Usually we post an
apocalyptic crash prediction from John Hussman, PhD, on Monday, but instead,
I’ll just say, “Ditto,” see last Monday’s blog entry” or go to http://www.hussmanfunds.com/weeklyMarketComment.html
This Monday, let’s go the
other way: “Don’ worry – be happy.”
Excerpts from the excerpts
of the May 21, 2012 issue of Fortune Follow:
FORTUNE – “If you're
nervous about the economy, you could do worse than talk to James Paulsen, chief
investment strategist of Wells Capital Management...
This recovery...looks
remarkably similar to both the early-'90s and the early-2000s recoveries. And on many metrics, 10 quarters in, it is. Annualized real GDP growth is just slightly
less than the average of the last two recoveries at this point, average real
gross domestic income growth is slightly better, and total job growth is right
on par. People say this is a "new
normal" -- that we've never been this weak before, ever -- and I am
suggesting that there is indeed a new normal, but it is already 25 years
old. It started in the mid- '80s and has
nothing to do with debt, balance sheets, or savings...In the mid-1980s we had a
significant downward shift in the rate of labor force growth in this country...
(He predicts)...I have a target on the S&P of 1500. If we can keep
inflation under control, then we have a buy-and-hold market for a long time
with a slow and steady increase in prices.”
Full story at:
My take – It would make sense that reduced rate of labor
force growth would coincide with technology advances. I took a tour of the Ford assembly plant in
Norfolk back in the late 90’s. I was
astonished at how few workers were there.
All of the welding was done by robots.
The plant completed a truck every minute. Regardless of the reason, slow labor growth
is dangerous for the economy, because there is little room to absorb any more
shocks.
EURO-NEWS FROM THE WEEKEND
(Reuters) – "The euro-zone economy
worsened markedly last month and U.S. employers cut back on hiring, according
to two reports on Friday that dampened hopes for gradual recovery on either
side of the Atlantic. In Europe, the
purchasing managers indexes (PMIs), which primarily cover services, suggested a
recession across the continent's currency union could now extend to mid-year
and be deeper than previously thought…"If you look at Spain, then using
the word recovery is an insult. Aggregated all together, it looks to us like
(the euro zone economy) is contracting," said Danny Gabay, director at
Fathom Financial Consulting in London.
'We've seen unemployment rise in a number of countries
and in the so-called bailed out countries, you're seeing deflation and
unemployment - some quite seriously negative numbers.'" Full story at...
THE MARKET
The S&P 500 reaction was
FLAT Monday to 1370. VIX rose1% to 18.94
(looks like I had a typo in there last week).
NTSM – Ditto again
The NTSM analysis remained
HOLD today, Monday, but it could flip to sell if the S&P 500 continues
down.
MY INVESTED POSITION
I bought back into the
stock market at S&P 500, 1155 on 7 Oct after the 6 Oct NTSM buy
signal. I remain 100% long in the
long-term portfolio (and 100% stocks in the 401k.). (See the page “How to Use
the NTSM System” – the link is on the right side of this page). 100% in stocks is quite extreme so don’t do
it unless you have a high tolerance for risk.
