This is just me putting out a "where I think things are going" idea. Caveat: I'm not a professional, or an advisor, or anything else, do don't listen to me if you're gonna be mad if I'm wrong.
S&P 500: 1,003.73 (as I write this)
Short-Term (curr month): Down. I would expect the S&P to end in the 900-960 range this month. The market is overbought based on fundamentals.
Long-term (3-6 months): Down. There is no fundamental reason for the valuations we are seeing. People seem to think "Oh, it's a discount to where it was 2 years ago, stocks must be cheap!" This is dumb. Consumer spending is hampered by high unemployment, auto sales will fall with the end of "cash for clunkers," and housing sales will fall/flatten when the housing stimulus ends in 3 months. Financials in particular will be hurt. Expect the market to be in the 800-900 range.
US Markets: Short
Corporate Bonds: Hold
Treasuries: Hold (short term)/Underweight (long term)
Commodities: Hold (short term)/Buy (long term)
Longer term: Inflation may become a risk in 2010, deflating the dollar, and causing a rise in commodity prices, further hampering the American economy. On the other hand, a weaker dollar would contribute to better exports.
The Market - Sept 01/09
S&P 500: 1038.54, up 3.4% since my post.
With the government putting so much pressure on interest rates to be lower, it's not entirely unexpected. Stocks are generally overvalued by historical means, but with interest rates on government bonds so low, there's not much for alternative investments. Stocks will continue to vacillate around 1000 until the government ends its easing programs. Financials are up about 1% during this same time.
Euro has climbed 3% against the dollar. The dollar will probably continue to suck for the future.
I continue to be pessimistic with regards to American equities, both due to the weakening dollar, and the weak economy. Stronger economies, especially those with heavy commodity exposure such as Brazil and Australia should be good bets.
With the government putting so much pressure on interest rates to be lower, it's not entirely unexpected. Stocks are generally overvalued by historical means, but with interest rates on government bonds so low, there's not much for alternative investments. Stocks will continue to vacillate around 1000 until the government ends its easing programs. Financials are up about 1% during this same time.
Euro has climbed 3% against the dollar. The dollar will probably continue to suck for the future.
I continue to be pessimistic with regards to American equities, both due to the weakening dollar, and the weak economy. Stronger economies, especially those with heavy commodity exposure such as Brazil and Australia should be good bets.
It's not me, it's someone else.
Market crashed today, the reason? Bad Economic Reports.
See what I did there?
Edited By Troy on 1254434198
See what I did there?
Edited By Troy on 1254434198
The basic situation is: our growth was fueled by unsustainable levels of debt. The government has stepped in to keep debt cheap, allowing people to unwind their debt and deleverage. Of course, with interest rates so low, why pay off debt? 
The risk is creating another bubble like they did in 2001/2002 by being too aggressive, keeping lending too cheap, and creating the burst we had back in 2007/2008. The other side is allowing interest rates to go up too early, and killing any chance of near term economic growth.
I kinda prefer the latter, since it gets us back to "normal," but we'll see. With the housing credit expiring in a few months, and the mortgage purchase program ending by March, we'll have better ideas of where the economy is without so much government intervention.
The risk is creating another bubble like they did in 2001/2002 by being too aggressive, keeping lending too cheap, and creating the burst we had back in 2007/2008. The other side is allowing interest rates to go up too early, and killing any chance of near term economic growth.
I kinda prefer the latter, since it gets us back to "normal," but we'll see. With the housing credit expiring in a few months, and the mortgage purchase program ending by March, we'll have better ideas of where the economy is without so much government intervention.
It's not me, it's someone else.
-
thibodeaux
- Posts: 8121
- Joined: Thu May 20, 2004 7:32 pm
