This article won't please some of our democrat posters but it's the reality I've been hopeful would come to light, once the rose colored glasses of their "man" winning began to come off. I'm not sure the diehard "Obama is king" democrats will understand anything but their own pocketbooks being hit front and center.
Read this, it defines how precarious the small gains to date are, plus Warren Buffet described our own economy as a drowning man that a lifeline was thrown to just last week. His explanation was that we'd stopped him from sinking but that he was a far distance from being back on solid ground.
Of course, after noticing this article earlier today, the stock market took a large dip just once again evidencing how far we have to go to a true recovery? My largest concern is that if that target date truly is next spring, well brace yourselves, for it's that's when the enormous spends for stimulus the democrats have voted in will begin to hit our bottom line.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/where-youll-see-real-recovery-first.aspxWhere you'll see real recovery firstBy Bill Fleckenstein
MSN Money
We have now seen a string of data points that indicate an improvement in the economy, with potentially more such data to come -- which is certainly refreshing news.
But after two quarters of gross domestic production contracting at a rate of
6%, if the economy shrinks only 2%, that will look like strength from a data standpoint. After a couple of quarters like we've just experienced (which are quite rare), just restocking depleted inventories could easily produce a positive GDP number in the short run.
Thus one cannot examine any of these reports in isolation. One has to take a step back and look at the whole mosaic. We don't want to become overly bearish about certain problems. But neither do we want to become overly bullish about a couple of positive bits of news.
Anything but clear The bursting of the housing bubble and the attendant collapse of the financial system, and the money-printing/government stimuli aimed at mitigating those disasters, are creating enormous crosscurrents that will make divining the market action (as well as the news)
particularly tricky.
If one wants to talk about a legitimate "green shoot" (the new favorite buzzword for signs of a recovery), I would point to a recent Wall Street Journal article in which the CEO of Caterpillar (CAT, news, msgs) noted that demand for excavators in China is at a record level.
Again, that is just one nugget. But I continue to believe that
the large economy most likely to recover first will be China. That leads to one of my areas of interest: commodity-oriented businesses.
I've been a fan of precious metals for reasons related to currency debasement, but lots of other companies will benefit from what transpires in China as well as from worldwide stimulus.
Small is beautiful If stagflation is the most probable outcome (my view at this juncture), we are liable to see coming out of this period sort of a replay of the 1970s, but on steroids.Small companies, which are usually nimbler than large companies and can grow more quickly, are likely to be the biggest beneficiaries.
If we are to experience inflation/stagflation over the next several years, companies that can grow rapidly -- i.e., unit growers -- will be sought after, and small may become beautiful. Conventional wisdom has it that, as a result of the financial system's collapse, bigger is better. But I think
bigger is slower and less flexible and therefore less adaptable. I'm especially interested in small companies that are uniquely positioned or are in sectors that have the wind at their back.
That's sort of the prism through which I am viewing the landscape. I've been thinking about this for some time and wanted to pass it along for readers to chew on.
Unfinished business on the downside? As for the current stock market rally, color me skeptical that the lows for the bear market have been seen. However, given the money printing that has taken place and will take place, folks must give any expectation that they hold a wide degree of latitude.
(
All that stimuli and money printing seem poised to take their toll on the dollar -- which, if the case, and if the bond market has indeed seen its lows, will add another level of complication for equities down the road.)
Lastly, part of the reason for my skepticism comes by way of market ******* Justin Mamis.
In March, as I detailed in "Bear's end? Wishing won't make it so," he cited somewhat of an ending sequence that has yet to fully unfold:
An intervening rally from a significant low. (That rally is now under way.)
Eventually, a real surrender, which will set the final low.
In all likelihood,
a test of that final low.
Now, it is not written in stone that this sequence must occur. But it's certainly worth thinking about.
At the time of publication, Bill Fleckenstein did not own or control shares of any company mentioned in this column.
