Last October we were buyers of the stock market at 1070 on the S&P, in January we sold out stocks at 1290 on the S&P, a 220 point gain. The S&P went another 130 points higher to 1420. We are now short because the market has gone beyond a reasonable level given the move to austerity that is underlying everything we see. So far our short sales have been based on anticipation of the market moving back to more sustainable levels and now the point is developing where technical indicators will soon move to confirm this anticipation.
On the coming election, Romney-Ryan-deficit reduction-austerity-depression,that is the sequence that is developing. Obama’s people don’t get the argument and the fact that the middle class will not vote for their pocketbook they will vote the magic fantasy that the supply side argument provides. Obama first needs to shake thing up, get rid of Axelrod, the sleazy big city politician, and get a person to build a campaign around solid economics and bold plans. Obama will go down to defeat if he tries a redo of 2008.
So right now I see a 30 percent chance that we avoid a depression over the next four years, and likewise I see a 30 percent chance that Obama will win.
David Brooks had a good column this week on some of this subject: