Archive for January, 2015

With the Dow hovering around 18K, I expect a correction.

Friday, January 2nd, 2015

70% of the US economy is consumer spending. Consumer spending is fueled by jobs. The unemployment rate may be down, but it doesn’t take into account discouraged workers. It also doesn’t take into account stagnant living wages and people who have only found part-time employment.

Couple that with inevitable inflation from all those years of QE and bailing out. Also couple it with inevitable rise in treasury bond interest rates (resulting in shift out of stocks and into treasuries), not only because of inflation, but also because we still have a debt problem that’s been swept under the rug for the time being. Don’t even get me started on the credit card and student loan bubbles.

With all of those matters considered, a 15K dow is still 1,000 points higher than the 14K high of October 2007 (right before the financial collapse).

I can’t time when the correction will come, but it is only rational that it will come sometime between now and the next two years.