There’s only a day left to this month and so far my prediction of trouble in August/September has proven dead (cat bounce) wrong. It’s too early to call the whole thing off, though. The market may yet give us a great buying opportunity before the end-of-year rally.
For starters, there are still lots of people worried about the economy. Chief among their concerns is terrorism, according to BusinessWeek.
I submit that something looming just as large is the fallout of the bursting housing bubble. What’s that you say? Still don’t buy that there was a bubble? Have a look at this chart.
We get the employment numbers tomorrow. From Econoday:
Employment has been coming in on the soft side. Non-farm payrolls rose a modest 113,000 in July following gains of only 124,000 and 100,000 in June and May. On the other hand, earnings have been quite strong recently with sharp increases of 0.4 percent in both July and June. Even with slow employment growth, a key issue is whether labor markets are still too tight for current monetary policy. We need to see not just a continuation in moderate employment growth but a slowing in wage pressures.
That would be good, particularly since profits are still slated to slow later in the year.
Remember that trading volume has been low during this rally, casting doubt on its sustainability. September looms ahead. Patience, cash, and a shopping list appear to be good companions.
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