Wednesday, September 9, 2009

Rally On!

The Recovery is right around the corner:


28 comments:

Anonymous said...

This is so stupid. Not once in the 80+ year history of keeping track of CRE has the vacancy rate peaked during the recession. Not once.

And this dumbass wants to show us the recession is "not over" because CRE vacancy hasnt peaked yet. Its a lagging indicator dumbass.

Still, maybe he believes CRE vacancy will peak before the recession is over - maybe he thinks "its different this time"

getyourselfconnected said...

I think anon works for the JP Morgan REIT trading desk. Hey anon, go back to upgrading the entire sector again before you get stuck holding the bag. You will then set the crap bag on fire and hand it to the taxpayers for disposal.
Sorry Jeff, could not help that one.

Jeff said...

Anon

I think the one thing we have learned from this recession is its not the "garddening variety" like the others seen since the early '80's.

There are no lagging indicators at this point.

The collapse is being disguised by the spigot of bailout money.

Things are still in a free fall. Look at the collapse in credit.

This is a market thats unlike anything seen since the '30's.

Trying to play it like its a "just another recession" is a mistake in my view.

Anonymous said...

Jeff said...

Its different this time...

Jeff said...

Hehe

The bulls said the same thing in 1930/31 after a 70% rally.

We'll see.

My point is you haven't seen anything like a consumer led recession.

Peter said...

Wow, that was ugly. Are the banksters not spending their bonuses?

It's nice to have someone like Anon stop by so that we can see what most "normal" people think. I assume he is in the majority judging by the market.

With all the economic and financial numbers available his only point is that it has always been this way. You can't argue with logic like that.

Warning, driving in the rear view mirror can be hazardous.

Herb said...

I think the one thing we have learned from this recession is its not the "garddening variety" like the others seen since the early '80's.

Bingo!

Plus, I would add, it is not exactly like the Great Depression of the 30's either.

I think when it is said and done we will find it is a mixture of several recessions and the GD.

From todays WSJ - "At their worst, U.S. exports were down 22% from a year earlier, but imports were down 31%." So did Smoot-Hartley get a bad rap in the history books?

jeff said...

Peter

Yup

"it is what it is". Thats all I can say right now.

J6P is totally confused right now. Others are convinced the bull is back.

So sad.

In my opinion stocks at this point should be a small speculative part of your portfolio.

jeff said...

Herb

Great data! Thanks.

Personally when this is all said and done I think its going to be worse than the '30's.

I am not predicting Armegeddon, just a slow brutal bleed that consists of slow to zero growth and high taxes.

Our children will pay the bills.

jeff said...

Let me add: Will the stock market reflect this?

Hell no! Just like our real unemployment numbers have been gamed.

The system is RUINED.

I have no faith in anything we are being fed right now.

YOu need to be diversified with your portfolios. This is nothing I haven't said 1000 times.

Be careful all!

J

Anonymous said...

Jeff said..."there are no real lagging indicators at this point"

Interesting. CRE was a laggard a mere 18 months ago.

http://3.bp.blogspot.com/_pMscxxELHEg/Sow24LBoUzI/AAAAAAAAGIw/Or1ToZnl7Gg/s1600-h/MoodyCREJune2009.jpg

Seriously, are you sure you are willing to say CRE wont be a laggard coming out of this?

flipdippy said...

You say potato, I say potatoe.

Why is it, in the realm of economics, Occam's razor is rarely mentioned?

The problem with the economy is not hard to explain. America spends a lot of money. America hit a spending wall and needs to pay off debts. If America is paying off debts, they can not spend more to pick up the slack.

And just like every investment prospectus says "past performance is no indicator of future results", there's no point in looking backwards and trying to see whether the shade of pink on the walls in the bedroom is more like the pink at sherwin williams or the pink at home depot.

We've found ways to postpone the inevitable. We may see temporary swings which are too positive or negative based on sentiment.

But I just don't understand how the public and even a lot of the people who follow markets and economics don't see this is a simple problem which has a simple but painful solution.

Everytime in history someone says "well, this time it's different", the forces of nature remind us, "no, it really isn't".

Jeff said...

Anon

I am just saying its too early at this point to read any indicators.

This bubble hasn't popped yet but it will.

This recovery isn't real. At some point CRE will be a lagging indicator. Maybe 10 years from now.

Jeff said...

Flip

Great points.

The market will eventually "get it". It just takes time.

Minton Mckarkquey said...

I'm sick of hearing about 'lagging indicators' - as Jeff mentions, this is consumer led depression. If anything, the unemployment and CRE numbers are arguably leading indicators simply because their unprecendented size is contributing to the continuing downtown.

CRE is going to crash and burn big time. The rents were too high in many areas, and the consumer has retrenched. In San Francisco, we're rapidly reaching the point when the number of closures competes with the number of open businesses.

Anonymous said...

Everytime in history someone says "well, this time it's different", the forces of nature remind us, "no, it really isn't".

Exactly why CRE will once again be a lagging indicator - same way its been for the last 80+ years.

Anonymous said...

Minton Mckarkquey said... If anything, the unemployment and CRE numbers are arguably leading indicators.

Translation - its different this time...

Anonymous said...

@ 1st anonymous:

CRE wasn't a lagging indicator in the 90s recession either. It just lags housing. That is all.

And who said anything about CRE having yet peaked?

The point is, CRE is the 'second shoe to drop' in this crisis that will again set off another huge round of failures.

flipdippy said...

wowee.

markets making new highs for the year, slicing through resistance.

time to re-evaluate being bearish. seems just as possible the bubble will go further faster than people expected. wouldn't want to miss another 10-30% just because we're already up this far.

Anonymous said...

I agree it hasnt peaked. But my point is if in the past it rises after the recession is over, and if this time it rises after the recession is over, how can the dummy in the video use the fact that it is rising as evidence the recession is "not over"?

You said one thing which I dispute:

The point is, CRE is the 'second shoe to drop' in this crisis that will again set off another huge round of failures.

Another round of failures where? In what sector? Largely an academic point, but I dont know if anyone is really aware what a lagging indicator means. To often I hear this:

1. Sector A will collapse, triggering a fall in B.

2. The collapse in sector B will trigger a collapse in C.

3. The collapse in C will trigger a collapse in D.

4. The collapse in D will trigger another leg down in A.

SCREEEECH! Hold up there boys. Looks like you took that argument one step to far. The collapse in D generally does not trigger another leg down in A. If it did, A would again trigger B, which would again trigger C, which would again trigger D which would again trigger A, etc. etc. etc. This is a negative feedback loop and the antithesis of leading and lagging indicators.

If negative and positive feedback loops were correct, right now, eveything would grind down over and over til they hit ZERO. Likewise, positive feedback loops would cause prices to hit infinity.

Fact of the matter is, it just doesnt work that way. To our knowledge, nothing has hit infinity or zero. Hence, "something has to end the cycle. "Something" has to fall causing nothing else to fall. Something has to be lagging - CRE is one such thing. A. hits B, hitting C. hitting D. end of story - such is the nature of lagging indicators.

Anonymous said...

Oh and thats not to say that its necessarily over. As bearish as Jeff is, im surprised he hasnt yet jumped on the double dip bandwagon like all other good bears now. Argument is that the removal of stimulus will cause crowding out of private investment - causing another "double dip" recession.

Its not a bad argument. In fact, its perfectly logical, and one I am watching for myself. And if it did happen, you would have a whole nother cycle, A then B then C then D. What is not logical is citing lagging indicators as some evidence of more pain to come.

So again, Jeff, time to ditch this current recession as its clear its about played out. However, you still have time to jump on the double dip bandwagon - jump on board and ride the bear train of us burning into oblivion forever my man - toot toot!!!

jeff said...

Anon

I have always been in the double dip camp. Many believe we never got out of the 2001 recession.

I definately see the potential for positive growth in Q3 and Q4 because the comps are so weak.

The bulls will then all jump in thinking happy days are here again before we sink right back into the soup in Q1 2010.

We are going to have a huge inflation problem which will force the fed to pull the liquidity.

BTW

I just try to tell it like it is. My main goal here is to provide a contrarion view to the constsnt bullshit thats fed to us on a daily basis on CNBC.

I am very much a realist versus being a bear.

In fact, I hate being bearish. I wish we could get out of this mess. I just don't see it happening over the long term wiothout some serious pain.

I will become bullish down the road someday. Not now.

Jeff said...

post up 7-7:30

getyourselfconnected said...

Jeff,
23 comments! Nice. I had no idea a CRE discussion would get so much attention, I guess it is a hot item.

getyourselfconnected said...

PS,

Whats your call on tonights game? I say Steelers 17 Titans 10 in a rough game with plenty of defense.

Jeff said...

Get

Thanks

The Titans scare me. they pummeled us by 20 points last year.

We are at home and I hope last years beat down will provide serious motivation.

I'll say Steers by 3 in a low scoring game.

Anonymous said...

"Jeff said...I am very much a realist versus being a bear."


I call bullshit. A few weeks ago you had the opportunity to admit that seasonally adjusted Case Shiller was up. One single solitary data point, at one single moment in time was up.

You chose not to adress it. You couldnt admit it. You just went silent. That was your defining moment, and you blew it. You exposed yourself as a true permabear. Like all permabears, I have ever known, you were unwilling or unable to see even one single solitary good thing in a sea of doom.

That spoke volumes on you and (I and your audience) wont ever forget it.

jeff said...

Anon

I didn't choose to not address it. I didn't disagree(from what I remember) with your data point. I just didn't think the point was significant.

I learned a long time ago on here that its easier to walk away from an arguement after a certian point.

I apologize if you took offense to my silence.

I get hit with a lot of comments and e-mails so I don't always have time to respond to everyone.

I have forced myself to cut back on this because it gets extremely time consuming.

As for my permabear stance, Its saved me a lot of money and I still see nothing to be bullish about.

Maybe I will miss the next bull market as a result of my bearish views.

The one thing I am pretty certian of is this isn't a new bull. There are no V recoveries after the collapse that we just saw.

I'm sorry you feel the way you do and I wish you the best.

J