dow opened up and never sunk for a second. it’s always nice to see a little green, unless you’re holding just shorts or trading in tokyo!
job growth rate was looking solid, especially on top of oct’s already decent #’s, oil dropped below $90 per barrel, productivity is up, and the dollar may be toughening a bit. the market already has a 1/4 point reduction priced in and i haven’t read much to indicate we’d see more than that.
with the government and banking-finance industry coming to an agreement today on how to handle, at least for now, the current and still developing sub-prime mortgage situation, i still have huge doubts about whether we’ll avoid a recession.
some companies (aapl, nok, goog, emc, msft, ko) are side-stepping these woes. smart money will keep flowing into those companies to avoid the rank wifing over from the finance sectors…i’d think at least in the short-term.
even if subprime eats away at the stock price of the finance sector, i’d still think the US signaling ‘no recession’ would cause for a rapid run to 15,000 on the Dow. continued signs of stagnation (or -flation) or a recession would definitely look like a roller-coaster to the bottom. i don’t see china being able to bail the world out yet. (possibly if they’d float their frickin’ yuan! and lead the way on a whole laundry list of other general political needs the world has…where art thou, dear communists?)
green energy is definitely building more and more momentum but would still be hit hard if the economy sank.
that being said, what is everyone else thinking? time to clear out those shorts and start accumulating on the “low” end? is it the low end? anything else we should be taking into account?
3 responses so far ↓
1 Mr K // Dec 6, 2007 at 7:55 am
Great post!
I had a long talk about the US economy yesterday with some friends. My main point was this: If housing falls, oil drops, the stock market corrects, and everything goes back to 5 years ago, AMERICANS would live happier lives. Cheaper to live, cheaper to drive, cheaper to invest, etc… In the short term it would hurt the economy, but in the long run it is what we need. How can a family of with two parents and two children live today? You need to make so much money to live a “mediocre” life these days. I say we have at LEAST another year of going ‘down’ and then very SLOW growth (I hope).
2 citizenworld // Dec 6, 2007 at 9:46 am
Sure Mr. K, that would help outflows of investment and purchasing power, but that really wouldn’t do anything nice for those of us with any sort of assets. The reality is that asset depreciation will only hurt those that own nothing and wait later to pick it up again and hold for later appreciation. Perhaps shorts across the board would give you the best of both worlds- making money on downward position moves and giving you tons of cash to live your “happier lives”…
3 messels // Dec 6, 2007 at 10:00 am
what’s interesting is that “slow growth” makes sense intellectually but doesn’t really happen much any more because the equity markets are too porous; so as soon as something becomes economically attractive to invest in, the co’ shifts from 1st gear straight to 4th…
i def’ think straddles are a good position move for this type of market…but maybe slightly untraditional straddles w/ shorts (or puts) on specific stocks and long (or calls) on either other more resilient equities and/or market indexes.
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