Seems to me the fact is that Bob Brinker was Plain Wrong. Completely. We will see what he says this weekend.
Bob Brinker said no more than 10% off the peak for Dow or S&P, give or take a "small amount" for a brief time. Plainly, clearly, repeatedly. He has occasionally indicated that by a small amount he meant about 1%
Both the Dow and S&P are now about 14% off their highs. )13.9% and 13.7%.) And the NASDAQ is off 18.6%.
It will be interesting to hear what he has to say this weekend. Hope he admits he's been wrong. And wonder what he has to say going forward.
The likelihood of a US (and hence worldwide) recession brought on initially by Asian deflation is growing steadily, I'm afraid. The analysis cannot be limited to how much of our trade is with the Asian countries most in crisis. Canada is our largest trading partner. Their currency is down almost 10% in response to the depression in commodity prices, and the lack of Asian demand. Canada is, of course, a major commodity producer. Mexico and Latin America in general (esp. Brazil) are our second largest trading partners. The Mexican market is down about 50%. Brazil is widely seen as being quite vulnerable to devaluation pressures. (Though like Hong Kong, they do have very large reserves.)
Personally, what I think is most likely is that the US goes into a sort of profit recession, or at least no growth period, on average. Interest rates will go down.
What that should do is create some very high multiples for those companies that really can still grow earnings strongly. And much reduced stock prices for those that can't. But in the meantime, there is gonna be lots of turmoil, tilting downward. Until the truth about earnings growth shakes out. The market will not take kindly to companies that were thought to be blue chip safe, having earnings recessions. And everything will continue to get axed for a while, including issues that stand to continue to show strong earnings growth. Because of the uncertainty factor. Otherwise known as fear.
My 2 cents at the moment.
Others?
Doug |
