Thursday, April 01, 2010

About The Time To Buy Self Sustaining Recovery?

After a brief set-back in China's PMI, we are surging again ... Eurozone sees strong increase in manufacturing PMI despite all PIIGS concerns, the US personal consumption is moving up! No wonder that J.P.Morgan suggests (H/T The Pragmatic Capitalist) that

"the global economy is making an important transition to self sustaining growth".

Self sustaining growth? This is what I have been missing since September 2009. Unfortunately to me, the cyclical cheer is clouded by structural gloom from the perspective of long term investing. Crowd Sentiment at extreme optimism (H/T Trader's Narrative) and other things I have learned in the past years keep me cautious near term ... and bearish longer term?

The 2nd quarter still looks OK to me, with an estimated adoration of equities still in cards, but the 2H 2010 makes me worry ... Climbing the wall of worry? Here is more of micro level in oil, and do not forget Merton ...

Click on chart to enlarge, courtesy of, annotations with my guesstimates.

Click on chart to enlarge, courtesy of Woody Dorsey, Behavioural Trading: Methods for Measuring Investor Confidence, Expectations, and Market Trends.

Is the long term picture telling me we are about the "Hope" that is followed by "Recognition"? But do not look at corporate profits, the problem is elsewhere ...
For the upcoming Easter entertainment of 1st April I suggest to read Lloyd Blankfein: Time Man Of The Year at The Baseline Scenario.

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