Saturday, February 02, 2008

a tug of war between two long term market trends

There appears to be a tug of war between two long term market trends the first be the correlation between a decline in employment growth and the precipitous decline in the stock market .Research seems to indicate that it doesn’t take much of a decrease in job creation to cause a fairly significant decline in the stock market. The one thing in our favor is that much of the job creation in the last 7 years is through the hard to measure growth in technology, with basically a person sitting at their breakfast table with a lap top running some kind of a technology enterprise.

The second trend is the panicked FED syndrome, which as the tide of FED rate cuts quickens to catch up to a declining economy ,The lower rates force up the most beaten down and out stocks ,in our case a rally in banking, real-estate, retail ,and other financials . Its hard to fight the FED despite the strong evidence that the worst is far from over with the current banking crisis.

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