I don't mean this sarcastically-it might seem that my point is that of course they aren't strong in view of this move but that's not necessarily my point. The fundamentals of the US economy may well be strong-unlike when John McCain said this during the election in 2008.
What we can say clearly is that if the fundamentals of the US economy are strong the technicals of the US stock market are very weak. Today the S&P just fell through 1850 with little argument today. After the huge drop early in the day it did rally a little to about 1854 but it has since fallen even further now at 1827.
The trouble for the market is that the fundamentals of the US economy don't matter anymore, not right now. The thing that has to be understood is that there is a difference between a rising bull market and a falling bear market. This market is not technically in a bear market yet-defined as a 20% drop from the highs-but it has certainly has acted like a bear market in the last few weeks.
On CNBC a lot of fund managers come on and declare that 'you should be buying when there is blood in the streets.' It makes me think of Keynes scornful dismissal of talk of how in the long run everything will be fine.
There will be a bottom but is it yet? There is reason for doubts. I note that Jim Cramer is bearish-that's as big a bearish sign as I need. The fund managers always point out that the fundamentals of the US economy are fine failing to note that this is not why the market is selling off-it's about the global slowdown-the slowdown in Europe, the weakness in Germany, the toll the Russian sanctions are taking on Europe-both on Russia but also Europe. Meanwhile, China is not nearly as strong as it was in 2008.
Today you had everything tanking-the S&P new lows, oil under $80, the 10 Year Treasury seeing it's yield fall under 2%. So when you hear about the US economy being decent, the selloff is not about the US economy. I don't know what will happen long term. Just right now this is where the market is. There will be a buyable bottom but I don't think we're there yet.
One question is whether or not you can have a bear market in equities but no recession.
http://diaryofarepublicanhater.blogspot.com/2014/10/can-you-have-bear-market-without.html
It seems that in 1987 we definitely did. Right now the US economy does look pretty good. However, there are even here some worries. What about what slower worldwide growth does the the multinationals, what about the bite of a strong dollar, etc.
What we can say clearly is that if the fundamentals of the US economy are strong the technicals of the US stock market are very weak. Today the S&P just fell through 1850 with little argument today. After the huge drop early in the day it did rally a little to about 1854 but it has since fallen even further now at 1827.
The trouble for the market is that the fundamentals of the US economy don't matter anymore, not right now. The thing that has to be understood is that there is a difference between a rising bull market and a falling bear market. This market is not technically in a bear market yet-defined as a 20% drop from the highs-but it has certainly has acted like a bear market in the last few weeks.
On CNBC a lot of fund managers come on and declare that 'you should be buying when there is blood in the streets.' It makes me think of Keynes scornful dismissal of talk of how in the long run everything will be fine.
There will be a bottom but is it yet? There is reason for doubts. I note that Jim Cramer is bearish-that's as big a bearish sign as I need. The fund managers always point out that the fundamentals of the US economy are fine failing to note that this is not why the market is selling off-it's about the global slowdown-the slowdown in Europe, the weakness in Germany, the toll the Russian sanctions are taking on Europe-both on Russia but also Europe. Meanwhile, China is not nearly as strong as it was in 2008.
Today you had everything tanking-the S&P new lows, oil under $80, the 10 Year Treasury seeing it's yield fall under 2%. So when you hear about the US economy being decent, the selloff is not about the US economy. I don't know what will happen long term. Just right now this is where the market is. There will be a buyable bottom but I don't think we're there yet.
One question is whether or not you can have a bear market in equities but no recession.
http://diaryofarepublicanhater.blogspot.com/2014/10/can-you-have-bear-market-without.html
It seems that in 1987 we definitely did. Right now the US economy does look pretty good. However, there are even here some worries. What about what slower worldwide growth does the the multinationals, what about the bite of a strong dollar, etc.
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