HOLY SMOKES : Did i read this right? Dow below 10,000 S&P;1,100 Nasdaq 1500. Is this possible by October?

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[quote author="PANDA" date=1223101495]I started this thread on September 2nd, 2008, exactly a month ago. Honestly, I was a bit skeptical myself that the DOW will get below 10,000, S&P 1,100 and Nasdaq 1500. I had not idea it was going to get this bad.



Is really possible that unemployment can really approach 200,000 by Jan 31, 2009?



Irvine Renter, I loved how you predicted that the Irvine Home prices will drop by 40%, and that mortgages rates will rise to double digits in the next five years, as all of us will take advantage of this great opportunity to own a home in Irvine at rock bottom prices. However, did anyone guess that many Americans' savings would be completely wiped out from the stock market and not be able to take advantage of this opportunity when prices of Irvine homes are at rock bottom prices.



In 2006, Most Americans can't buy because the home prices are too high.

In 2010 - 2012: Most Americans can't buy because their savings got wiped out from the U.S. Stock Market, banks are unwilling to lend even at 12% - 15% mortgages rates. Money Market accounts that we thought are 100% safe by FDIC end up crashing. It sure feels like 1979.



The key from now until 2010 - 2012, is holding on to your cash, and not losing it.</blockquote>


There are safe havens from the storm. That is why the yield on short-term treasuries is so low right now. Everyone should be thinking in terms of capital preservation rather than return on investment or speculation right now. The time to speculate and invest will be coming soon, but we are not there yet.
 
[quote author="PANDA" date=1223101495]I started this thread on September 2nd, 2008, exactly a month ago. Honestly, I was a bit skeptical myself that the DOW will get below 10,000, S&P 1,100 and Nasdaq 1500. I had not idea it was going to get this bad.



Is really possible that unemployment can really approach 200,000 by Jan 31, 2009?



Irvine Renter, I loved how you predicted that the Irvine Home prices will drop by 40%, and that mortgages rates will rise to double digits in the next five years, as all of us will take advantage of this great opportunity to own a home in Irvine at rock bottom prices. However, did anyone guess that many Americans' savings would be completely wiped out from the stock market and not be able to take advantage of this opportunity when prices of Irvine homes are at rock bottom prices.



In 2006, Most Americans can't buy because the home prices are too high.

In 2010 - 2012: Most Americans can't buy because their savings got wiped out from the U.S. Stock Market, banks are unwilling to lend even at 12% - 15% mortgages rates. Money Market accounts that we thought are 100% safe by FDIC end up crashing. It sure feels like 1979.



The key from now until 2010 - 2012, is holding on to your cash, and not losing it.</blockquote>
I respect IR's opinions and analysis, but I just can't see mortgage rates rise into the double digits because we are heading into a period of asset price deflation, not inflation (that includes oil, metals, wheat, corn, homes, stocks, etc). Little to no inflation = mortgage rates in the single digits. I'll make a prediction now...the EURO currency will get hammared in coming few years as our pain will spread across the Atlantic and the dollar will remain the safe haven currency (don't be suprised to even see parity between the US dollar and EURO as the Eurozone will need to start slashing rates).
 
[quote author="usctrojanman29" date=1223107265][quote author="PANDA" date=1223101495]I started this thread on September 2nd, 2008, exactly a month ago. Honestly, I was a bit skeptical myself that the DOW will get below 10,000, S&P 1,100 and Nasdaq 1500. I had not idea it was going to get this bad.



Is really possible that unemployment can really approach 200,000 by Jan 31, 2009?



Irvine Renter, I loved how you predicted that the Irvine Home prices will drop by 40%, and that mortgages rates will rise to double digits in the next five years, as all of us will take advantage of this great opportunity to own a home in Irvine at rock bottom prices. However, did anyone guess that many Americans' savings would be completely wiped out from the stock market and not be able to take advantage of this opportunity when prices of Irvine homes are at rock bottom prices.



In 2006, Most Americans can't buy because the home prices are too high.

In 2010 - 2012: Most Americans can't buy because their savings got wiped out from the U.S. Stock Market, banks are unwilling to lend even at 12% - 15% mortgages rates. Money Market accounts that we thought are 100% safe by FDIC end up crashing. It sure feels like 1979.



The key from now until 2010 - 2012, is holding on to your cash, and not losing it.</blockquote>
I respect IR's opinions and analysis, but I just can't see mortgage rates rise into the double digits because we are heading into a period of asset price deflation, not inflation (that includes oil, metals, wheat, corn, homes, stocks, etc). Little to no inflation = mortgage rates in the single digits. I'll make a prediction now...the EURO currency will get hammared in coming few years as our pain will spread across the Atlantic and the dollar will remain the safe haven currency (don't be suprised to even see parity between the US dollar and EURO as the Eurozone will need to start slashing rates).</blockquote>


That's Panda's opinion SC. I've never seen IR go so overboard as to such rates in the 12-15%...
 
[quote author="ipoplaya" date=1223113417][quote author="usctrojanman29" date=1223107265][quote author="PANDA" date=1223101495]I started this thread on September 2nd, 2008, exactly a month ago. Honestly, I was a bit skeptical myself that the DOW will get below 10,000, S&P 1,100 and Nasdaq 1500. I had not idea it was going to get this bad.



Is really possible that unemployment can really approach 200,000 by Jan 31, 2009?



Irvine Renter, I loved how you predicted that the Irvine Home prices will drop by 40%, and that mortgages rates will rise to double digits in the next five years, as all of us will take advantage of this great opportunity to own a home in Irvine at rock bottom prices. However, did anyone guess that many Americans' savings would be completely wiped out from the stock market and not be able to take advantage of this opportunity when prices of Irvine homes are at rock bottom prices.



In 2006, Most Americans can't buy because the home prices are too high.

In 2010 - 2012: Most Americans can't buy because their savings got wiped out from the U.S. Stock Market, banks are unwilling to lend even at 12% - 15% mortgages rates. Money Market accounts that we thought are 100% safe by FDIC end up crashing. It sure feels like 1979.



The key from now until 2010 - 2012, is holding on to your cash, and not losing it.</blockquote>
I respect IR's opinions and analysis, but I just can't see mortgage rates rise into the double digits because we are heading into a period of asset price deflation, not inflation (that includes oil, metals, wheat, corn, homes, stocks, etc). Little to no inflation = mortgage rates in the single digits. I'll make a prediction now...the EURO currency will get hammared in coming few years as our pain will spread across the Atlantic and the dollar will remain the safe haven currency (don't be suprised to even see parity between the US dollar and EURO as the Eurozone will need to start slashing rates).</blockquote>


That's Panda's opinion SC. I've never seen IR go so overboard as to such rates in the 12-15%...</blockquote>
By bad then. If mortgage rates do double from current levels, the real estate market will get absolutely CRUSHED with prices probably rolling back to late 80s/early 90s levels. I personally think that mortgage rates will remain in the 5.5% to 6.5% range over the next few years as we work through the credit crunch and asset deflation (this is only for conforming and FHA mortgages).
 
[quote author="usctrojanman29" date=1223126278]By bad then. If mortgage rates do double from current levels, the real estate market will get absolutely CRUSHED with prices probably rolling back to late 80s/early 90s levels. I personally think that mortgage rates will remain in the 5.5% to 6.5% range over the next few years as we work through the credit crunch and asset deflation (this is only for conforming and FHA mortgages).</blockquote>


I think they will tend toward the low as well while the government continues to attempt a soft landing / fix to all our economic problems.
 
[quote author="ipoplaya" date=1223127876][quote author="usctrojanman29" date=1223126278]By bad then. If mortgage rates do double from current levels, the real estate market will get absolutely CRUSHED with prices probably rolling back to late 80s/early 90s levels. I personally think that mortgage rates will remain in the 5.5% to 6.5% range over the next few years as we work through the credit crunch and asset deflation (this is only for conforming and FHA mortgages).</blockquote>


I think they will tend toward the low as well while the government continues to attempt a soft landing / fix to all our economic problems.</blockquote>
I think you and I are on the same page...the forces that be will do anything they can to keep mortgage rates low to cushion the fall in real estate prices. I think we will see the FED funds rate back at 1% early next year and it'll stay there for at least 12-24 months. I'll be more than happy to buy a property if prices are 20%+ lower than they are today with a 6% or lower mortgage in the next few years.
 
[quote author="IrvineRenter" date=1223099861][quote author="blackvault" date=1223099242][quote author="IrvineRenter" date=1223095971][quote author="ipoplaya" date=1223093723][quote author="IrvineRenter" date=1223081689]If any of you were watching the markets today, it was interesting how sellers waited for the bailout announcement and used the strength of the euphoria to sell into volume. Rather than seeing a big rally as everyone anticipated, the sellers came in and ruined the party.</blockquote>


I was doing a little "I'm all cash" dance at my desk as the market was selling off by 4% intraday. Might have broken through some downside support levels today. Look out below!</blockquote>


Yes, the fact that there was no rally off the bailout is a very, very bad sign for the market. What kind of news would it take to cause a rally at this point?</blockquote>


The bailout is already priced in the market. I think people already expected it to pass through so the markets really just remained calm. If the House failed to pass, you would have seen blood.</blockquote>


I think we are about to witness the market price in a severe recession caused by our dysfunctional credit markets.



In case anyone didn't notice, one of the three predictions of the title of this thread came true today. The S&P closed at 1,099.23.</blockquote>


Hey Optimus,



You have to refresh Panda's memory. Did we ever agree to a bet of $50 that the DOW will get below 10,500 before year end?
 
Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.
 
<em>i would have bought MF in 4 go instead 1 go all together, that way u can avg it out. </em>



Irvine2010, I did 10K each in 2 different mutual funds. I thought it might see a bounce when the vote passed....but of course, you are right. It was already priced in. RATS !
 
[quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.
 
[quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


Absolutely correct IR. When the banks needed to shore up their balance sheets during the Savings and Loan crisis in the mid-90's the fed allowed the spreads on Fed funds and loan rates to remain artificially thick. When the crisis abated in the late 90's the spreads returned to normal. That is happening again.
 
[quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


IR always has the right idea, but seems to be overly conservative on his forcasts (housing price declines for instance). We'll see double digit rates soon enough, within the next year or so. The gov needs to auction out a lot of notes in the near future to pay for the bailout, Freddie/Fannie, ect. If there are having trouble selling these things they will have to raise the rates. With all the inflation today and even more to come, the gov will be hard pressed to find buyers while offering single digit rates. The 10 year note will go up, and mortgage rates will not be left behind. Even if the FED monetizes the notes instead, the resulting inflation will be more cause for the rates to climb.
 
[quote author="upperlowerclass" date=1223182335][quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


IR always has the right idea, but seems to be overly conservative on his forcasts (housing price declines for instance). We'll see double digit rates soon enough, within the next year or so. The gov needs to auction out a lot of notes in the near future to pay for the bailout, Freddie/Fannie, ect. If there are having trouble selling these things they will have to raise the rates. With all the inflation today and even more to come, the gov will be hard pressed to find buyers while offering single digit rates. The 10 year note will go up, and mortgage rates will not be left behind. Even if the FED monetizes the notes instead, the resulting inflation will be more cause for the rates to climb.</blockquote>


Actually, I think IR's prediction of 8% by 2010 is about right. If rates really get to the 10 - 12% level by 2010, and the goverment imposes some ridiculous increases in our taxes, I would probably pack up my wife and kids and move to Asia, where the future will look much brighter than living here.



United States will be a very unpleasant place to live if it gets that bad. There will probably be riots, angry homeowners who are about to lose their homes, burning down their house because they cannot afford to refinance, and a once powerful currency (the U.S. Dollar) will become worthless like toliet paper. As bearish as i am, I do not want to see mortgages rates go up to 10 - 12% by 2010, and certainly, I do not want to see our country go through a 1930s great depression. God help us that it will not get this bad.
 
[quote author="upperlowerclass" date=1223182335][quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


IR always has the right idea, but seems to be overly conservative on his forcasts (housing price declines for instance). We'll see double digit rates soon enough, within the next year or so. The gov needs to auction out a lot of notes in the near future to pay for the bailout, Freddie/Fannie, ect. If there are having trouble selling these things they will have to raise the rates. With all the inflation today and even more to come, the gov will be hard pressed to find buyers while offering single digit rates. The 10 year note will go up, and mortgage rates will not be left behind. Even if the FED monetizes the notes instead, the resulting inflation will be more cause for the rates to climb.</blockquote>
What are you smoking? We have deflation and not inflation. So you think that 10-year bonds are going to 6%+ and credit spreads are going to be 4%+ above the bond rates? Last time I checked, if the ecomony tanks bond rates go down.
 
[quote author="usctrojanman29" date=1223192249]

What are you smoking? We have deflation and not inflation. So you think that 10-year bonds are going to 6%+ and credit spreads are going to be 4%+ above the bond rates? Last time I checked, if the ecomony tanks bond rates go down.</blockquote>


I'm curious, are you basing the idea that we are experiencing deflation because of the stock market and housing prices? CPI?



I feel the bond market is going to be the next bubble, but I'll elaborate on that more later.
 
Trojan,



How are you so sure that we are in a deflation and not an inflation? Ben Bernanke will do everything in his power to avoid a deflation, even if it means putting our country through a hyper-inflation.



I am curious to know how many of you think that this current recession is temporary setback in the U.S. economy that will fully recover by first quarter 2009, or we are in the middle of a 20 year bear market cycle that started in year 2000 that will last until year 2020?
 
[quote author="ukyo116" date=1223194845][quote author="usctrojanman29" date=1223192249]

What are you smoking? We have deflation and not inflation. So you think that 10-year bonds are going to 6%+ and credit spreads are going to be 4%+ above the bond rates? Last time I checked, if the ecomony tanks bond rates go down.</blockquote>


I'm curious, are you basing the idea that we are experiencing deflation because of the stock market and housing prices? CPI?



I feel the bond market is going to be the next bubble, but I'll elaborate on that more later.</blockquote>
Ummm, why don't you take a peak all commodity prices....oil, wheat, building metals, lumber, corn, coffee, sugar, etc. In a global economic slowndown that we are experiencing at the moment the demand for most all commodities will decrease. Also, due to the deleveraging going on many investors/speculators are having to sell long positions in commodities. Most all asset prices will continue to experience deflation (that includes housing). The drop in the stock market is caused by the tighening of credit and downturn of the economy which is translating to the lower of future earnings estimates. Until the economy gets some traction, bond interest rates will continue to be at these low levels.
 
[quote author="PANDA" date=1223195286]Trojan,



How are you so sure that we are in a deflation and not an inflation? Ben Bernanke will do everything in his power to avoid a deflation, even if it means putting our country through a hyper-inflation.



I am curious to know how many of you think that this current recession is temporary setback in the U.S. economy that will fully recover by first quarter 2009, or we are in the middle of a 20 year bear market cycle that started in year 2000 that will last until year 2020?</blockquote>
Why don't you take a look at the commodity indexs on bloomberg...



http://www.bloomberg.com/markets/commodities/cfutures.html



Most of the charts on the individual commodities look just as ugly. Looks like deflation to me. In order to have a lot of inflation, you have to either have strong demand or limited supply. Last time I checked, we are in a recession (global one at that, don't think Asia or Europe will escape it) so demand for commodities will continue to decline which will result in lower commodity prices in the near future. No way will the economy recover in Q1 of 2009, we'll be lucky to get out of it in Q1 of 2010.
 
[quote author="usctrojanman29" date=1223192249][quote author="upperlowerclass" date=1223182335][quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


IR always has the right idea, but seems to be overly conservative on his forcasts (housing price declines for instance). We'll see double digit rates soon enough, within the next year or so. The gov needs to auction out a lot of notes in the near future to pay for the bailout, Freddie/Fannie, ect. If there are having trouble selling these things they will have to raise the rates. With all the inflation today and even more to come, the gov will be hard pressed to find buyers while offering single digit rates. The 10 year note will go up, and mortgage rates will not be left behind. Even if the FED monetizes the notes instead, the resulting inflation will be more cause for the rates to climb.</blockquote>
What are you smoking? We have deflation and not inflation. So you think that 10-year bonds are going to 6%+ and credit spreads are going to be 4%+ above the bond rates? Last time I checked, if the ecomony tanks bond rates go down.</blockquote>


Deflation?!? Housing and stocks, yes, everything else, no. Google some mid to late 70's data. Now watch the dow drop, inflation go up, and note yields skyrocket. But wait, how did that happen?!?! I thought "if the ecomony tanks bond rates go down." It's not always as simple as following the crowd back and forth from the market to bonds and back.



And the commodity deleveraging is over. Your right saying that pushed prices down, but now thats over. GS is net long on gold for the first time in a while, for instance. Anyone buying anything the treasury is selling is gonna look real stupid.
 
[quote author="upperlowerclass" date=1223212630][quote author="usctrojanman29" date=1223192249][quote author="upperlowerclass" date=1223182335][quote author="IrvineRenter" date=1223165098][quote author="awgee" date=1223159476]Mu guess is that folks are going to find out just how little control the US government is going to have over interest rates.</blockquote>


I agree. Mortgage interest rates are going to rise. I see 8% by 2010. I think rates will stabilize between 8% and 10%. The banks need to make back all the money they lost. With their short-term borrowing costs going up, and reduced competition in the industry, lenders will be raising interest rates to dig out of their hole. They are already doing this with jumbo rates.</blockquote>


IR always has the right idea, but seems to be overly conservative on his forcasts (housing price declines for instance). We'll see double digit rates soon enough, within the next year or so. The gov needs to auction out a lot of notes in the near future to pay for the bailout, Freddie/Fannie, ect. If there are having trouble selling these things they will have to raise the rates. With all the inflation today and even more to come, the gov will be hard pressed to find buyers while offering single digit rates. The 10 year note will go up, and mortgage rates will not be left behind. Even if the FED monetizes the notes instead, the resulting inflation will be more cause for the rates to climb.</blockquote>
What are you smoking? We have deflation and not inflation. So you think that 10-year bonds are going to 6%+ and credit spreads are going to be 4%+ above the bond rates? Last time I checked, if the ecomony tanks bond rates go down.</blockquote>


Deflation?!? Housing and stocks, yes, everything else, no. Google some mid to late 70's data. Now watch the dow drop, inflation go up, and note yields skyrocket. But wait, how did that happen?!?! I thought "if the ecomony tanks bond rates go down." It's not always as simple as following the crowd back and forth from the market to bonds and back.



And the commodity deleveraging is over. Your right saying that pushed prices down, but now thats over. GS is net long on gold for the first time in a while, for instance. Anyone buying anything the treasury is selling is gonna look real stupid.</blockquote>
Last time I checked the US dollar has been rallying while gold has been flat. But I'm talking about commodities excluding gold...check out the price charts for oil, gasoline, wheat, corn, sugar, copper, etc. All that stuff got shot up to the moon by speculators just like housing prices but a lot quicker and now they are crashing back down to earth. You can talk about inflation all you want, but if you look at the charts you'll see that inflation just isn't there. Just please don't tell me that the rest of the will not enter into a recession like the US because so goes the US so goes the rest of the world.
 
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