Daily Investment Interpretations

July 19, 2010

2010-7-19:  The markets rose today. Stocks rebound after slide The NASDAQ Composite gained 19.18 points (0.88%) to finish at 2198.23. The Dow climbed 56.93 points (0.56%) to close  at 10,154.43, and the S&P 500 added 6.37 points (0.6%) to end at 1,071.25. Oil ended at $76.46 a barrel, while Gold closed at $1,184. The VIX subtracted 0.28 to 25.97.
   You may recall that Dr. Krugman cited Ireland as a country which embraced austerity two years ago, and which should, if the deficit hawks are correct, because of their fiscal austerity be enjoying higher credit ratings than the other four PIIGS (Portugal, Ireland, Italy, Greece, and Spain): Moody's cuts Dublin's debt. Dr. Krugman took issue with that claim and noted that Ireland's sovereign debt was no more highly regarded than that of Spain or Portugal.
The rest of these articles are self-explanatory.
    Hungarian assets tank as IMF, EU talks collapse  
    Premier trumpets China's economic slowdown  
    Buy and hold is getting old  
    My investment advisory service clearly made an ill-timed call when it recommended buying into this rally. It considers the markets to currently be in a trading range from which they will break out above or below. Unfortunately, that has all the predictive potential of a fortune cookie.
    My personal bias is that it's time to be in cash until the future direction of the economy is more easily discernible.
    Here's another up-to-date Goldman Sachs assessment of what to expect from the U. S. economy:
    "By our estimates, (federal) fiscal policy has contributed +2½ percentage points (annualized) to real GDP growth from early 2009 to mid-2010. From mid-2010 to mid-2011, we estimate an impact of about -¼ percentage point—i.e. 2¾ percentage points less than before—even under our baseline assumptions of extended unemployment benefits, more aid to state governments, and at least a temporary extension of the bulk of the 2001-2003 tax cuts. We need a lot of improvement in private sector activity to offset this swing, and at the moment it unfortunately doesn’t look like we’re getting it."
    This is taken from today's Paul-Krugman commentary: Permanent Link to Why I Worry.
    Market futures are slightly negative tonight.