I just listened to King World News and their interviews for this weekend. There are some good coverage of what it going on and where the people being interviewed think we are headed.
David Tice & Bill Laggner were interviewed and really are not optimistic. They are calling for a retest of the low of 666 on the S&P. I’ll let you listen to the interview for their reasons.
http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Broadcast_Gold+.html
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I try to listen to these types of opinions with an open mind. I then try to look for my own reasons for either agreeing or disagreeing or weighing the odds of their being right.
In this case, how and the world could we retest the low of 666 when we have so many people saying we are getting better. Manufacturing is hiring, exports have been up, earnings have been good, etc.
Well, lets start with the Leading Economic Indicators.
http://dshort.com/charts/ECRI-Weekly-Leading-Index.html?GDP-recessions-WLI-FFR-since-1965
Then after looking at that chart of the leading indicators, add
quote
States are looking at a total budget gap of $180 billion for fiscal 2011, which for most of them begins July 1. These cuts could lead to a loss of 900,000 jobs, according to Mark Zandi, chief economist of Moody’s Economy.com.
http://money.cnn.com/2010/02/13/news/economy/federal_funds_for_states/index.htm
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When you cut spending by the government at any level, you hit both the directly employed and the indirectly employed. Look at this report from a few years ago in Florida and how many jobs are tied in that state to government spending in defense.
The overall figure of $44-billion represented 9.8 percent of Florida’s gross state product.
Direct and indirect spending supported 714,500 jobs, with an average annual wage of $40,310.
http://www.sptimes.com/2003/12/12/Business/Defense_spending_in_F.shtml
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You have seen the news on Europe. They are in a political battle of austerity vs. spending. That too, is a very important in what happens to us. Austerity for them, means less exports for us. Austerity for them, means less exports for China. Let exports for China, means less exports for us.
You are witnessing a global storm and it could become the perfect storm that whether we stimulus spend or not, could send us into a deep depression. Prepare for that storm by having a plan that allows you to act quickly. For example, if bonds, that are in a bubble, start to fall in price, they will fall so fast that many will be blind-sided. Mutual funds trade at end of day, no matter how early in the day you got your order to sell in. Maybe others here have tips on how to prepare for a sudden change in market sentiment and what could trigger it.
If there is a rally, then fine, if you can, take advantage of it but, as you have seen, sometimes they don’t even last a day.
- Jan Paul
