morganstanley.com
This time is different?
WTF.
No, bears say this time is THE SAME.
Brigs thinks this time is different.
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Barton Brigs.
I still think the rally will carry further and last longer. The consensus now thinks the bounce off the July lows has run its course and expects a retest. They cite the last six bottoms, each of which was followed by a 25% rally and then a pullback before a major move began.
The bears are still rampant. They believe this time truly is different, that the July lows will be busted, and equity markets around the world will go considerably lower before the bear is over. They cite a frightening array of reasons ranging from overcapacity, deflation, the double-dip, the Japanese disease, valuations that are still extended, terrorism, an attack on Iraq, over-ownership of equities, and the public's abiding disgust with Wall Street CEOs. They worry that in August the U.S. and European economies seem to be softening. Their conviction is increasing that the rally ended last Thursday.
I am more optimistic. The July lows were marked by a parabolic decline and massive capitulation that has not been seen for 40 years. I don't believe in the double-dip. Auto sales are strong, refi and home equity loans are surging, corporate profits have turned up, and money growth has accelerated. The consumer bubble is a misconception. Real growth should be 4% for the next three or four quarters and inflation is invisible. Stay invested. |
