I'm bullish when I see productivity driving wealth.
Leo Kolivakis has an excellent post that looks at the triple hit to the markets, The asset decline is the housing market is about 1/3rd and comparable to the 1930s. An interesting point is that some people still expect the market to recover to what they paid kind of thing and over time people will adjust spending to their beliefs of their level of wealth.
This latest stock market rally is timed perfect with how declines in GPD in recessions normally last. However, with this kind of credit contraction declines typically last 2 years. It takes 6 years for housing to bottom out, which suggests housing bottoms around 2011-2013.
It looks like about 3 times as many people have found themselves out of work compared to a normal recession. This is simply a bigger shock.
Income drives spending and profits. There is huge under employment, which means people have to make cuts to discretionary spending.
I took the title from this next piece:
The stock market still has big hurdles to clear. You can have a jobless recovery, but you can't have a profitless recovery. Consider: Earnings are subpar, Treasury's last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying "I don't stand with them," California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?
Until these issues are resolved, I don't see the stock market going much higher. I'm not disagreeing with the Fed's policies -- but I won't buy into a rising stock market based on them. I'm bullish when I see productivity driving wealth.