Daily Investment Interpretations

June 25, 2010

2010-6-25:  The markets ended the day up a little: Consumer sentiment hits a two-year high, but U.S. growth rate lowered for consumers, trade.  The NASDAQ Composite gained 3.07 points (0.29%) to close at 2,223.48, the Dow drifted down  8.99 points -0.09%) to close at 10,143.81, and the S&P 500 added 3.07 points (0.29%) to end at 1,076.76, Stocks can't find foothold. Oil ended up to $79.19 a barrel, while Gold ended the day at $1,257. The VIX fell 1.21 to 28.53. 
    Just as a reminder, my investment advisory service issued a "sell" signal yesterday.
    The markets are overdue for a technical bounce, and it would appear that they're getting it. Even so, it probably won't last.
    About a year ago, Paul Krugman quoted someone saying that getting the economy going again is like giving a car a running start on its way up an icy hill. If the car is traveling fast enough, it will make it to the top of the hill. If not, the car will begin to spin its wheels before it clears the top of the hill, and will then slide back down again, with dangerous consequences. The U. S. stimulus package seems to be running out, and there's the danger that Dr. Krugman's prediction will come true: the economy will fall back into recession. Meanwhile, the financial reform bill that is being finalized won't prevent end runs by the big banks, and another meltdown will be in the offing: Wall Street gets off easy, and Reform is for the populists: Holland (audio) . Of course, we haven't escaped the current meltdown yet. "While Obama may have given the bill a 90% grade, a scholar with the Brookings Institution think tank wasn't quite so generous. The reform bill, paired with other regulatory changes in the works, 'will move us perhaps two-thirds of the way from where we are now on financial regulation to where we should be,' said Douglas Elliott." Also, "'Essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle,' wrote Simon Johnson, a Massachusetts Institute of Technology professor, on his blog, The Baseline Scenario. Read more on his blog."