CapitalistMarks

The dog days of summer. 2nd qtr GDP -1.0%.

Posted on 31. Jul, 2009 by scott in economic daydreaming, markets

The old saying “sell in May and go away” would have led to disaster for investors in U.S. markets this summer.  Depending on what happens today this month might be the July with the biggest increase in overall market values since 1989.

Typically these are the ‘dog days of summer’ — hot days filled with vacations and generally with little interest in markets.  Not this year.  The money managers have stayed home to work . . . and a good thing too!

News this am was good, better than expected.  The second qtr GDP was  -1% which is better than estimates (-1.5%) and substantially better than the revised 1st qtr of -6.5%.

A long time ago I predicted DOW 10,000 by June-July, clearly this isn’t going to happen but that 10,000 is less than 10% away.  Closer than my critics would have thought.  What about the DOW 13,000 I predicted for the end of the year?  Still possible and I am sticking with it and would include a 12,000 mark as a hit.

However, as I pointed out last week this is going to be a roller-coaster ride and not a steep climb up Mt. Rainer.  If you are a trader you are going to have at least one good chance to sell and buy at better prices (10% or so).  But you had better be good at your timing and few are.  If you are a long term investor just make sure you own good companies and go along for the ride.

Sadly, unemployment will continue to climb and the Democratic controlled government will continue the move leftward.  This means higher taxes and inevitable inflation down the road.  Further, and even more sadly, the Prez. and his posse are doing almost nothing about solving our long term energy import problems.  Consequently oil prices are going to rise with the improving economy (minus employment of course since this will be a pure democratic jobless recovery).

Bottom line:  enjoy the rest of summer with relatively low gas prices and improving markets.

Can I suggest a trip to Utah?  Sure it is hotter than Hades here in July, but by tomorrow (August) the temps will be on their way down and you could spends weeks checking out our mountains, valleys, rivers, lakes and GOLF COURSES!!

Just in passing, the third qtr GDP should be positive and by the fourth qtr the recession will be declared dead.  It has been longer than most post-war recessions already and it was especially ugly for those that lost jobs.

For those fortunate to still have jobs when it is over times will be good.  For the unemployed I can only suggest you contact your Congressmen and the President to find out why their stimulus package did almost nothing for YOU!!  Ask them what they are going to do for you TODAY!

thanks for the picture to flickr’s e0000

Tags: 2nd qtr gdp, democratic congress, economic recovery, economic stimulus, end of recession, GDP, markets, President Obama, unemployment