Some other drain on the economy, hmmm...how about the financial implosion of middle America and the bursting of a major real estate bubble that destroys another few trillion in global equity as falling housing prices and rising mortgage defaults feed each other in a vicious cycle? The fed's attempts to reliquify the seized up corporate debt market have only ended up pumping the real estate bubble further instead, and lenders and appraisers are making things even worse by giving artificially high values to housing prices due to perverse cash incentives to get loans pushed through. Sound familiar? Not to mention that consumer spending is falling sharply as evidenced by retailer results or that savings rates are still at an all time negative or that consumer debt is still at an all time high. Piper ain't been paid yet, and the piper is a bad bad man.
When will the next round of real pain happen? Dunno. Could be a few months, could be a few years. This window of optimism we are enjoying might last for quite a while or it could fall apart next week. But there is another bubble on the horizon and it could be uglier than the first.
Back to stocks, look at MSFT as an example. Is that a healthy chart? No way- that's a 'here ya go guys, have fun while it lasts' chart. The only firm market opinion I have right now is 'skeptical,' and until this temporarily happy market successfully weathers a healthy correction I must ponder whether the current bull is a tough guy with a glass chin. If we look good on a pullback- and that's a big if- then sure why not go long. But the bear ain't done.
