The Obamanation is not going away anytime soon. The stock market is going to continue continue feeding economic fears, not just reflect the double dip recession fears that grip the nation.
Stocks have fallen four weeks in a row. 401(k) statement watching has set off a spiral of fear that most likely will push stocks even lower, causing both consumers and businesses to pull back even more, tipping the world economy into a double dip recession.
More home sales are falling apart at the last minute, which suggests that plunging stocks and dismal economic news is giving potential buyers cold feet. The U.S. economy, to put it simply, is being pushed to the brink. Europe has already fallen off the cliff but they haven’t hit the bottom yet. Expect a very painful splatter when Euro socialism takes down the Sovereign debt of Europe.
Investors are responding to the risk by putting their money where they feel “relatively” safe. 10-year U.S. Treasury notes were so high last week that the yield dipped below 2% for the first time in my lifetime (57 years). The price of gold has continue to rise and is now over $1,800 an ounce.
Official unemployment remains at 9.1% but if you include those who have quit looking for a job and the “under-employed”, the number is much higher, perhaps 15+%.
On paper, stocks are a big bargain, priced roughly 11 times their expected earnings per share over the next year. The markets long term average is 15 times expected earnings. If earnings come in as expected, the S&P near 1,565 the October 2007 record high. Unfortunately, there is a very strong possibility that we’ll fall into another recession and the S&P will plunge below 1,000 before the year ends.
I’m not selling. But I’ve also stopped buying for now. Bargain basement prices are going to be available for at least another year. No need to jump in now. Obama “hope” is dead and his “changes” will continue to push the world towards a “100 year flood” of worldwide economic disaster.