Archive for the ‘Economic Indicators’ Category
Buckle up kids, 2008 is starting to look like the year of the bear. In the midst of tightening credit markets, rising unemployment, and a housing market that continues to head south, the US economy may put the bulls out to pasture and succumb to the dreaded “R” word. That’s right, after 6 years of economic expansion, many investors believe the US will feel the pinch of a recession in 2008.
No Shortage of Naysayers
Goldman Sachs came out with a notably pessimistic economic report today, announcing that recent softness in the job market indicates a recession could be upon us within 3 months, if not sooner. AT&T also added fuel to the smoldering fire when it revealed it was having to disconnect an increasing number of consumers due to missed payments. Throw rising energy prices, shrinking corporate capital expenditures, and a tepid holiday spending season into the mix and you have all the makings of a bust.
Don’t Despair
For investors who are patient, however, bust cycles can be an opportunity to find good companies that trade at a discount to intrinsic value. In fact, there is an old saying that “smart investors buy when there is blood in the streets”. This is true, as long as you take a long term approach to investing. In the next several weeks, I’ll be taking a look at some of the companies I believe will reward patient investors over the long term. After all, Rome wasn’t built in a day. Neither was Berkshire Hathaway.
Tags: bear market, credit market, housing, recession
Stocks were lifted by positive GDP growth numbers today, as investors chose to buy into the market after the announcement and ahead of the Fed’s rate decision. However, like many indicators, GDP is a lagging metric of past performance. While the news is still good, many are still scratching their heads and wondering if this is simply wishful thinking for the economy. With the recent rise in oil prices, the tightening of credit markets, and the housing “flu”, we could be in for some stormy weather going into 2008. Tissue anyone?
The University of Michigan’s Consumer Sentiment Index remained unchanged in September vs. August. The index came in at 83.4 vs. consensus estimates of 84.3, demonstrating that consumer attitudes remained relatively stable. This bodes well for consumer spending, as a further decline in the index would be a bad thing for GDP growth and markets overall.
Stocks are awaiting data from the University of Michigan’s Consumer Sentiment survey which will be released at 10 EST this morning. The survey is used by investors to gauge the health of consumer spending (which accounts for approximately 70% of Gross Domestic Product). Consensus is calling for an increase from 83.4 at the end of August to 84.3 in September. Also, per Econoday, investors will be watching the “assessment of current conditions” as a gauge of public reaction to the subprime fiasco.
Related Links:
Categories
- Economic Indicators (14)
- Investing (42)
- Large Cap Stocks (25)
- Mid Cap Stocks (2)
- Small Cap Stocks (4)
- Stock Basics (11)
- Stock Market News (40)
- Stock Metrics (6)
- Stock Picks (1)
- The Stock Market (12)