The US economy will suffer further damage from the downturn in the American housing market, Hank Paulson (US Treasury Secretary) warned.
The implosion of the housing bubble will have negative repercussion on the economy, on consumers, and on the financial system.
Are you panicking yet? Well, do not.
The Financial Times raises the issue of what will the Fed do.
How can they be so naive. The Fed will do what is supposed to do. They will add liquidity into the banking system, they will come up with everything humanly possible to protect the banks from going under. This is their job.
My friends, this is spectacularly bullish for the markets.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
3 comments:
The 10/19 decline does not support your view! The SPY finish at 149 is now below your trend line in Fig.13. Now what??
REB
You should slowly decrease exposure to stocks, especially the poorest performers. It IS likely that there will be a rebound in this week or next week (as per Dagnino's analysis) -- if there is, then you should halt your selling. If the fall continues, however, then continue to decrease your risk. At the moment I'm 55% stock, 25% dollar short (UDN), and 20% in commodities (through DBA and DBC etfs). These non-stock assets are likely to continue to hold value and appreciate in the face of our massive dollar decline.
The dollar just keeps falling. Exports are moving higher, and the lower growth/decline in the speculative orgy in housing 'wealth' domestically, will curb spending on non essential imports.
Thus the trade deficit will shrink, and exports will pick up slack in the labour market. If you followed Benankes Speech on savings ratios recently - he pointed to this outcome.
Rather explains why a trade surplus feels so bad as recessions are usually what create them.
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