S&P 500 Breaking Out
In last week’s update, I expressed worry about the increase in bullish sentiment and felt a pullback in stocks was imminent. I put first support at 975 and better support at 950. 950 never came into play and now the S&P 500 is breaking out after testing 975: We’ll see if this holds for the day, .. read more
Bulls Drop in AAII Poll
The American Association of Individual Investors released their weekly poll today. I’ve been very concerned that bullishness was getting too high as the last two readings were 50% & 51%. Anything over 50% makes me very nervous. The selloff Monday obviously had an immediate impact – bulls dropped to 34% and bears rose to 40%. .. read more
Deflation
The Federal Reserve, backed by almost every mainstream economist, is determined to prevent deflation. In fact, Bernanke, in promising Milton Friedman that he wouldn’t repeat the mistakes of the Depression era Fed, was essentially promising that he wouldn’t allow deflation. Why is he so afraid so deflation? The basic answer to that question is that .. read more
The Triumph of Pessimism
A number of prominent economists have recently upgraded their outlook for the economy. Richard Berner (Morgan Stanley), James Glassman (JP Morgan), Stephen Stanley (RBS Securities), Lawrence Myer (former Fed governor) and Neil Soss (Credit Suisse) have all recently commented on the likelihood that growth in the coming quarters will be more robust than the consensus expectation. .. read more
Papering Over the Housing Market
Are we just creating another real estate problem? After all the problems traced to Fannie Mae and Freddie Mac, you’d think we would learn the lesson and stop subsidizing housing. And you’d be wrong: Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie .. read more
Government Efficiency
According to this WSJ story, the cash for clunkers program is having some difficulties. Dealers are not being reimbursed on time: The Obama administration eased the rules of its “cash for clunkers” program Thursday, saying it would let consumers order autos that dealers don’t have in stock. It also tried to reassure dealers who say .. read more
Broken Windows
This morning’s retail sales report was widely reported as a surprise, but it shouldn’t have been. When the program went into effect, I wrote a post called Broken Clunkers: It’s not as if this is some new idea. Bastiat included the parable of the broken window in his 1850 book, Ce qu’on voit et ce .. read more
Couldn’t Have Said It Better Myself
Bruce Bartlett has an editorial at the Daily Beast that lays out for all to see the economic sins of the Bush adminstration. The thrust of the article is that Republican anger at the Obama administration about deficits and the economy is misplaced. A snippet: Conservatives delude themselves that the Bush tax cuts worked and that .. read more
