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starbucks4ever (86.98)

Current mood: bullish, bearish, and worried



July 15, 2010 – Comments (5)

This is an interesting time to be in the stock market. Three trend changes are occurring at once. All three are equally important.

-Bullish. The US "economy" (quatation marks) is emerging out of the recession and undergoing a V-shaped recovery. The strength of the recovery is going to be a complete surprise to the bears

-Bearish. China is crashing, dragging with it the three other "bricks". "B" is going to have a hard landing, the future of "R" is uncertain, "I" should survive it and remain the same mess it is now. The Euro is tanking to 90 cents and its future looks ugly. There are some very dangerous domino effects that could bring down seemingly stable countries.

-Worried. We are still in the disinflation mode, but this is just calm before the storm. In the future, the second half of 2010 will be looked back upon as the time when the battle against inflation was lost. The next 6-9 months will be critical. We can well afford to ignore inflation until 2011. Staying in cash past 2011 will be like picking coins in front of a bulldozer. By the New Year we must estimate the likely rate of inflation and the inflation-adjusted returns of the stock market. 

5 Comments – Post Your Own

#1) On July 16, 2010 at 12:36 AM, dpdoor (< 20) wrote:

V shape? Going from complete fear to no fear is good. But we will never have the $200,000 atm built into our homes.

Nothing will make up for that. We will buy cars, lots of em. People who live in appartments drive nice cars. But to invest in companies that lived off our investments is not the best thing to do.

For the last 12 years the dow averaged around 8500 and always crashed at 11k. and that was during great times. Why should we be over 10k? China? we aren't feeding them the bucks like we did, and they are not going to spend like crazy in the next few month, it will take 10 years for them to do what we are expeting.

When the dow hits 10,500 it has done all it can. Why be in after that?

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#2) On July 16, 2010 at 4:23 AM, fmede (< 20) wrote:

Interested to know why you think Brazil is "going to have a hard landing"...???


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#3) On July 16, 2010 at 7:38 AM, cthomas1017 (98.43) wrote:

Sorry, I don't see the Bullish case.  "The US economy is emerging out of the recession" is based upon the forecasts of economists who have a horrendous record for making accurate economic forecasts.  The leading indicators, other than sentiment, don't support a strong case for recovery and the trailing indicator, employment, is causing those economists to conceive of a "jobless recovery".

 The only Bullish trends has been the play in the dollar and the injection of cash into the system.  But all measures of money supply have recently turned negative.  

So, sorry, just not seeing it. 

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#4) On July 16, 2010 at 2:07 PM, EnigmaDude (50.99) wrote:

Good points and I agree about the bears will be surprised (cthomas's comment illustrates it nicely!)  But I am not sure that I agree that China is "crashing".  More likely they are going thru a correction after huge growth expectations are slowing down. But they are still experiencing 10%+ growth in their economy.  I don't see that as indicating a crash.

Still - I would stay away from Chinese stocks for a while. 

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#5) On July 16, 2010 at 2:13 PM, russiangambit (28.87) wrote:

> Good points and I agree about the bears will be surprised (cthomas's comment illustrates it nicely!) 

Except the bear case is US crashing and draggining China down with it, not the other way around.

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