Talking to my consultant contacts (some high up guys), they tell me their clients (Goldman Sachs, Smith Barney, Merrill Lynch) are being gutted. They tell me, JPM is way overstaffed and need to feel the ax, in a pretty egregious way. Mind you, these are the guys that would tell the guys at JPM to put the hammer down on the work force.
If you live in NYC, prepare for some pretty dicey shit. Now, I’m not talking ordinary pullback, walk in the park, get a quick blow job, type of recession. I’m talking investment bankers becoming cab drivers, renting a studio in Hell’s Kitchen amongst the rats, type of hardship.
If NY State gets 31% of their revenue from banks and insurance firms, tell me, where will they generate revenue in 2009-2010? The garment industry?
This Madoff scandal is going to leave a serious dent. Who has exposure? Who is going to eat the large sausage on this one?
Then we have the GM crisis. The GOP has nothing to lose. They are going to shoot this fucking bailout down, in an effort to appeal to the current “fuck the bailouts” mentality that is sweeping the country.
You know, I heard a staggering stat the other day. If you count all of the money the government has doled out during this crisis, it equals approximately $100,000 per U.S. citizen. Call me fucknuts, but I think sending 100k to every American would have stimulated the fuck out of this bitch, as opposed to just giving it away to some asshole CEO, who will horde the cash and/or dump it into treasuries.
Bottom line: There is NO FUCKING WAY this market starts goose stepping higher, in 2009. This is not a one year, recession is over, ha-ha funny, sort of situation. The cycle we find ourselves in will last a long, long time. Earnings will continue to slump and equity prices will underperform for years to come.
Low ball estimates on the S&P for 2009 were at around $65 p/s, when oil was trading at $75. Let me tell you, at $45 per barrel, you can look for earnings for the S&P to register in around $50 for ’09. We need to bottom out at 10x earnings.
You do the math.
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