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Timing

September 16, 2009 – 10:30 am

Federal Reserve Chairman Bernanke gave us a speech telling us that everything is ‘OK’, that the world economy is recovering. He also said that it is not going to be a smooth ride and jobs are gong to be hard to come by. Maybe he didn’t say those exact words but you certainly got that feeling in the words he used.

To support his premise retail sales for August were better than expected up 1.1% without autos. Throw in autos and it was up 2.7%. The cash for clunkers give us a false reading because that was a one time stimulus that went away so it is nice to see the consumer opening the wallet to give a boost to our economy with the auto sales. The retail sales numbers are not all that strong when compared to a year ago but the change in trend is important. When you consider the high unemployment rate you have to be impressed.

No inflation, a stronger consumer, low interest rates and low inventory certainly feels like a formula for growth. A weakening dollar, excessive spending and very high government debt appears to be a formula for inflation.

Always it’s in the timing. For now the timing is a stronger economy and a rising stock market. Future worries are always going to be with us and as long as we have a large amount of investors worried then the rally will likely stay intact.

Buy on dips.

Good Trading
Steve Peasley

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