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Thursday, March 4, 2010

Still waiting for a decision on market direction

I am busy this week with work, more so that usual, hence my sparse blog postings.
Unfortunately, my postings may be sparse for the next 3 weeks. I'll make it a point this weekend to make a couple of good posts for Monday/Tuesday for next week.

What the market prognosticators are looking at right here and now is the trading range. The economic fundamentals in the economy is weak at best. Any positives are trumped-up positives from trillions of dollars in deficit spending. What the US government and many economists don't get is printing money is not the road to a long term recovery.

Sure for the time being we all feel a little bit better, but over the long haul only one thing matters. Basic driving forces of an industry lead economic driver like .com boom of 1995-2000, Car revolution in the 1920-1929, etc.

The nation needs a leader, to set the "game" straight, to enforce LAW, to change law and influence / inspire industry, to reign in fiscal irresponsible behavior.

The bush years get quite a bit (deserved) critique from the left. One digging point is Clinton had an economic surplus and a deficit of 5 trillion. Bush left with the government deficit spending over a trillion, and a debt of 12 trillion.

But apparently the thought goes Bush's deficit spending was wreckless, and Obama's is needed?

Lets change the sentence above, and see what you think:
The president of XYZ is continuing the deficit spending of the previous administration, resulting in their countries debt soaring from 35% of GDP to 80% of GDP over the past 10 years. The country is on track to eclipse 100% of GDP in a couple of years, and expects an economic boom to follow.

I say above is unrealistic.

But this has only one thing to do with the markets, will this result in the next 1 to 12 months in the US dollar falling or the US dollar rising in a world with economic turmoil as OTHER countries also have debt issues.

Frankly, no one knows, we are repeating the great depression mis steps of countries all trying to act reckless to force their currency lower and "boost" economic activity. The main difference is countries had a gold standard to restrict the amount of money creation, today we do not. One thing is for sure, the next 10 years will look NOTHING like the previous 10.

For now the question is, will the market break into a new high, or break below dow 10,000 and presumably on track for going lower. Going higher is probably an indicator time to go into natural resources as the currency may be starting to resume it's fall into new territory. I'll pontificate, as many others will, once we finally break out of this range.

Good luck

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