Let's get an opinion here if one hasn't already been asked about your overall opinion on the U.S markets. Bullish? Bearish? Sideways? I am personally bullish on the dow but with the price swings being so erratic, I do not know how long my opinion will hold for. However, bullish is my answer.
Volatility is a sign of unsettled markets. We are going into recession, but it will take many months to get there. (Perhaps not until after the election.) The Fed is walking a tightrope between inflation and dollar devaluation on the one hand, and a credit crunch, real estate-building-lending-mortgage bond collapse of monumental proportions, together with the political necessity of monetizing our gargantuan Federal deficit, on the other. All of this fueled, of course, by the Greenspan liquidity geyser that has put Old Faithful to shame. In my exceedingly humble opinion, the situation is just now developing to the point where it can no longer be swept under the rug. The economy is going to take a much bigger hit then most people realize. The market is going to do its best to ignore reality for as long as it possibly can (which can be a surprisingly long time). Eventually though, it will come down hard and shake the liv'n bejesus out of us. And the longer the market remains irrational, the harder that inevitable rough landing will be. If we had any sense as a nation we would go ahead and get it over with. But we won't, and there will be a lot of money to be made by traders in the meantime. And job loss is going to get absolutely awful. The Fed, the Treasury, Wall Street and their Media puppets will continue to paint the rosiest picture possible. But beware, to the extent that the Fed, and particularly the Treasury (the masters of mis-speak) indicate that all is not well, we have been doubly warned, as by long established tradition every calamity and every unsavory economic event will be downplayed. When jobs are falling like Pick-Up-Sticks we will hear "the numbers are not the kind I like to see," and while the presses roar we will be told "a strong dollar is good as gold". This is very, very serious. I haven't seen anything economic-wise this worrisome in my lifetime, and i have lived a long long time. As far as the immediate future goes, and this is just an educated guess, it seems the market is already taking into account a 25 point basis lowering when the Fed meets, so i expect, if the announcement is as anticipated, that the market's reaction, after the initial hysterics blow over, will be muted and possibly even down. So i would say "buy the rumor, sell the news." What is going to be very disappointing is that the Fed move will do virtually nothing, in the long run, to turn things around, as will be evident soon enough. Bernanke seems to be a very reasonable and competent economist, and the the Fed has several powerful arrows in its quiver. But this time around they are faced with an attack by a Grizzly Bear, albeit a Grizzly bear of our own making.
I obviously forgot to mention: " a strong economy will cushion us." :eek: Thank you Hank, that's real reassuring.
I think we are setting ourselves up for disappointment when we only get 25bps to no cut or, god forbid, a rate hike next week.
I'm short and have been since June, with much of the nice to excellent equity earned in shorts taken that month having evaporated. Now, however -- meaning today -- I'm adding to my exisiting short positions on belief this "rally" from lows isn't bona fide and that index lows soon will be reached and breached.
Dow 150,000 is in the bag. Whoopee, right? WRONG.... it will be the inflation pricing of stocks versus a collapsing $USD. 1. Dow 150,000 2. $USD <10 (currently 80) 3. We're all "Pauper $Bazillionaires" Therefore, you should be Bullish on the markets, but Bearish on your future.