Friday, January 9, 2009
(Cont'd from above)...

Jim (cont'd):    Now apply that idea to the stock market… it is exactly the same… everybody was predicating that we would lose roughly 500,000.… everyone was predicating that the Eagles would lose to the Giants… and the market with its vicious 40% decline last year set the line exactly at that level… so when it came out at that level… uh, it kind of hung in there all day… then went a little bit at the end of the day, it went down… it is next to nothing. Now, if 200,000 jobs had been lost… that would have been a stunning victory for the bulls… think of that as the Giants winning by more than they need to pay off… and it would be up huge. Now, if 700,000 jobs had been lost… that would have been a stunning upset to the bulls… a major bear victory… no, a major Eagle victory because the bears were eliminated… a major bear victory. That number would be even worse than what the market predicated with it’s enormous decline last year… and we would have been mulled… we would have been hammered… put simply, the market did not cover the spread.

Now, you know I find it hard to be bullish about the market… I am want is known as a bottoms up guy… I look at the fundamentals of individual companies to predict how the overall averages will do… and the fundamentals.. they are not good… Average stock… I am not a Dow Jones top down guy… this week in RealMoney.com, the paid sister site to TheStreet.com, where I am chairman… I calculated what I thought each component of the Dow would do by year end… I could not even make a case that the Dow could go to 10,000... that is in part because even as the market already knew that the job loss would be bad… it still doesn’t give us a reason to get excited enough to buy stocks… some little reason to sell at the end of they day that’s all… um, we gotta see numbers stock going down… just because the market has already forecasted bad news… and then the bad news happens… that’s no reason to be bullish is it?… it is kind of one of these animal, kind of like both… and at the end of the day this guy took over (bull)… The bad news is behind us, that doesn’t mean the good news is necessarily ahead… which is why audibly the market held in for most of the day, before giving up the extra 80 points in probably the last 17 minutes.

Alright, so what would change this pattern?… What would push us up? Or bring us down?… Something beyond the odds makers limits… get 3 straight months where job figures simply stabilize at 500,000 jobs lost per month… and we don’t have double digit unemployment… and then we will get it then…. we will have a real surprise… that could actually motivate buyers to come in and bid this market up… that is the blow out for the upside that pays out for these guys (bulls)… but, if unemployment then catapults to double digits… something we are still very far away from… then we will break to the downside for certain… and the reigns will be no more, because the fundamentals will cascade… until that happens I do not want to expect much from the market. When the economy does nothing more… and nothing less than was expected.

Here is the bottom line...

▼   ▼   ▼   ▼   ▼

The Bottom Line!:     Not all news is surprising.. the market saw this bad job loss number coming, which is why last year was the worst year for stocks since the depression… the bad news was almost already baked in… just 150 points down more… it was certainly no reason to enter the land of the 1000 bull dances.

[verbatim recap]

▼   ▼   ▼   ▼   ▼

Jim went on after this segment to take questions from callers, and responded with his comments...

```````````````````````````````````````````````````````````````````````````````````
Q:    With the unemployment rate today at 7.2%, my thought is that the Great Depression 2 is off the table, if you do kind of an apples to apples comparison to the way the rate was calculated and authorities. What do you think?

Jim:    Well it is really important for people to understand… that when we speak about the ‘30’s… and why I stopped talking about the Great Depression… because I was just trying to worn the government, not that they listened… um, when you talk about the Great Depression, you are talking about productivity plummeting from 100% to 25% in two years… you are talking about 30% unemployment… we are fighting at 7% unemployment… they are just not comparable… what I have been so struggling with… I am a bit of a gardener… but this is what I would call a garden variety depression… in other words, you can’t compare it to any depression that we have had in our live… because it is worse than that… but to compare it to 1932 is a mistake… and yet the market went down as much as it did then… I always like to compare the example of the letter X… U.S. Steel was at 220 in 1929, it went down to 23 in ‘32... U.S. Steel was at 190 in 2008, it went down to 23 in 2008... we are worse off in terms of the stock market in ‘32 but the fundamentals aren’t as bad, which is why people keep coming in and buying.

```````````````````````````````````````````````````````````````````````````````````
Q:    With the stimulus plan that Obama is planning to go thru with, do you think it would be a good idea, since they are sending checks out again, to give that money in the form as tax cuts and grants to big and small businesses to hire people? And use the grants to pay about 50 to 75% of their salaries, and when companies have built up enough they could take over. And yes, I am well aware of Laze Fair.

Jim:    I have to tell you on that I think it is very important that every company that hires a person be given a tax credit for that hire… I think that is absolutely one of the ways to get out of this… if you want to go buy a house… not a new house, I do not want to encourage more house building… we need to do tax credits… I keep hearing about tax cuts… they are too hard for people to understand.. I want money back… I want it to be like a coupon, you do something you do something you get money back… so I require, believe that there should be even more spending… there was a reference today, to Paul Krugman in the Press Conference, to Obama, and he said hey listen, if we need it we are going to do it… and by the way, can I just say for the record… that when Obama starts talking about like USC and other football teams… I am saying that I can’t believe that we got this guy for president… we are one lucky group of people.

The Dow was down only a 143 in spite of the incredible job loss… because we all knew it… we all saw it coming.. you gotta do better than the line or worse than the line to get paid off.

[end of segment]

```````````````````````````````````````````````````````````````````````````````````

Read Jim's next Segment here