Public opinion can change relatively quickly such as when it changed from the time of the Gulf War to the 1992 election. America's attitudes toward sexual behavior has changed radically in the last 30 years and I suspect they are saying Clinton's sexual behavior is not their most important concern. It has to be compared to the loyal opposition. For example, when the Republicans took over control of the house and Bliley replaced Waxman, it looked like the tobacco industry had once again gotten a reprieve. Thanks to some brave whistle blowers, the tobacco industry's criminality was exposed, and even Bliley is coming around to the public's side. Clinton's political opposition still has its own problems and everything is relative. It is too bad Paxon has called it quits.
The President zooming popularity in the polls has given the Democrats the message that it wasn't necessary to commit crimes because of presidential embarrassment. The American public likes to be entertained.
But Ron's blanket statement had two parts. He said, "However, I give the odds of a new president within 1 month standing at 75%. The odds of a Bear market stand at greater than 75% within the next year. (30% decline in the stock market)"
The odds of a Bear market are also being called into question by the recovery from the Asian flu, rising to one record after another. I think it reflects a world wide "flight to quality" by money frightened out of Asia. I say the year isn't over yet. There is a very good chart in the Online Barrons and I assume it is in the newsprint edition as well. It shows a chart of the year over year percentage rise and fall of per share earnings of the S & P 500 compared to the Core Crude PPI. The Crude PPI is unfinished goods, not the finished goods PPI that we see published all the time. The chart goes back 20 years and show a truly remarkable correspondence between the two, meaning that the Crude PPI is a good leading indicator of the direction of earnings of the S & P 500 because its data are published before earnings are reported by companies.
The chart of the Crude PPI shows that it has begun to turn down and has actually spent most of the past two years in negative territory. The tracking between the two curves is far from precise, and the fine detail must be ignored, but I think it could be forecasting a downturn in earnings. While the overall economy won't actually shrink as in a recession, I think the Crude PPI chart is predicting large cap earnings disappointment; that is, I don't think earnings per share will grow as fast as the public thinks it will. If the fund managers begin to get panicky, anything could happen because they are far more volatile than individual investors are and are easily spooked. Sometime during the year, Ron could be right.
Charles |
