Is the Worst Ahead of Us?

What the #@%$

In my humble opinion - yes.

I am not an economist or an analyst or market guru but have enough sense to see where we are headed. I derive this assessment by looking around me.

Corporate Tightening
The numbers are bad, budgets are being trimmed and layoffs are a reality. I see this everyday at work. There is a sense of foreboding and anxiety. The unemplyment data backs up the dismal state of the economy so it is obviously not a false alarm. The challenges are spreading and it could be a while before we are through this rough patch.

Consumer Tightening
No job or risk of losing a job translates into less spending. The consumer is glum - not only in the US but across the world. Discretionary spending is down and will remain low till the economic environment improves. Less spending by consumers means less corporate profits which means falling equity prices. Can the market fall further - probably!

Housing, Housing, Housing
The root of it all is still a drag. In my neighborhood there are still plenty of homes on the market. The number of MLS listings in my inbox keeps growing with multiple foreclosure listings at attractive prices. Credit is still hard to come by and the buyers just aren't there. It will take some more time and probably some more price reduction to mop up the excess home inventory.

But then again what do I know. The market has rallied from the March lows and if Q2 earnings are decent maybe the worst is behind us.

In any case, hopefully you have an investing strategy and more importantly are sticking with it. Let the earnings begin ...

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