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Put A Lid On It

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Personally, I wouldn’t put any money on the DJIA breaking 13k any time this year.

For one thing, I see at least another $100 billion leaving equities during 2008 from defined benefit pension plans; and I don’t see much of that finding any replacement demand to balance out the drag like it did last year. So every time buyers find enough good news to party it up a day or two, I believe we’ll only see the market suffer a quick hard hangover taking it right back down. Reminds me of how I’d be if I tried to get my jogging back too quickly these days: get me feeling some stray burst, and I might even sprint a hundred feet or so, but then I’d be out of breath and worrying folk about stroke risks. Ditto this market: if nothing else, pension fund managers’ current anti-equity strategies are going to keep stocks running out of steam every time they try to run off anywhere.

And while we’re looking at how the institutional investors might be affecting the markets, let’s wait for the 7th inning stretch on the credit crunch until the next round of CAFRs have been published by all the PERS bound to be hit hard enough to send out new shock waves.

Besides, what W calls a “slowdown” is what anyone else will be recognizing as a recession. I know, we’ve got to cut him a little slack: his ignorance here arises from being a politician aiming for a third term by proxy, rather than an economist aiming for fact or an ordinary person out of a job defaulting on a mortgage while struggling to pay higher prices at the pump and at the grocery checkout with a dollar that W policies have sent swirling down the drain. Still, those temporary pleasant surprises in first quarter earnings aren’t going to be sustained with sufficient breadth to keep things afloat anywhere near a 13k level.

bumper sticker [] - calls & puts

Written by macheide

22 April 2008 at 12:47 pm

Posted in calls & puts


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