Economic Update – July 27, 2010
RUMORS OF THE (NEAR TERM, 2010) DEMISE OF THE UNITED STATES STOCK MARKET, and GLOBAL MARKETS, HAVE BEEN GREATLY EXAGERATED.
In my last few updates in Jan – Feb 2010……
Stock Market: All year, I’ve said the stock market could be in a “trading range” for 2010. ie, up 1000, down 1000….. and that’s what it’s been doing. As the recent near term bottom was made during the Greek/Euro Crisis, once again things looked pretty bad…..but don’t bet against this market…..not yet at least!! It has more resiliency than many people think!! (BUT….if I have to choose between GROWTH stocks….or DIVIDEND stocks/bonds……I’m betting on things WITH a DIVIDEND. Growth seems elusive, at least for now……but I can “count” on the things I like that have nice dividends!)
Gold: After recently topping at around $1,260 (?) at the end of May, it is now around $1,160….off 8%. In times of world instability, Gold goes up, and normally, vice versa. Recognize, the long term trend in Gold is still up. Gold is up significantly since Sept 11, 2001…..as the world became more and more unstable. (Oh, to have bought Gold in the early part of the first decade of 2000’s…..and then SOLD Real Estate at the midpoint (2005-2006)…… Easy to say looking back…..but what do you do now? (See my conclusions at the bottom…)
U S Dollar: I don’t hear much about this (in the main stream media at least) any more, although many people believe it has already happened??? Really? The US dollar strengthened very nicely in May and June as the Greek Crisis made the world, once again, run to the “safety” of the US Dollar. The dollar rose to around $1.18 to the Euro. But, in the last couple weeks, has fallen to $1.30 to the Euro….and THIS DROP OF THE US DOLLAR HAS HARDLY EVEN BEEN IN THE NEWS…… (By the way, the US Dollar would have to drop to almost $1.60 to the Euro to be at it’s WORST/lowest value in the past 3 years…)
Interest Rates: Low and staying low all year, so far. The prophecies of UNCONTROLLED Inflation are still wrong. (At least for now……)
Bank Failures: While the number of bank failures will be many more than last year, it does NOT seem to be on track for TWICE as many, though. So far….this appears like a controlled process. (believe it or not) and similar to the S & L failures in the early 1990’s. I continue to say there will be NO forced bank holidays, as has been prophesied by a few vocal parties since fall of 2009, or before.
1) Gulf Oil Crisis: Incredibly, it looks like it’s capped. Ah, but will it hold? The fatalist point of view is: “NO….and watch for the big blow up, tsunami, mass health concerns and mass evacuation of 20 Million people in the Gulf states…..” Personally, I don’t see that happening.
2) Iran and Israel getting ready to exchange missiles in the next BIG mid east war. This seems like it is continuing to build with each passing week…if not each passing day now.
Stock Market: Still in a trading range: +/- 1000, now with a little upward bias. (I’d heard “if the market closes ABOVE $10,500….we’re in for another upward rally…..for the near term.)
Gold: Not sure it can retry for a new high for a while. Some think you could see a price “collapse” near term. Without another BIG world Economic Disaster…..they could be right…for now.
US Dollar: I expect the Euro to quietly strengthen…..as the Dollar falls against it.
Interest Rates: No reason, yet, to expect rates to rise…..but keep watching.
Bank Failures: Should not be twice as many as last year…..and NO bank holidays!
This is just my thoughts……granted, there are…and always will be….people who disagree. So far this year…..my thoughts have been right on target!
As I continue to say: I believe the Rapture is “the trigger” that makes everything blow up, economically. And you can make a very very god case that we are on the brink of that world-wide economic disaster. It would only take a little “push” from God to make it all happen.
PS…..Many DOOM and GLOOM economic and market type people have been calling for a total economic collapse in 2010. One, Harry Dent, expected it to happen today, July 27. Apparently, he’s wrong !! He thought the US Gvt would re-figure the US GNP numbers today for the last quarter…and revise them downward enough to make the stock market go into a violent downward death spin. Hmmmmmm…… I’ve heard that again and again over the past 25 years.
The Elliot Wave guy has been equally bad with his predictions…..for 2010…and many times over the past 25 years, too.
Time will tell…..but WITHOUT the Rapture…..and as bad as “business as usual” is for many people in the US and elsewhere….(many many people are hurting financially..)….. the markets seem immune and are looking forward to an increasingly better economy….at least today they are!! But, it can all change on a dime!!! So, be careful out there……it’s a jungle!! And everybody’s got an opinion….and they all can’t be right.
And…..sooner or later……they all get a chance to be right. LOL…..at least for a little while!!
The old phrase…..”it ain’t over ‘till the fat lady sings….”
I’d say….”it ain’t over…..until my Father in Heaven has the last word!!”
AND HE WILL !!!!!!!!!!
(No time to thoroughly proof read….sorry for any errors!)