Geithner Has Got it Wrong
From what we read he refuses to acknowledge that banks and people who made bad decisions, bought a bubble, have to pay the price. Forty percent of the stock-market and housing assets have disappeared since the highs. So in our mind start from there, it is gone, let it go, pay the price.
There is only one thing that should be done here, get the job machine going through energy and infrastructure investment, revamp what our manufacturing sector builds, push technology, etc. Let the really bad banks fail, nationalize the ones we need, then sell them back to the private sector when things improve in 5 to 10 years.
In spite of all the above the stock market looks like it will push higher out of this base. The only thing you have to keep in mind is that the solutions presented by Washington at the moment are going to fail eventually because the allocation of the investments are too small and going to the wrong places. So in the ensuing 12 months sell out your stock positions when the S&P hits 1080 and buy them back when it goes down to 640.
No change in positions yet, we are awaiting the triggering of long-term trend buy signals before adding to our core positions. Yesterdays skeptical reaction to the news helps set up the scenario.
The EMA ETF Fund NAV was 985 at the close, falling back to where it was 4 days ago.
8:06 AM CST