Blog : Friday Could Get Ugly

 

Theories of a market meltdown are rising across all major media (worldwide), and this is actually a good thing.  Major crashes very rarely occur when many are expecting them.  Investor sentiment is a contrarian indicator, so the more who expect downside, the more likely we will see exactly the opposite.

 

 

That said, we've been talking for weeks and months about the shaky ground the entire market is standing upon.  For our part, we are picking very specific stocks which we expect to do very well with a bursting of any of the half dozen bubbles your government has inflated for you.

 

Investors are too focused on the timing of when the Federal Reserve (FED) might raise interest rates.  They are forgetting that interest rates are linked to trillions of dollars in bonds, and those bonds trade freely on an open market.  Interest rates can spike with or without the FED.  You are about to see what we mean in the coming weeks.

 

 

There is no good "solution" for the default situation with Greece.  At best, they kick the can down the road again... or raid the pension funds of Greek workers.  Greece has a $300 million (M) euro payment due tomorrow.  They have three more payments due this month.  Only with the International Monetary Fund (IMF) making the payments (which means Germany mainly) will Greece be able to avoid default.

 

 

Tomorrow will be the big employment report.  Don't read too much into it.  You already have all the data you need - just look around.  Are your friends, relatives, and acquaintances happily fully employed?  Even if the number is considered "strong," it could still be bad for the stock market since this will increase the threat of an interest rate hike by the FED.  The stock market world is hoping the number is weak enough to encourage the FED to delay their potential rate hike this fall.

 

 

We are believers that the economy is weak enough that there will be another quantitative easing (QE number Four).  We also expect it to be called something different than QE, so that it won't have the feel of another ineffective bout of money printing.  Kind of like Altria, Accenture, AirTran, MCI, etc...  We'll bet you can't remember what those companies used to be named, when they had poor reputations.

 

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