Some tho’ts from e-zines.
In an article titled: Don’t Fall For The Market’s Head- Fakes
Louis Navellier said the following about stocks:
“I want to tell you something - and I'm dead serious. For the market at large, things are going to get a whole lot worse before they get better.”
“The news on the inflation front is bad and getting worse.
Alan Greenspan and the Federal Reserve are now warning of a new inflation shock. That means more interest rate hikes than previously thought. And that means bigger hikes - perhaps half-a-point at a whack, as well.”
“When rates start rising like that, it's really bad news for many stocks.
And there's no doubt the economy is slowing down.”
“So we're looking at a period of slow growth AND higher inflation.
That could spell "so long" to the recovery and usher in a new recession longer and deeper than the last. And some analysts are even starting to throw the term stagflation around.”
Here’s what he says about oil:
“There is some level of speculation built into oil prices today. So they could move lower short-term. But the longer-term trend is clearly in favor of high energy prices for a good long time ahead.”
And John Murphy said this:
“One key intermarket principle is that a weak dollar is very bullish for commodities in general. The commodity that has benefited the most has been oil. Another intermarket principle is that a rising oil market is bad for the stock market because rising oil prices hurt the economy.”
“I pointed out earlier this year that energy was the top-performing sector in the stock market. It’s just simple economics. When energy stocks are leading, the stock market, ultimately, is going to run into trouble.”
“I don’t think we have seen the final highs in commodities. I think the commodity market is in a long-term uptrend. I am a little more bearish on the stock market at this point.”
And regarding bonds & rates…
“…what we are seeing is that each time long-term rates move up, they reverse and fall back down. That could be due to signs of a weakening economy and that keeps long-term rates down. It’s possible that we are moving into a period of stagflation, similar to what we had in the 70s.”
“Commodity prices climbed in the 1970s, increasing inflation pressures, and interest rates rose. That was not a good decade for stocks and bonds. The worst possible situation for the stock market is rising inflation, forcing the Fed to increase interest rates when the economy is already slowing down.”
“If we are in a secular bear market, which could mean sideways to down, and use the 70s as a guideline, we will likely see two down years followed by two up years. This action is more balanced. Considering that we just had two up years, 2003 and 2004, it is likely that we will have two down years. This implies the next bottom will probably be in the fall of 2006.”
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both guys mentioned stagflation...
it's getting ugly out there!
-ja
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