Wednesday, February 28, 2007

Following the Bouncing Ball...

So we're poised at the open to bounce a little after yesterday's sell-off, but let's look at the new info.

GDP was revised down from 3.5% to 2.2%. That's a huge cut and look for more cuts in 2007 forecasts after yesterday's durable goods number.

I don't foresee a global meltdown of equities, there is too much $$ chasing performance for that to happen. However, data like today's GDP # reflect what we are all seeing (well everyone outside of Watertown which is experiencing it's own little retail/fast food/housing boomlet) the economy is starting to real from the slowdown in housing.

I expect us to see a series of weak economic reports to cause the markets to leak 1%/mth from here until 2008 or 2009. The Fed has no bullets to resurrect the economy at a time when it's starting to show cracks. Bernanke will say all the right things today but the reality is that he is a man without any paddles on the Niagara River.

As far as the impact all this has on your portfolio, I won't be too worried until we get to Aug-Sept. If the markets are down 10%+ for the year at that point we will get a mad rush by fund managers to make their number for the year. That means increased speculation and increased risk. That's when I'll get nervous (and even more short!!!).


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