Comments on: Confidence, Housing, and Unemployment are All Intertwined http://www.ritholtz.com/blog/2009/07/confidence-housing-and-unemployment-are-all-intertwined/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Sat, 21 Nov 2009 21:07:54 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: leftback http://www.ritholtz.com/blog/2009/07/confidence-housing-and-unemployment-are-all-intertwined/comment-page-1/#comment-188697 leftback Wed, 01 Jul 2009 14:20:00 +0000 http://www.ritholtz.com/blog/?p=30611#comment-188697 Confidence = Stock market - Gas prices. I think the latter is having a bit of an effect in the last month or so. We may start to see signs of the impending double dip recession soon, notably in soft retail sales this summer and in Q3 earnings and more corporate bankruptcies this fall. In the Govt debt problem I think you identified the problem for 2010, although it may visit the UK earlier than that, Jack. I have read quite a few commentators calling for a replay or "echo" of 2008. If you look at the spring rally, the summer doldrums and the behavior of the VIX in 2008 and 2009, there are certainly eerie similarities. My bets are that Treasuries will outperform equities and commodities again in the 2nd half. One of the biggest unknowns to me is whether retail/401K investors might actually panic en masse and exit equities completely if they see a repeat crash coming. Even the dumbest investors might start to see a pattern and bail out. Last year we definitely saw panic selling and deleveraging by hedge funds and pension funds, but by and large the B&H crowd just sat there. I wonder if another sharp correction might send them to the exits this time. If such a move were to gather steam, we might see new lows that only the most bearish among us have imagined. Confidence = Stock market – Gas prices. I think the latter is having a bit of an effect in the last month or so. We may start to see signs of the impending double dip recession soon, notably in soft retail sales this summer and in Q3 earnings and more corporate bankruptcies this fall.

In the Govt debt problem I think you identified the problem for 2010, although it may visit the UK earlier than that, Jack. I have read quite a few commentators calling for a replay or “echo” of 2008. If you look at the spring rally, the summer doldrums and the behavior of the VIX in 2008 and 2009, there are certainly eerie similarities.

My bets are that Treasuries will outperform equities and commodities again in the 2nd half. One of the biggest unknowns to me is whether retail/401K investors might actually panic en masse and exit equities completely if they see a repeat crash coming. Even the dumbest investors might start to see a pattern and bail out.

Last year we definitely saw panic selling and deleveraging by hedge funds and pension funds, but by and large the B&H crowd just sat there. I wonder if another sharp correction might send them to the exits this time. If such a move were to gather steam, we might see new lows that only the most bearish among us have imagined.

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