Stimulus is way Short of Needs…………..with Update
The stock market rally off the 666 S&P lows is in our opinion primarily a reflection of the big players being out of position. The capital structure of this country is being rebalanced.
On the otherhand as we said early in Obama’s term, some 99 days ago, the total of the various Stimulus Plans is way short of what will be need to really jumpstart our economy. To be equivalent to what happened coming out of the 1930’s recession and WW II we would need a total of some $ 9 trillion bucks, the Republicans are still crying over $ 750 billion. So this current economic basing will not have legs and deflation is sitting on the back porch waiting to come out.
This mornings rally, the S&P index should open around 915, will allow us to cut our leverage further to 0.20 percent, a 90 percent drop since we started selling out positions at S&P 870.
The EMA ETF Fund Nav was 1161 at yesterdays close.
8:14 AM CDT
Update at 9:38 AM The S&P high was 915.36. We decided to go to a 100 percent neutral portfolio at that level. This means we are long the greens, bio-techs, financials, etc and short the broad market.