As of this writing, stocks are up nicely this morning, due largely to the good employment numbers that came out earlier. Employers hired 117,000 new workers, which is higher than the past two months, and the unemployment rate ticked down from 9.2% to 9.1%. While these numbers were better than expected, new hires are still well below where they need to be.
The main issue that we are facing right now in the markets, is not the lackluster growth our economy is seeing, it's Europe; plain and simple, it's Europe. The problems going on in Europe with their troubled banking/financial system, is similar to what happened to the U.S. stock market and financial system back in 2008, when the largest financial institutions (Bank of America, Wells Fargo, Citigroup, Wachovia, etc) almost went under; that financial apocalypse was avoided because the U.S. Government stepped in and back stopped our banks and prevented that from happening...well the same financial mess is now happening in Europe, but the problem is that the European Union does not have the financial ability to rescue the banks because they don't have the money (the EU is the main "financial powerhouse" over there because most of the European countries use the same currrency - the "Euro").
Yes our economy is struggling, and yes there is a slight possibility that we could slip back into a recession, but I (and other money managers) do not believe that will be the case; I believe we will continue to see a slowdown and sluggish growth over the next year. But the main problem, and what the U.S. stock market is being held hostage by, is the financial mess that has engulfed most of Europe.
In the meantime, I'm monitoring the developments that take place across the ocean, and hoping that the crisis in Europe can be resolved in a timely manner.
I hate to say this but I'd like to see the market come down a bit more, and I'd like for stocks to get a bit "cheaper", and as that happens the risk/reward for buying stocks would become more attractive. That being said, there are still some special stituations and opportunities that we are watching and looking to get in to (one such example is a billionaire investor is looking to buy a large U.S. consumer products company so we might be buying some of that stock so that we could participate in a possible takeover of the company).
I'll write again in a bit because as I've been typing, the market went from opening up big and has now moved into negative territory - this is why the title of this blog is "Riding the Rollercoaster"!
