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I will throw in a few thoughts as well, since I asked the question. The
reason I asked the question is because of the following events:
About 2 weeks ago some one posted to the RealTrader listserver about a
currency play in Hong Kong that was basically too good to be true. He
said that he wasn't going to play it because he didn't know what the
gov't would do.
A few days later another post arrived to the list explaining the
divergence in the Hang Seng & the currency. This was before the big
tumble. THis was also the post I forwarded to our group.
What all of the above did was make me more aware of our current
situation as it relates to our markets. Although it isn't widely
publized but the news did say that Hong Kong did make the move to change
interest rates to head off a currency play on their currency. After that
commentary, I have only heard about the interest rates.
So by listing to different points of view, in this case from around the
world, it has helped.
So what will make the markets move up, these are more like questions as
apposed to being answers.
Not in any particular order.
1-From a valuation (pe) point of view, I think we need to move lower
before we can move higher.
2-Positive earnings growth from the market leaders. This could come from
some new inovation from a company that will affect the technology
sector.
3-Good economic climate-low inflation (see 4), reduced wage preasures (I
still think with a global market and increased productivity from
technology, wages will stay in check), cut in the interest rates (might
sound obsurd but it could be realistic-the yield on the 30 yr treasury
bond has moved lower. If it moves into the 5% range, do we have the fed
follow & lower rates. Here is thelogic: If the over all out look for
inflation is headed towards zero then the Fed can lower the feds fund
rate), increased exports, higher new housing starts (caused by lower
interest rates),etc.
4-Low inflation: (this actually came out of an ad for the Wallstreet
Digest by Don Rowe, Actually I am in agreement with a great deal of what
he is saying in his ad to hawk his newsletter. I was surprised.)
He observes that the bigest savers are in the 55+ age range, but the
biggest spenders are typically are in the age range 16 - 34. The
individuals in this later demograph range of spenders is relatively
small. This will reduce demand and ease inflation.
That is about all that I can think of for now.
Harley
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