There's No Need To Fear, The U.S. Economy Hasn't Been Eaten By The Bear

Here we go for another week. I hope you had a great weekend. I did. Not only did I get to spend time with my son (we went to the movies to see Underdog), but I also got to play lots of guitar.

On Friday night, I plugged in my Les Paul and practiced Head On by the Jesus and Mary Chain. I love that song; the Pixies do a great cover version. I also worked on Bruce Springsteen's The River, another great song.

Now it's back to the grind, and I am here at my desk trying to make sense of what's going on in the markets.

Here's what I think:

There are a lot of “Chicken Little” pundits claiming the U.S. economy is on the verge of catastrophe and that other major world economies are the best place to park your investment cash. What a crock!

They start by pointing to the mortgage meltdown that’s created a credit crunch that’s sending ripples throughout the markets. They also like to cite the lame performance of the U.S. dollar against other major world currencies.

I could go on and on about the fundamental problems in the U.S. economy and make a convincing argument that the sky of falling: massive debt, huge foreign trade imbalance, government spending gone wild.

The market is jittery and it should be. But it’s not the end of the world, and I am not putting nails in the U.S. economy’s coffin. What’s going on now is part of a natural correction in the market that probably won’t last too long.

Just take a look at the following weekly chart of the S&P 500. If you look at the chart and try to clear your head of all the rubbish you hear and read, the market uptrend remains intact. In fact, the S&P could lose another 73 points before I would start to worry.



I’m not saying it’s time to start buying up stocks or selling everything irrationally. What I am saying is it’s premature to be calling the beginning of a bear market, and it’s even more premature to claim that foreign markets are impervious to what happens in the U.S. markets.

Rock on!