Could this possibly, maybe, perhaps be it? And some ramblings

The market is visibly weak. A grand 3.5% GDP number created a massive rally that was among the most impressive we’ve seen in a while. Now that Wall Street has had a night with the actual numbers in the report, they have noticed something. Most of the report stunk of stimulus and there was very little organic healthy growth. Today we are down by nearly the same amount, and the selling is intensifying. Not much follow through from yesterdays rally eh? (SO far)

I don’t know how many times I read that “half of the GDP number came from automobile production”. The income portions of the report also left a lot to be desired (typically what happens when unemployment is about to surpass 10%).
Update from Today’s PCE Report: Disposable incomes are down.

The question now bugging the street is where do we go after the stimulus props are gone? Data shows thus far that without the stimulus, the economy would have shrunk more. The prospects for the the US economy are not very bright right now. Maybe the Cash for Appliances and the Homebuyer Credit Extension will help, or maybe these consumption-inducing programs are simply pulling in demand from the future. Post Cash-for-Clunkers auto sales have shown this. Mortgage applications were already trending down as the homebuyer credit was expiring. So the evidence that these programs are not working is there.

Politics have taken over. This is not good. The underlying problems are not being addressed. Mid term elections are coming up. From the looks of it so far, it seems that the Democrats will lose their majority seating in Congress (…maybe the House also) and if they do, it will strangle our gov’t even more as bickering leads to filibusters and filibusters lead to efficient laws not get passed. Efficient laws that are important in our situation. I voted Obama, but I must say, he’s blowing it in my eyes (there I said it, I’m sorry)…I went off on a tangent.

Chinese, Korean, and Japanese markets had already begun rolling over almost 2 months ago. Aren’t they the new region of global growth? Isn’t the whole global recovery suppose to hinge on Asia?

I believe that Decoupling 2.0 will be once again rejected. Emerging markets just can’t pick up the slack that use to be the American Consumer.

If indeed we do begin the correction in the markets, I am leaning on it being relatively shallow, maybe 10-20% as performance chasing and Christmas appear on the horizon. However, maybe the gift that was the 60%+ rally included Wall Street’s Christmas present also. Lots of people were expecting Sept-Oct to be the dangerous months, no one is expecting a terrible Nov or Dec. Contrarian wise, we could drop more than what I think. Keep an eye on the technicals!

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