a good bet. Good yields and some may even pay dividend.

BP, Northern Foods, Unilever and utilities will still be here is 3 years and the share price is low at the moment with good yields.

I am in shares until the Summer. Look for multi national companies - cheap pound is good for exports. Do some research and find quality stock that has been oversold. Avoid housebuilders, banks and anything to do with car industry unless you know what you are doing.

I spread bet occasionally but it's not ideal for most people. Easy way to lose money.

Of course gold is a good place to put some of your cash but this is not something the general population would contemplate as it's not easily transparent as to how it is purchased/sold. What I mean is it's not something that is generally considered an investment. Although it clearly is.

[Confounded]

http://zerohedge.blogspot.com/2009/04/are-...l#disqus_thread

Zero Hedge

Wednesday, April 29, 2009

Are Fed And Markets On Same Page?

Posted by Tyler Durden at 3:55 PM

Last thoughts for today from D. Rosenberg. Furthermore, the fact that the WHO just raised the Black Swine pandemic to level 5 should force more SPY "deleveraging" compliments of JPM, DB and UBS. To paraphrase WHO chief Margaret Chan: "it really is all of humanity that is under threat in a pandemic."

Mr. Market is to be respected, but he is not always correct

We find it rather difficult to square today’s Fed press statement with the amazing reversal in investor sentiment towards euphoria over the past several weeks. The equity market is, as we all know, a forward-looking barometer, and now seems to have gone further than merely pricing in “green shoots”, to discounting the righthand side of the ‘V’. Mr. Market is to be respected, but he is not always correct.

Fed has a more somber forecast than Mr. Market

The Federal Reserve does possess the largest US macroeconomic model on the planet, and although the central bank acknowledged the obvious today (that “the pace of contraction appears to be somewhat slower”, which was hardly a resounding endorsement for the second-derivative viewpoint, in our view), it seems to have a much more somber forecast of the economy (that “economic activity is likely to remain weak for a time”) compared to Mr. Market.

Disconnect between Fed & market’s ability to sustain rally Although the “outlook has improved modestly since the March meeting”, the operative word is “modestly”. In addition, the “remain weak for a time” quote resonated with us even if the market has largely shrugged it off. The Fed certainly does not have a perfect forecasting track record , but let’s just say that there does appear to be a disconnect between the central bank’s choice of words to describe the economic backdrop and Mr. Market’s ability to sustain this vigorous rally.

Never in the past 60 years have prices dropped this much

As for Treasuries, the selloff continues unabated, and comes on a day when real GDP contracted at over a 6% annual rate with confirmation of a deflationary environment with the gross domestic purchase deflator (GDP deflator ex trade) declining at a 1% annual rate on top of a 3.9% annualized slide in the fourth quarter of 2008. In fact, at no time in the past 60 years have we seen domestic prices fall this much over a six-month span.

Fed views deflation as the primary risk

Perhaps the market was expecting that the Fed would announce more in terms of the size of its bond-buying program (which was not forthcoming) and viewed the press statement as a disappointment. But as we stated this morning, periods of deflation in the past were typically met with long-term yields in a 2-3% band with near consistency. The Fed may have tweaked how it portrayed the current climate in today’s statement, but what it did not change was its view that deflation remains a primary risk – “the Committee sees some risks that inflation could

persist for a time below rates that best foster economic growth and price stability in the longer term”.

Too much slack in the economy to worry about inflation

The fact that the Fed can state this view, knowing full well that it has dramatically expanded its balance sheet and the money supply, is a testament to the view that the central bank has been leaning against the winds of deflation rather than creating inflation. In our view, the latter will be practically impossible to do in an environment where the underlying unemployment rate is approaching 16% and capacity utilization rates are at all-time lows of 66%. There is simply too much slack in the economy, in our view, for us to be worried over the prospect of inflation or a sustained bear market in bonds. Sphere: Related Content

[right_freds_dead]

The government are printing money at a tremendous rate to offset the collapse in banking. More money around, same number of BP shares, price of BP shares goes up. What is hard to understand?

so the FTSE is undergoing a sort of inflation - in a way ?

theres no market fundamentals of recovery pushing this up on the horizon.

id agree with this poster as the money has to go somewhere, ftse seems the obvious choice, so because of the reasons above i would suggest the ftse is simply inflating a little due to the money supply, rather than on performance or projections.

its very sharks teeth out there. up 2%, down 2% almost daily. its as if some ones making 4% every two days. these traders, banks what have you are very desperate and so are being more sharky than usual. strange times. dangerous times. you can see the potential of making a quick mint, but to me it seems like the music will stop and you wont want to be holding the package of wallet ache at the time in happens.

gold is standing firm though. seems to be the 'no alarm' investment at the moment,

the ftse seems like the hand of a gypsy enticing the unwary cash into the fools tent south east.

[durhamborn]

Shares have been a crap investment over the last 10 years, I don't see that changing.

I agree they have.They were over-valued 10 years ago.The big caps P/Es slowly declined over that time,and this crash pushed them to buying range.Long term quality equities should return Dividend+Inflation+GDP growth.

For GSK 6% divi now.If it only stands still and inflation averages 3% over 10 years you should get 9% compounded,more if the earnings are valued higher at some point.

Equities IMO will out perform every asset class going forward.No doubt with wild lurches down along the way.