Monday, April 18, 2005

Economic musings

Did you know that Billmon actually is an economist?
For the financial markets, last week had a ugly feel to it, both on Wall Street and globally. It wasn't a crash, certainly, but also more than just a garden-variety correction. It felt like the preliminary stages of a sea change in sentiment -- the kind that either accompanies the popping of a bubble, or causes it, depending on your economic point of view.

The Dow dropped 420 fast points in the final three days of the week, interrupted by nothing that could be called a significant countertrend rally. This despite positive earnings surprises from both GE and Citigroup.

When the market ignores good news from those two, it's essentially a storm flag for the entire economy...

Continue reading the Billmon post....

James Wolcott is not an economist, but he says the stock market "fascinates" him. He comments:

A year ago in an interview, Sir John Templeton said he had never seen so few investment opportunities in all his 91 years. Buffett has also said he's sitting on a mountain of cash because there's so little worth buying. Today, former Fed chairman Paul Volcker, a man of true stature (literally as well), wrote in the Washington Post today, "[U]nder the placid surface, there are disturbing trends: huge imbalances, disequilibria, risks -- call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. What really concerns me is that there seems to be so little willingness or capacity to do much about it."

Also looking under the placid surface is the excellent young coolheaded portfolio manager, John Hussman, who does a weekly commentary on his site and has been marking the underlying deterioration of the stock market, which turned ominous last week.
Read Wolcott's post...

....but hey, do what you want....you will anyway.

No comments:

Post a Comment

Comments are moderated. There may be some delay before your comment is published. It all depends on how much time M has in the day. But please comment!