Wednesday, November 25, 2009

One-Way Markets for Now

Note I am in the process of moving, so posting will remain light up till this weekend.

Re the financial and economic scene, a certain calmness reigns, with the S&P 500 and gold both extended on a 40 week view, though at reasonable prices on a long-term view. Gold is clearly in the more bull phase as momentum buyers are squeezing the shorts. It's anyone's guess what comes next.

Perhaps because of the inexorable improvement in the economic numbers courtesy of unprecedented deficit spending plus natural cyclicality, several of the bloggers and other seers such as Marc Faber are out of sync with the markets.

The fact is that on a societal basis, counting government, there is no deleveraging. There is more leverage (debt compared to GDP and related metrics that are not quite debt such as "swaps")than ever. What comes out of this is likely to be bad, but don't count on the markets to tell you what is going to go wrong (and right!) when.

Flexibility is the key.

Copyright (C) Long Lake LLC 2009

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