Excerpts from John Mauldin's weekly e-letter giving his forecasts for 2009:
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I think we could see a tradable rally in the next few months, but at the very least test the lows this summer, if not set new lows. Earnings are going to be far worse than any analyst’s projections I have seen. And earnings drive stock prices.
Further, this recession is going to be the longest in anyone’s memory. It is going to seem like it is never going to end (it will, I promise), and more and more investors are just going to give up on stocks. The buy and hold for the long run mantra is wearing thin. In inflation-adjusted terms, the stock market is about where it was in 1973!
It takes a lot of buying to make a bull market. It only takes an absence of buying to make a bear market.
I think the correlation between the US stock market, other developed markets, and emerging markets is close to one. I prefer to stand aside until the US economy has a clear direction and we can see whether the stimulus actually works. And then we can look at the world economy. I won’t embarrass them by naming names, but those who argued for “decoupling” between the US and the rest of the world are not looking good.
After a year of bouncing around, gold may be poised to rise against all major currencies. We could easily see new highs in the next year.
I think oil is going lower in the near term.
As for the other metals, I think it is quite likely copper and its industrial allies will fall in price at least for the near term, until production can be cut and demand in Asia begin to rise again. I would not be a buyer of long-only commodity funds for the near term. Someday the bull market in commodities will return, but not until Asian demand picks up.
The risks to my forecasts are quite clear. The stimulus could happen quicker and be more effective than I think, and the economy and the markets could surprise to the upside. On the other hand, and more scarily, the Fed could be pushing on a string in a liquidity trap and the economy and markets could get hit harder, along with most assets.
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4 comments:
Will Obama do any thing new to save this market or He will not have any hold on the market as has been during the last one year of Bush rule.
Even The Right Monetary and Fiscal Policy Can't Get Us Out of the Depression
DIE ZEIT: Can the right monetary and fiscal policy keep the US out of a recession?
Alan Greenspan:
"Probably not. Global forces can now override most anything that monetary and fiscal policy can do. Long-term real interest rates have significantly more impact on the core of economic activity than the individual actions of nations. Central banks have increasingly lost their capacity to influence the longer end of the market.
Two to three decades, ago central banks were dominant throughout the maturity schedule.
Thus, the more important question is the direction of long-term real interest rates."
Alan Greenspan
The Great Irony of Success
© ZEIT online, 30.1.2008
If short-term risk-free interest rates are 0% doesn't it that mean that credit is worthless?
A Credit Free, Free Market Economy will correct all of those dysfunctions.
The alternative would be to wait till, on the long run, most of our productive assets get physically destroyed either by war or by rust.
It will be either awfully deadly or dramatically long.
We Need, Hence, to Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.
This Age of Turbulence People Want an Exit Strategy Out of Credit,
An Adventure in a New World Economic Order.
✔ Exit Strategy out of Credit
✔ A Specific Application of Employment, Interest and Money. [For my Fellows Economists]
Press release of my open letter to Chairman Ben S. Bernanke:
Chairman Ben S. Bernanke, Quantitative Easing Can't Work!
Yours Sincerely,
Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
1776 - Annuit Cœptis.
MR SUKHANI,
ONCE U SAID ON CNBC THAT U EARN YOUR LIVING BY TRADING.THAT MEANS
EVERY TRADE U DO MUST ACT IN YOUR FAVOUR,IN ORDER TO PROTECT YOUR CAPITAL OR EITHER GET STUCK OR BOOK A LOSS.
THIS REQUIRES A LOT OF COURAGE.
INTERVIEWS ON CNBC MUST HAVE ALSO FETCH SOME MONEY.
Mr.Sukani,
Market will improve only if our interest rate come down below 6%,in India. It will coincide with developements in western and US economies.
Reji Abraham.FCA
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