Sunday, May 6, 2007

Markets, Limbo, News and Opinions

As we have been witnessing for the last seven months, the Dow Jones Industrial Average continues to set new records, since surpassing the old record attained back in 2000 at the height of the Tech Craze. Once again, the DJIA closed Friday at 13,264.32, another record high. Since the Dow surpassed the old high back in October of 2006, I have been concerned that the broader market, represented by the S&P 500 index, hasn't beaten its old mark, which was also set back in 2000. However, the S&P 500 has stealthily been adding points and is now within 21.84 points of surpassing its previous record of 1,527.46. The broader market setting a new record and adding to it would be a very positive sign for the continued advance of the current bull market. This past Friday's weak employment numbers indicate a further slowing of the economy. This should give the Fed the ability hold interest rates at the current level during the FOMC meeting on Wednesday. The Treasury Department releases the Producer Price Index on Friday, which will give a further indication of the direction of wholesale price inflation.

While I expect the S&P 500 to beat the old mark this upcoming week, I don't think the advance of this bull market will, by any stretch of the imagination, be easy or rapid going forward. One of the things I expect is that shortly after the S&P 500 sets a new mark, we could see a bit of a sell off and profit taking, which is a good thing. It is interesting to note this current rally is being led by mostly professional investors, while the retail investor is not really participating. My thoughts on that one are that the "cocktail party conversation" investors are still occupied by real estate and trying to flip houses. By the time these trend setting, band wagon jumpers climb aboard the stock market train again, the bull market will be nearing its peak. Let's hope we have some time before this happens. I'm hoping another year or so, because it may take some of them that long to sell their speculative houses!

This morning I also read an article in my local paper about Limbo, and the fact that Catholics, and any other religion that espoused the concept before, don't have to believe in it anymore, if they choose not too. For those of you who don't know the meaning of Limbo, it is the place an unbaptized baby goes if it dies. I just wonder if that means the word will disappear too, because then we wouldn't have a way to describe where our county is right now. Limbo, you see, seems to be as good a word as any to describe the standoff between Congress and the President on the funding of the Iraq War. The Democrats are showing exactly why they are so out of touch with the huge group of Americans who are neither right wing conservatives nor tree hugging liberals. Instead of coming up with a plan to have meaningful debate about the Iraq War, the Democrats have acted like they won a sweeping majority in both Houses of Congress, rather than their rather narrow majority. Immediately, out came the white flag and the pessimistic, defeatist attitude. Of course, the President hasn't been much better at listening to anyone.

So, here we sit in LIMBO, waiting for someone who "gets it" and stops catering to and polarizing the right and the left in this country. While the 2008 campaign is already in full swing, I am really somewhat disturbed by the lack of qualified leaders who might actually be able to unite this country. It must be done in the middle. We have to stop fighting the old battles between the right and left, and realize there is a real enemy out there that wants to destroy everything America stands for, and he isn't going away! I think it is safe to say most Americans are somewhere in the middle politically. Many moderates believe it is a woman's right to decide the fate of her unborn child within limits, don't have a problem with civil unions and what people do in their bedrooms, would like to keep taxes low, realize the government wastes tons of money and would like to see it be more frugal, hate the fact we are having soldiers killed in Iraq, but realize we CAN'T CUT AND RUN, understand we can't close our borders and isolate ourselves from the rest of the world, understand the threat posed by islamic terrorists, probably inhaled, and want to see policies that bring the most jobs and wealth to the largest majority of people in our country. What is your feeling on some of these issues?

John Kaighn