Daily Investment Interpretations

June 30, 2009

2009-6-30:  The indices fell somewhat today, and my normally optimistic advisory service was pretty pessimistic this morning. The principal news driving this seems to be the fact that consumer sentiment dropped below 50% this month, after rising above 50% last month. The continuing layoffs are spooking consumers.
    An updated jobs report will come on Thursday.
NASDAQ Composite ended the day down 9.02 points (-0.42%) to 1,835.04, the Dow lost 82.38 points (-0.97%) to close at 8,447.00, and the S&P 500 divested itself of 7.91 points (-0.85) to end the day at 919.32  Oil fell  to $70.46 a barrel, while gold dropped $13 to 927. Apparently, the recovery is back on. the VIX added 1.00 to 26.35.
    Michael Ashbaugh writes, S&P reclaims 900 mark. He thinks Thursday's job report may set the tone. In the meantime, during a holiday-shortened week, there's not a lot going on.
Estimating the Market's Rise in an Anemic Recovery
    Supposing the economy recovers to a new, lower norm than its 2007 level. How high would that be from here?
    Presumably, GDP--and therefore, earnings--will be several percent lower than they were in 2007, at least until GDP growth can catch up with the 2007 levels. So presumably,  earnings, after correcting for inflation, will plateau several percent below their 2007 levels. But they won't settle at a level 40% below their 2007 measures. In fact, in a year or two, I would expect them to level out a few percent below their 2007 highs, rising to their 2007 values in another year or two. But this means that the stock market may approach 2007 levels within the next two to four years, doesn't it?