Friday, June 11, 2010

FLASH

The S&P 500 is trying to rally but I think if we do get a rally it will probably top out in the range of 1100 to 1110 on the S&P.  I said in a recent Blog that I thought the "Wolf Pack" would return by mid summer. I still think it is possible that we will test the 950 to 1,000 level on the S&P 500 this summer. The most recent jobs numbers were very disappointing and there are not that many job reports left till the mid-term election, I think the Democrats and the President need to start worrying. Its always been about the Jobs stupid.

The economist talk about how well our economy is doing yet the consumer closed their wallets in the month of May. Is it possible that the worst May since 1940 in the stock market scared the American consumer? I find it hard to believe that we will have sustained growth in the United States with almost 17% of the population under employed.

In the last few weeks the credit markets started telling us something. The yield on the 90-day T-Bill has dropped in half to what it was just a few months ago. I mid Spring the credit markets were saying, even in the face of the problems in Euro Land, that the Fed will have to tighten, because the economy is so robust. I think the decline in the bill rate is a message that the Fed is on hold for a long time. I do not think anybody, including me and the Fed has any idea how long it will be before they start raising interest rates.

One last observation about the real estate market. If a seller takes their house off the market and tries to rent it-- is that a positive for the real estate market? I don't think so. Look around in your neighborhood and see how many houses that had for sale signs now have signs for rent.

Hang on it could be a difficult summer. Stay away from the Wolves.


Dan Perkins

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