Martin Feldstein predicts slugish growth

Martin Feldstein has predicted recently that we will see a protracted period of sluggish growth and potentially lower standards of living... “Large fiscal deficits would mean that the government must borrow funds that would otherwise be available for private businesses to finance investment in productivity-enhancing plant and equipment...Without that investment, economic growth will be slower and the standard of living lower than it would otherwise be. Moreover, the deficits would mean higher interest rates and continued international imbalances.”

When the federal government competes with the private sector for funds, it always wins out. The
private sector is not capable of competing with the federal government. They do not compete on an equal footing. It is a very short view of the market that causes the market to hold up under these circumstances...

New information that may explain natural gas prices rising:

Just got a report from Stratfor.. an external intelligence crowd, talking about the possibility that Netanyahu and friends might in fact do something belligerent to the Iranians.. They seem to believe it is more of a possibility than others believe... Just something to be aware of as you make decisions.

Welcome to the Twilight Zone

Stocks - up
Bonds - up
Gold - up
Oil - up
Natural Gas - up

an unusual situation...
Does this seem strange to you????
We will be considering this and getting back with some thoughts here...

“Hey, be careful out there.” Sgt. Phil Esterhuis

Readers of a certain age and gender may remember Sgt. Phil from his days running the squad roll on the TV show “Hill Street Blues” for doing more to make bald beautiful than anyone other than Michael Jordan and Mr. Clean. Readers of both genders may remember his occasional appearances in these missives over the years at times where we became aware of studies that indicated reasons for short--term caution in one market or another.

While many of you have heard us mention the Economic Confidence Model, we have not talked much about the people at Princeton Economics who studied it for so many years in conjunction with some of the other cycles and models they discovered. By chance, we ran across one of the gentlemen we used to talk to there back in the good old days. During the course of the discussion, he mentioned his current involvement with the work of W.D. Gann, who was a famous trader and market prognosticator of the earlier part of the 20th century. We supposed that this would be normal given the relative rarity of disciplines that deal in forecasting both time and price. He agreed that P.E.I. and Gann were among the few with that appeal for the practitioner.

He explained his recent studies that indicated September 2, 2009 and 1053 on the S&P 500 were showing up as important points in their respective continua. Since the S&P 500 recently made a high of around 1037, and you all can find a calendar, we thought we‘d mention this in a Sgt. Phil mode —caution, not panic. Perhaps, some tuning of portfolios may be in order. Some prognosticators are rooting for a target of 1100 on the S&P 500, while some Fibonacci studies we’ve seen indicate a possible target of 1070. All of these targets have one thing in common. They all are based on this being a cyclical rally in a secular Bear market.

We know of at least one individual, who has been participating in the markets since the 1950’s based on his studies of the advance/decline data, who believes that a new Bull has begun. Definitions are somewhat slippery in these things, so we mention it only in passing to show that unanimity of thought is not present.

We are currently involved in a substantial study to determine the areas of concentration among asset classes that seem to make sense over the next number of years. This is on the order of the studies done back in 1997-1998 leading up to the major turning point in the Economic Confidence Model on July 20, 1998. It will take a while, but hopefully, it will be as fruitful as the ‘97-’98 work.

“Keep your eye upon the donut.” We’ll be in touch soon.