Archive for September, 2009
Friday, September 25th, 2009
The march of good news of a slowly recovering economy stumbled this week. The housing report for existing and new construction of homes was weaker than expected. Sales were slow while inventory fell and the expectation was for stronger sales. The durable goods report for August was much worse than expected down 2.4% when the experts were looking for a small gain.
None of this should be a surprise. The economy is recovering in fits and starts and those fits and starts are showing in the reports. Positive signs this week came in the form of consumer sentiment which was up to 73 from 70 month over month.
The huge move up from the March 9th low in stock prices is over. The next up leg is likely to be more subdued. This is normal. Just like the economic numbers there will be fits and starts but a steady improvement in the stock market with corrections along the way is likely.
Of course something unexpected could happen but on balance the path seems to be set for at least the next six months. Long term the government will have to ease itself out of its over spending and over easing of the money supply. That is going to be a very slow process to say nothing of the difficulty.
Good Trading
Steve Peasley
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Thursday, September 24th, 2009
Today’s Stocks & Topics: Emerging Markets, Investing, Natural Gas, (VPRT) Vistaprint N V, (UNG) United States Natural Gas ETF, The Stock Market, (WDC) Western Digital Corporation, (STX) Seagate Technology, (GS) Goldman Sachs Group Inc.
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Thursday, September 24th, 2009
It appears that health care is the major item that Congress and the President are addressing at this point, leaving the economy to move forward on its own as the stimulus package money is spent. That spending will be spread over many years; therefore the impact on the economy will be spread over those years.
Because of this drawn out spending it is going to be difficult to separate the natural economic cycle highs and lows from the government induced benefits. Short term government benefits are important when trying to exit a recession, but it is always difficult to know when to pull the plug on excess spending. I think it is going to be impossible for Congress and the President to withdraw the spending once it is no longer needed.
That leaves us with health care and the spending it will produce. Though the proponents talk about saving money no one believes it. Most believe any government health care plan will result in more spending and that is on top of already excess spending.
The stock market will react to spending they see as excessive. Initially, traders and investors will assume rightly or wrongly that inflation will be a problem. It appears some inflation fear is present in the price of gold but there is no evidence of any inflation in the economy. You can also see the market reaction to spending in the dollar as it has fallen for some time. Right now the focus is on economic recovery so worries about inflation and the U.S. dollar are on the back burner. That won’t last if the economy continues to improve.
Good Trading
Steve Peasley
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Wednesday, September 23rd, 2009
Today’s Stocks & Topics: (BRCM) Broadcom Corp., (HTGC) Hercules Technology Growth Capital Inc., (NLY) Annaly Capital Management Inc., (EBS) Emergent Biosolutions Inc., (T) AT&T Inc., (CAH( Cardinal Health Inc., (MTW) Manitowoc Company Inc., (ABT) Abbott Laboratories.
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