Sep

25

The Sky Must Be Falling?

Posted by cameron

September 25, 2007 |

Well the Fed finally cut interest rates a half point after weeks of speculation. Now I suppose some naysayers will view this as evidence the sky is falling. Despite this being September, one of the worst months for the stock market, we are now just a couple of percentage points away from the previous all time high. So far this summer has been a bit of a yawn. A few weeks back we did hit the expected 10% correction level and held there for about one microsecond before the market rebounded with attitude. And here we are, closing in on the all time high as if we don’t have a care in the world. Sure the economy is slowing and sure there has been spillover from the housing mess and credit crunch but the market seems to be able to shrug that off. I’m wondering why.

I look around in my neighborhood, my city, and I don’t really see a housing slump. Houses are moving although prices are not rising and Homebuilders are cutting deals on new homes. That’s not so bad now is it? The economy is slowing but I can’t tell in my town. Can you? Truth is it doesn’t feel a whole lot different from a year ago. In fact we were talking about a slowing economy a year and a half ago and we still haven’t hit a recession. I guess if enough people don’t feel the slowing economy and don’t get hurt by falling house prices then there is no slowdown, at least for them. I talk to customers all the time and they seem to be really busy. I haven’t spoken to anyone yet who said, “things are terrible” or “things are slowing down.” Not one!
I have been more cautious than usual in the stock market, primarily because of age, but for me the stock market is the only way to register the slowing economy. If it hadn’t been for the stock market I might never have known anything was up.

Still, we have a ways to go before we can really say the threat of recession is behind us. Wake me up when its 2008, another eventful year I suspect. 2009 should be a beaut!


Comments

1 Comment so far

  1. wedding supplies on September 25, 2007 12:43 pm

    I disagree with your assessment on the housing market. Foreclosures are through the roof and you only have to drive around a bit to see the number of for sale signs to get the hint that things are moving that well. Ryan homes just announced that they are pulling out of 6 neighborhoods in the Cincinnati area and retreating to their corporate offices in Dayton. I also know a builder personally who has given up for the time being because the market is so difficult for new homes. But all these things run in cycles so I find it easy to stay optimistic because I know brighter days are around the corner.

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