The Financials Pitguru Review
For the week of June 28, 2010
For the week of June 28, 2010
This trader has mentioned before over the past year or so that a double recession was possible because of the housing market. When the 5 yr arms and seven years arms come due over the next 1 to 3 years there could be serious repercussions. Besides the issues that are apparent presently like foreclosures and unemployment, consumers could just walk away from their mortgages. An article this morning by Robin Griffiths, technical strategist at Cazenove Capital also has this same belief. He mentions that consumers could try and get out of debt, but there may be no buyers to help. (1)
The battle between bulls and bears will always be around. In this current market, the bulls argue that P/E ratios are in good shape and that is a buying opportunity while the bears looks at the current status of debt filled nations, toxic assets, and, yes, a bleak housing and job market. When large companies move money out of the market and into gold and treasuries traders should be cautious. It is one thing to be doom and gloom, but it is another to be honest with what is happening out in the financial system.
Consumer spending appears to be up 0.2% which is better than expected. The thing is consumers are known for spending because of credit cards. Yes, many do slow down when the economic climate becomes choppy, but leveraging is what many consumers do. The mentality is if a person may go bankrupt they might as well have a good time and live large for the present. So, are these numbers really positive?
It seems as though people are not buying into the market early this week as the market is trending down. The S&P was around 1073, down 3 points while the DOW was down 15 to 10128. (2)
1. http://www.cnbc.com/id/37970896
2. http://www.cnbc.com/id/15839121
By PitGuru Frank LaMantia
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