The bull shit keeps flowing like what we heard in the late 1990s and early 2000’s about Tech and, then again,--- 2002-2007--- about real estate. “You don’t understand the market,” was the mantra of all the incumbents, most of whom had “real world experience” (and an anti-intellectual bias), trumping microeconomic knowledge. Well, we know how that ended, don’t we!
So, here is what I think about today’s bull shit ("marketing without knowledge") emanating from Wall Street, some businesses and a few politicians. If I am wrong about these prognostications, please feel free to rub my nose in it in 3-4 months. This market is overvalued and despite the Fed flooding the market with capital (printing money and keeping interest rates artificially low) there will be hell to pay by the end of 1Q. 2010 (timing is always difficult to accurately predict, though the outcome is not).
Here are the facts:
1. The U.S. propaganda-machine won't let facts and reason interfere with its own incessant market-pumping. The latest fluff comes from Reuters. On Saturday, it speculated that “improved revenues” could continue to fuel the equities rally, and that revenues “kicked into gear” in the 3rd quarter.
a. How does Reuters quantify this bullish prognosis? It's predicting that instead of the 14% year-over-year declines which represented the S&P average for the 2nd quarter, that the year-over-year decline for the 3rd quarter will be 'only' 11%.
b. What these sleazy propagandists somehow 'forgot' to include in their analysis is that the 3rd quarter of 2008 was much worse for U.S. corporations than the 2nd quarter.
c. Naturally, Reuters dug up a market shill to reinforce this prognosis. “As of right now, the growth rates [emphasis mine] are improving for earnings and revenue,” said John Butters, director of U.S. earnings for Thompson Reuters.
2. As I just pointed out, both earnings and revenues are still plummeting down in all year-over-year comparisons.
a. The reason why the market focuses on year-over-year numbers more than quarter-over-quarter numbers is because seasonal changes in markets make quarter-over-quarter comparisons irrelevant for many sectors of the economy.
b. Thus, when this shameless shill talks about “growth” in earnings and revenues, he is referring to numbers which are still plunging downward at one of the fastest rates in history.
c. This has been symbolic of this entire propaganda-fueled rally.
3. In the upside-down world of the propagandists, “black” is “white” and “bad” is “good”.
a. Reality has no relevance, only the perceived reality is important.
b. With the real numbers (beyond the control of the propagandists) showing that the U.S. economy is once again accelerating downward (Business, Consumer Loan-Delinquencies Still Soaring).
c. With “insiders” now having taken most of their own money off the table, the market-pumpers appear poised to end their propaganda campaign, allow U.S. markets to crash – and thus provide a new buying opportunity for insiders.
d. Put another way, if U.S. corporate earnings and revenues continue “growing” in the manner described by Reuters, almost all these companies will be bankrupt in a few years.