Dow closed at 7925 today. Housing is coming back...from the dead. Retail sales in Jan and Feb were better than expected. I'm calling a bottom (actually, the bottom was about three weeks ago). Not saying we won't give some of this back in the weeks/months to come, but I believe the general trend is up. If you haven't already done so, it's time to get back in.
So the question is, why? What is it that is beginning to bring the economy back? I have a few thoughts:
1. Fast, concerted action by both the Bush Administration and the Obama Administration. This crisis was taken seriously by very serious people, and though there was a lot of confidence lost in the markets, investors overall seem satisfied that the people in charge recognized that there were serious problems.
2. Superb monetary policy by the Fed. Bernancke is one of the adults in DC, and he has been stellar. Encouraging liquidity has kept us afloat.
3. The stimulus. Although none of the money has gone out the door, there is an awful lot of money on the way out....and that has been priced in. I would suggest that if the President came out and said, "you know, I've looked at the economy and I think we should NOT spend $300B of the stimulus package and instead apply it to deficit relief" the markets would love it. All that borrowing is going to act as a brake on liquidity when the private sector actually begins needing it to fund expansion.
So....what are you buying?
"So...what are you buying?"
ReplyDeleteBottled water and canned food; this is a sucker's rally :)
I think when all is said and done, the bottom will officially be called in june/july, but the resulting recovery will be anemic.
Thanks, Mr. Fun.
ReplyDeleteSince we know the economic data lags three months, nobody is allowed to call an end to the recession until July. Of course, the current Administration is re-writing so many rules now, they might as well add the "Obama Declares Recession Over" statute whereby the One looks into the teleprompter, and states, "Thanks to me the recession is now over." Case closed!
ReplyDeleteWhen I first saw the title, I was thinking this post was going to be about something else.
ReplyDeleteBuying gold, ammo, and Treet (it's cheaper than Spam - only $1.00 @ Big Lots)
ReplyDeleteThe only stocks I would recomend buying are stocks in companies that manufacture the printing presses used to print dollars. And even the return on those will be greatly watered down due to the devaluation of the dollar.
ReplyDeleteMy brother's made a killing the past few months(he sells gold) but neither he nor my mother have been able to buy ammo. Apparently the entire state of Texas is "sold out." They think it's some perverted Obamaspiracy.
ReplyDeleteYes, my long hair still covers up my redneck . . .
There's not much buying of 5.56mm ammo as it is very hard to find - except for the cheap non-brass casings.
ReplyDeleteI did buy a couple thousand shares of F at $2.18/share.
Does the bond market matter?
ReplyDelete