March 3, 2009
markets dropped slightly enough today that they're essentially unchanged. The
to close at 1,321,.
to close at 6,726,
and the S&P
to end at 696.
a barrel, while gold lost
to close at $913.60.
fell a little to 50.93,
in spite of the fact that the markets actually closed a bit lower.
I really haven't much that's new to report tonight. If
expectations mean anything, the markets are expected to go lower before a
bear market rally is triggered. Michael Ashbaugh has published his regular
Tuesday technical analysis:
Ashbaugh hunts for sustainable lows.
Dr. Irwin Kellner asks, Has housing found a
floor? FundWatch- Three to six years before investors recoup losses, advisers say
says that investment advisers are split on whether the U. S. will emerge
from this recession this year or next. However, they think it will be
three to six years before the market indices return to their 2007 peaks.
I'll try to update Paul Krugman's latest comments
Mark Hulbert's conclusion that although it's possible that yesterday's
price action reflected a market bottom, sentiment probably isn't negative
enough to call a market low just yet: Contrarian analysis of new market low.
Revisiting Paul Krugman's Revenge of the Glut,
he observes that after the 1998 Asian financial crisis, Asian governments
protecting themselves by amassing huge war chests of foreign assets, in
effect exporting capital to the rest of the world.
The result was a world awash in cheap money, looking for somewhere to go."
Although part of that money went to the United States, much of the rest of
it went to small countries where capital inflows became a much larger
fraction of their economies than it did with the U. S. Rising asset values
in those countries gave the illusion of rising wealth just as it did in
the U. S. Now the asset bubble has collapsed, but the debts remain...
viz., money they borrowed to build bigger factories to sell to a booming
world. And now, with unemployment threatening, the savings rates are
greater than ever, with the unavoidable consequence that consumer spending
has fallen down a well. Unfortunately, this "virtuous
is getting worse, not better.
It may be important to keep these ideas in mind in
assessing Mark Hulbert's, or anyone else's projections about a cyclical
bear market low, followed by a normal market recovery.