"WHAT RECESSION? EVERYTHING IS GREAT"
We are probably in a recession. That somber assessment reflects the steady flow of dour economic news this year. We think the downturn will be brief lasting perhaps no longer than the first half of 2008. - Value Line, April 18, 2008
This economic downturn may be short....just a quarter or two of negative growth. But the recovery will take much longer, with ill effects lingering till at least 2010. There will be no quick snapback in job growth...no strong up surge in income, spending or profits. Once the economy regains its footing ....the policymakers will reverse course.....probably hiking rates a full point or more over a 12 month span starting in 2009. That'll keep a lid on GDP, holding growth to no more than 2.5% in 2009, following what looks to be a paltry 1.5% gain this year. Employment will pick up slowly, a very gradual increase in the number of jobs, similar to what came after the 2000-2001 recession rather than the robust bouncebacks that followed earlier slowdowns. - The Kiplinger Letter, February 29, 2008.
First Quarter earnings show banks and consumers grappling with falling home prices and tightening credit, while big businesses, especially those that sell to other U.S. companies or to consumers abroad, are proving surprisingly resilient. A worry on Wall Street is that other sectors may suffer declines later. - WSJ, April 18, 2008
The trick is to get postioned long and leveraged in stocks when the turn in the stock market comes. It's hard to do. But, for me, Dow Theory, significant breakouts above major resistance in the indexes, along with supporting breadth (accumulation), provides a guide of a legitimate market turn. I'm not convinced that we are there yet although the major indexes are building a base to possibly spring higher from. Only time and future market action will tell.
This economic downturn may be short....just a quarter or two of negative growth. But the recovery will take much longer, with ill effects lingering till at least 2010. There will be no quick snapback in job growth...no strong up surge in income, spending or profits. Once the economy regains its footing ....the policymakers will reverse course.....probably hiking rates a full point or more over a 12 month span starting in 2009. That'll keep a lid on GDP, holding growth to no more than 2.5% in 2009, following what looks to be a paltry 1.5% gain this year. Employment will pick up slowly, a very gradual increase in the number of jobs, similar to what came after the 2000-2001 recession rather than the robust bouncebacks that followed earlier slowdowns. - The Kiplinger Letter, February 29, 2008.
First Quarter earnings show banks and consumers grappling with falling home prices and tightening credit, while big businesses, especially those that sell to other U.S. companies or to consumers abroad, are proving surprisingly resilient. A worry on Wall Street is that other sectors may suffer declines later. - WSJ, April 18, 2008
The trick is to get postioned long and leveraged in stocks when the turn in the stock market comes. It's hard to do. But, for me, Dow Theory, significant breakouts above major resistance in the indexes, along with supporting breadth (accumulation), provides a guide of a legitimate market turn. I'm not convinced that we are there yet although the major indexes are building a base to possibly spring higher from. Only time and future market action will tell.
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