re earnings recession:
You're right, we are in for a time of lower earnings, and lower earnings growth. But stock prices are a function of earnings and interest rates. As long as interest rates and inflation stay down, the (stock) market won't be in trouble. We've had periods in the past like this, with mediocre earnings and falling interest rates, and stocks usually go up in that environment.
My take is that unemployment rates will inch up modestly, ending the year at about 5%. This historically low unemployment rate will keep consumers consuming, and allow them to handle their debt loads. Business, too, will see good enough demand to maintain margins and handle their debt loads. At the margin, the undercapitalized, poorly managed concept companies will go under, but the world will not come to an end. And the Nasdaq will be up for the year, maybe 10-15%.
So, although I sold my long CSCO position and initiated a AMAT short today, my overall stance is cautiously bullish.
JS@feelingforthefloor.edu |
