What will bust the World Stock and Bond markets!!!
MGLICKER
Posts: 7,995 ✭✭✭
Look closely at this map of Saudi Arabia. Please note the proximity to Syria and Iraq, both nations which have been infiltrated by ISIS.
ISIS has a passion for overtaking oil facilities and with 10,000,000 BBL production per day, the Saudi's with little military defense is a nearby and ripe target. $150 oil would not bode well for world economies. Bakken Shale production is wonderful, but at a million BBL a day, represents only 10% of Saudi delivery.
The US would of course respond immediately to such an invasion........or would we?
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Natural forces of supply and demand are the best regulators on earth.
I don't believe that ISIS really exists the way it's being promoted. The story is a little too cute. But maybe this time its different .
Screw the Saudis anyway , they have been fomenting all these radical groups for years . Let them reap what they have sown
Fact...The Saudi's have an army of approx 150,000, equipped with the latest & best weapons that money can buy. (Total military strength in excess of 200,000)
Saudi Arabia has the third largest air force in the Middle East behind Iran and Israel. Equipped with some of the most sophisticated fighters that petro dollars can purchase.
As you stated: "the Saudi's with little military defense is a nearby and ripe target." Facts do not confirm that remark....(FYI, ISIS is believed to have no more than 10,000 fighter, including approx 100 from the U.S. in their ranks)
Equipment will be as effective as the Iraqi equipment that was tossed as soon as the terrorists rolled into town.
House of Saud has no interest in fighting a war and has little or no experience in that regard.
Unfortunately the caliphate will continue in Saudi Arabia with little internal resistance and more than a bit of support as the Saudi's resemble ISIS more than they deviate from them.
I knew it would happen.
<< <i>MGL as has been the case with most of your posts....Here are some facts that you overlooked.
Fact...The Saudi's have an army of approx 150,000, equipped with the latest & best weapons that money can buy. (Total military strength in excess of 200,000)
Saudi Arabia has the third largest air force in the Middle East behind Iran and Israel. Equipped with some of the most sophisticated fighters that petro dollars can purchase.
As you stated: "the Saudi's with little military defense is a nearby and ripe target." Facts do not confirm that remark....(FYI, ISIS is believed to have no more than 10,000 fighter, including approx 100 from the U.S. in their ranks) >>
Here's another fact: Saudi Arabia is 90% Sunni. IS is Sunni. IS, as it continues to grow, would more likely attack Shia Iran, or Jordan, though Sunni, that leans toward the West, is peaceful towards Israel, and is comparatively weak defensively. An offinsive by IS towards SA is a long, long way off.
<< <i>What will bust the World Stock and Bond markets!!! >>
PE ratios like the one AMZN currently holds. The current market is in a growing bubble. When will it burst? I dunno when, but I can say it will.
<< <i>Here's another fact: Saudi Arabia is 90% Sunni. IS is Sunni. >>
That is why the military will roll over. Saudi's love to dismember those in disfavor so they play into ISIS bailiwick. Oil production is too large to ignore and the rank and file citizens have had it with the Saudi royalty.
News Flash: WH has no strategy for Isis and that will likely not change anytime soon.
I have been focused on participating in the upside in both the stock and bond markets.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>I don't know.
I have been focused on participating in the upside in both the stock and bond markets. >>
....and many made money buying silver at $35 on the way up to $49.50.
<< <i>Equipment will be as effective as the Iraqi equipment that was tossed as soon as the terrorists rolled into town.
House of Saud has no interest in fighting a war and has little or no experience in that regard.
Unfortunately the caliphate will continue in Saudi Arabia with little internal resistance and more than a bit of support as the Saudi's resemble ISIS more than they deviate from them. >>
I had no idea, that you are such a military expert or House of Saud historian.
I dont trust the Saudis one bit nor do I give a crap if they get beat up but as soon as ISIS crosses into Saudi Territory they will cry like babies to us and America will ofcourse defend them and prostitute ourselves to them AGAIN.
<< <i>There is ZERO chance, Im talking ZILCH that the USA would let ISIS take control of Saudi Oil Fields.
I dont trust the Saudis one bit nor do I give a crap if they get beat up but as soon as ISIS crosses into Saudi Territory they will cry like babies to us and America will ofcourse defend them and prostitute ourselves to them AGAIN. >>
That would be true if the Nobel peace prize winning commander in chief had any real interest in the matter. He seems to care little that Isis has infiltrated Iraq, even though they have substantial petroleum reserves.
Better chance that the European Union will step up to the plate when the incursion into SA occurs.
Anyone remember 1990? Iraq had the 4th largest army in the world, with dated, but modern Russian weapons and training. Those forces included first rate tanks, second rate aircraft, first rate small arms and modern missiles. Even with all that manpower, and firepower Iraq didn't come close to taking over all the oil fields and keeping them.
Isis? While they do well against women, children and poorly armed civilians, they would likely melt against well trained, modern forces schooled in combined arms warfare of air, artillery and armor. Who you ask? It might be the U.S. or might not. The Saudi's like Kuwait in 1990, have enough money and influence to buy other armies if need be. The Russians would likely be glad to send in a division or two and that's probably all it would take to destroy the Isis army, especially if backed by air strikes. The Chinese would also jump at the chance to expand their sphere of influence and gain a few IOUs in the bank from the ultra-rich Saudis. It would take time for Russia or China to get ground troops there, but Saudi has a modern air force with enough firepower to prevent being overrun quickly.
Knowledge is the enemy of fear
To keep this PM related, I seem to remember at one time Saudi Arabia was a big buyer of gold. Is this true? Do they still have and/or buy lots of gold with teir oil profits?
Successful BST deals with mustangt and jesbroken. Now EVERYTHING is for sale.
<< <i>Do they still have and/or buy lots of gold with teir oil profits? >>
Good question. My understanding is that to appease the vassal citizenry during the Arab Spring, the Saudi royalty agreed to massive government programs and subsidies to maintain control. Opinion was that oil had to maintain a $100 level to fund these initiatives. Money for gold purchases may then be in decline.
<< <i>My portfolio would take a hit if we had a pullback...so then ya stock up on the ones you are confident in at a lower price...in another 6 years you will be up handsomely in all likelihood. You know the drill. And MG you talk about an impending pullback or a bubbly market-I'm sure you know where we are p/e wise now compared to where we were in the tech bubble-we aren't close to that overvalued level. The nasdaq hasn't even recovered from the crash 14 years ago...the nasdaq will probably set a new all time high within the next 6 years, perhaps earlier. That will lift up the S&P and Dow...however long it takes...it doesn't help to tell people to be concerned about being in US equities right now-some of the same people with those views are those who take goldline ads seriously...it is better to be in the market than not. You can't time the markets. >>
To the long term, disciplined stock investors, I say congratulations and carry on. Valuations though are being distorted by one time charges that now occur quarterly and were meant to be used in rare, occasional events. Dividend yields tell a better story as it represents real cash. We are at a bit under 2% on the SP500 which is looking vulnerable in a 7% plus inflation environment. Going back a century we have only been this low once, in 1999 and that ended badly.
Nasdaq is up fourfold since the bottom in 2009. Though undervalued at the time, fourfold moves for a single stock, not to mention a whole market are taking things to an extreme. You are correct that the 1999 Nasdaq valuation in 1999 was more absurd than today, but the same can be said of $50 silver in 1980 vs $50 silver a few years ago. 1980 was more overvalued, but both dropped sharply as they approached that lofty benchmark.
Investors have a penchant to follow the hot market. Tough to ignore the metals or equities when they are seemingly rising each day. I have learned from 40 years of trading though that valuation always wins out and unless you are a saavy and experienced trader, overpaying for an asset will ultimately result in failure.
Regression to the mean historical returns. Which will probably mean corrections, but not collapses. Those corrections are usually buying opportunities in the long run.
the recent outperformance of certain asset classes, as investors search for some kind of yield for their stored capital, could come to a sudden end for any number of "music stops" triggers or confluence of events. It's why it's often best to have a spare chair or two (asset class diversification) both for when the music's playing, and when not for a certain sector
it would not surprise me one bit if the stock market droped 10 or 15 percent THIS MONTH OR NEXT because we are entering the two worst months historically for these types of corrections.
What will bust the World Stock and Bond markets!?!
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Liberty: Parent of Science & Industry
<< <i>Regression to the mean historical returns. Which will probably mean corrections, but not collapses. >>
Baley, what seems to be missing when folks consider the future of equities is two factors that have not come into play in 35 years. One is falling earnings, the other is high interest rates.
Perhaps we can hold the loose money effect indefinitely, but history shows that to not be true. Taking a future and historic 5% ten year note and a 30% drop in earnings as the economy slows. suddenly real PE jumps to over 30% at current pricing, where 15 would be more in line with interest rates. That is a scenario where the SP500 could drop by 50%. Loose money is setting us up for 10% interest rates and the outcome will be much less swell.
It is easy to overlook the danger as we have risen from each collapse to set new highs, and DC has on the surface appeared to save the economy.
Problem is the nagging debt refuses to cooperate and simply go away.
I'm starting an online advisory and you can subscribe to my email alert when I place my first stock order. I figure it should be worth about 8,000 Dow points.
I knew it would happen.
Otherwise some incredible (mis)analysis in this thread.
Knowledge is the enemy of fear
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"""The king of Saudi Arabia has warned that jihadists could target the United States and Europe if leaders across the globe do not react to growing terrorist threats as Islamic State militants make advances across Iraq and Syria."""
<< <i>Looks as if the good Saudi King is getting a bit nervous and requesting Western action.
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"""The king of Saudi Arabia has warned that jihadists could target the United States and Europe if leaders across the globe do not react to growing terrorist threats as Islamic State militants make advances across Iraq and Syria.""" >>
So, what's new with that analysis....Most western nations, including the US have been saying that for a while. The Saudi's are late to the party.
Or would they make a pressure cooker bomb and set it off in a crowd? I think they did that already. How did the stock market react?
Knowledge is the enemy of fear
Knowledge is the enemy of fear
<< <i>In an other thread you intimated that companies only saw a 5% increase in earnings because of inflation on the products they sold. If inflation is 7% thenwont these companies see 7% rise in earnings even if they don't sell a single additional item? So stock will be lower because they are making more money? >>
....or perhaps they sold 2% less goods and services as you are correct about the 7% plus inflation rate. Just rounding out things but I should have been more specific.
In a vacuum stocks would continue to perform well as prices rise. Problem is, when interest rates adjust to the 7% plus inflation rate, they will look much more attractive than the sub 2% SP500 dividend return and sub 1% on Nasdaq dividends. Perhaps more importantly, higher interest rates put a pinch on auto and home and other big ticket sales and the cost of borrowing to the corporate world goes up.
Like many, I am surprised at the still extremely low Euro/US fed manipulated rates. If one believe that they will stay low for a prolonged period, I suppose that the stratospheric P/E's on Wall Street are ok. These things tend to pop up quick though and as the Bernanke buddies on the street dump and chuckle, the rank and file end up holding the bag.
<< <i>What would the Islamist nutjobs do? Round up everyone iin Tucson, force them into the mountain and then take the women to Mexico City to be sold as slaves?
Or would they make a pressure cooker bomb and set it off in a crowd? I think they did that already. How did the stock market react? >>
Think back to 9/11/01. This time the nutjobs have bags of money and a North Korean despot that needs cash. Do the figuring yourself.
Thats a pretty good trend you are trying to fight. Interest rates will rise when economic activity increases. Increased economic activity will mean increased corporate profits. Increased profits will cause money to flow into the stock market and out of bonds (which is why rates will increase in the first place).
However, rates in the US cannot rise without like rises in rates throughout the rest of the world. So when will rates rise in Germany, Australia, Brazil, China, Great Britain? If there is a 300 basis point spread in yields from Germany to the US then MASSIVE amounts of money will come into the US. This would lead to inflation---in assets such as stocks, real estate and bonds. The US dollar would strengthen.
If you want the stock market to drop, then you need to start praying for even lower rates, not higher.
Knowledge is the enemy of fear
The effect of all this money being created and kept by a small group of entitled elitists is that "everyone else" keeps roughly the same amount of money and earns roughly the same amount of money, but the purchasing power won't stand up to the massive amount of free money that the elitists have in their back pockets - to be spent and used at their own pleasure, whenevier they desire.
It's that simple. Money is the power to compete and the power to manipulate. Normal people just don't get to even see the game, let alone play it. The 20% who buffer the 0.01% are the ones who get to feel the heat. It's been that way for a long time, I suppose.
I knew it would happen.
<< <i>
<< <i>I don't know.
I have been focused on participating in the upside in both the stock and bond markets. >>
....and many made money buying silver at $35 on the way up to $49.50. >>
You remind of a guy I once went fishing with.
We found a spot at a lake where nice fish were biting every 15 minutes or so ......I was having a blast catching fish.
He wanted to move on to another spot at the lake. Seriously.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>When all of the world governments are playing the same game in order to maintain a favorable trade position, when all of the central banks are allowed to give themselves free money, and when massive and I mean massive amounts of failed derivative bets are allowed to remain on the books of the loser entities that raked in bonuses for their criminal managements - then there is only one effect:
The effect of all this money being created and kept by a small group of entitled elitists is that "everyone else" keeps roughly the same amount of money and earns roughly the same amount of money, but the purchasing power won't stand up to the massive amount of free money that the elitists have in their back pockets - to be spent and used at their own pleasure, whenevier they desire.
It's that simple. Money is the power to compete and the power to manipulate. Normal people just don't get to even see the game, let alone play it. The 20% who buffer the 0.01% are the ones who get to feel the heat. It's been that way for a long time, I suppose. >>
The game has been played long enough but it won't stop anytime soon. So few benefit from the manipulation that it is criminal but the inmates continue to run the asylum. We now sit on $25 trillion in debt/QE vs. $10 trillion just 6 years ago. 90% of the $15 trillion created has landed at the top with no trickle down. It goes on day after day, week after week, month after month.
$15 trillion has been handed to top quintile in the last 6 years with more on the way and some wonder why there's unrest. Amazing so few see what's coming....
Its just like 1861 out there.
Knowledge is the enemy of fear
<< <i>some wonder why there's unrest.
Its just like 1861 out there.
Are you suggesting that some world leader is about to pretend to care about abolishing slavery as cover for economic warfare on part of his own country?
<< <i>
<< <i>some wonder why there's unrest.
Its just like 1861 out there.
Are you suggesting that some world leader is about to pretend to care about abolishing slavery as cover for economic warfare on part of his own country?
I'm not but economic warfare will eliminate the middle class and result in thousands of billionaires in the U.S. within 10 years. American businesses have one goal in mind and it's not social responsibility.
There was a time when a reasonable profit was enough, when providing a good place to work was a goal, and when societal benefits were at least in the back of our minds. It's sad that the relentless pursuit of profit has led to this - Greed is the deadliest of all sins.
ZIRP and QE have allowed demand to appear decent while 70% of our country struggles. We'll keep them going as long as possible.
There was? When? 1955 Prague?
You may want to read the book, The Wealthy 100. Its a fun little book about American history.
Knowledge is the enemy of fear
<< <i>There was a time when a reasonable profit was enough >>
You can't be serious with that statement, unless you lived your life in a "glass house."
<< <i>
<< <i>There was a time when a reasonable profit was enough >>
You can't be serious with that statement, unless you lived your life in a "glass house." >>
Entirely serious. I remember a different America than you do. One nothing like what we see today. Perhaps you should study the "Morality of Profit".
Man finds goose that lays golden eggs and lives happy for a lifetime.
Modern time:
Man finds goose that lays golden eggs and does an IPO for the goose, the shares go up and he's loaded with shares worth a fortune. Soon millions of shareholders get angry, egg production never increases so the shares collapse and the only winners were the ones that sold the shares at the peak.
<< <i>Good old days:
Man finds goose that lays golden eggs and lives happy for a lifetime.
Modern time:
Man finds goose that lays golden eggs and does an IPO for the goose, the shares go up and he's loaded with shares worth a fortune. Soon millions of shareholders get angry, egg production never increases so the shares collapse and the only winners were the ones that sold the shares at the peak. >>
If shares collapse, the "man" loses too. Blackberry was worth more than Apple in the late 1990s.
IPO buyers have to pick companies where egg production increases. Buyers have a choice which stocks they buy.