Uh-Oh: The Economist Cover
Whew! that was a close one!
The cover of this week's Economist refers not to the US Equity markets, but instead to the Housing / Real Estate market.
"Despite the rattled markets, the world economy is still relatively strong. Just don't bet your house on it"
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May 25th 2006 Edition
Let me remind readers The Economist, an otherwise fine periodical, just about bottom ticked the telecoms in Summer 2002.
The full article can be seen here: The great telecoms crash ($)
For a primer on Magazine cover indicators, see this doc or these weblinks.
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Source:
Bears in the woods
The Economist, May 25th 2006
http://www.economist.com/opinion/displayStory.cfm?Story_ID=6975848
Thursday, May 25, 2006 | 03:55 PM | Permalink
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True story:
We have alot of black bears in the area (Fairbanks) and I see one several times a year at least. And there are a few griz around, but not alot of them in the 50mi radius around town. Yesterday, for the first time in about 20 years two griz were spotted next to the road about 10mi from downtown Fairbanks. Front page photo today in the local paper.
The bears are truly coming out to play. Won't be long before a few pets or livestock in the are get the chop. I'd wager on the musk oxen at the university being a prime target.
Posted by: Alaskan Pete | May 25, 2006 4:30:05 PM
So does that mean the U.S. real estate market has bottomed?
Posted by: GRL | May 25, 2006 4:45:33 PM
agree with GRL.... i'm not sure i get your point (if there was one).
Bulls in force at the close today. Maybe that's the point.
Posted by: pillowbiterskilling | May 25, 2006 5:00:31 PM
I love the magazine, but they definitely bottom-ticked crude; when it touched $10/barrel they claimed it was on it's way to $5 as the world was 'awash' in oil. Crude turned that day and never looked back.
Posted by: mojave | May 25, 2006 5:07:45 PM
I love the magazine, but they definitely bottom-ticked crude; when it touched $10/barrel they claimed it was on it's way to $5 as the world was 'awash' in oil. Crude turned that day and never looked back.
Posted by: mojave | May 25, 2006 5:07:47 PM
On the other hand, they had a "Housing is Doomed" cover story in June 2005. And that was pretty much the top in most U.S. markets. So I think this "indicator" is full o' beans.
Sometimes mag covers mark bottoms. Sometimes they mark tops. Sometimes they're early. Sometimes they're late.
I remember Barrons doing a cover on "Which dotcoms will go bankrupt?" in March 2000. Hardly a bottom for dotcoms.
I remember Fortune doing a cover story in Sept 98 on "How to Survive the Coming Recession?". They were about 18 months early.
So who does this current Economist cover mean---top, bottom, early, late? Who knows and who cares.
Posted by: angryinch | May 25, 2006 5:34:39 PM
I remember that. Then again, they almost perfectly top-ticked the tech-bubble crash.
Who reads the Economist for market timing tips?
Posted by: wcw | May 25, 2006 5:34:59 PM
BTW, the story IS about the stock market. Actually about all investable assets. It's not a real estate story.
But the moral of the article is: don't worry, be happy, pare back risk, stare down the bear, no problemos. So while the cover looks ominous, it's a "feel good" story after all.
Posted by: angryinch | May 25, 2006 5:38:09 PM
The dow was up 100 points today... but did anyone notice there were only about 4 stocks that made a move... everything else was basically flat.
How bullish is that ?
Posted by: chris | May 25, 2006 5:58:11 PM
There was just a magazine cover less than a year ago espousing real estate. The worm can't turn in a year and inventories are exploding.
We are headed for a recession. It doesn't matter what the Fed does any more. And bonds have bottomed. Tips are starting to drop a turd too signaling inflation is dead. Rates are going down. IMO.
In the market, we still have the same scenario. Too much money chasing too few stocks because there is no new leadership. eBay up nearly $4 today? Are you sh*tting me? eBay is one of the most overvalued big cap techs on earth. That run up will last. NOT! For GM to be up nearly $3 today and nearly 50% this year is absolutely ludicrous as well. Fast money trading GM is fine but there is no way out of this mess. None. Unless the retirees roll over. Yeah, I'd do that if I were a retiree out of the goodness of my heart. Especially after the worst management on the globe has created this mess by losing 50% market share in 30 years. They must declare bankruptcy at some point. This year, next year, three years from now, whatever.
For God's sake, Bob Lutz said Renault's stake in Nissan a handful of years ago was suicide. Oh really? Tell Carlos Ghosn that. He's kicking your ass mercilessly with full size SUVs, full size pickups, small cars, sports cars, midsize cars, a luxury brand, etc.
Unlocking the value of GM, and it is absolutely tremendous, will require a transformation so painful only bankruptcy will provide the impetus.
Posted by: B | May 25, 2006 6:20:31 PM
More juice injected by the BoJ:
http://www.forbes.com/markets/feeds/afx/2006/05/25/afx2772177.html
and Bernanke is, indeed, a major hawk. "... judged the bias in CPI inflation currently to center around 0.9 percentage point per year."
http://www.house.gov/jec/news/news2006/bernanke%20statement%2005-24-06.pdf
One and done, anyone?
Posted by: ndk | May 25, 2006 7:24:09 PM
Don't forget that The Economist nearly bottom-ticked the price of oil 6 years ago. The mag has some of the best, most nuanced, most balanced writing around, but they've called some real stinkers over the years.
Posted by: Bynocerus | May 26, 2006 10:20:06 AM
