When you have solid economic growth, an economy can support more debt, because it’s easier to service the interest payments. This is why investors weren’t selling on news of higher deficits and national debts. Traditionally, a central bank would partake in a combination of money-supply growth and cite economic growth as a way to keep dealing with rising debts. Now that the economic growth equation is out of the picture (as virtually all Western countries are experiencing little to no GDP expansion), the problem is growing by the day. It’s the same thing as being able to service a credit card with a large outstanding balance. As soon as the ability to service this debt comes into question, the problem starts to get worse exponentially.
So we have the European sovereign debt issue that the marketplace is worried about. Domestic economic news is negatively affecting sentiment and there is a lingering wariness about the possibility that we aren’t going to get out of the current malaise for quite some time. All this has sapped most of the positive investor sentiment in the marketplace.
My view is that this lackluster scenario (and expectations)
Of course, the gold sector is flourishing with all this turmoil. I would say that gold stocks would be even higher today if we were in a bull market, but the top stocks for speculators in this kind of market are almost exclusively with gold. There just isn’t the growth out there in the rest of the economy.
Everything has broken down in this market since the sovereign downgrade ofU.S.debt. The railroads corrected significantly and so have technology shares. It’s an across-the-board correction the trading action of which is very similar to what happened the same time last year. The stock market was able to recover from last year’s correction based on the expectation for decent corporate earnings. I think we have about one quarter left of a positive outlook on earnings. Without GDP growth, positive trading action in the fourth quarter is vulnerable.
Retire on This One Hot Stock!
This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.
Get your FREE report on our top stock pick immediately here.
# # #
We publish Profit Confidential daily for our customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you!
Visit our site: