Hussman Funds Weekly Market Comment
John Hussman is sticking to the story of recession and market not pricing that in. Read the full story here.
Great graph of the unemployment rate mapped against history with start of recession drawn in a T-8 months.
“we can expect the unemployment rate to move substantially higher over the coming 6-8 months.”
Hussman’s take on Fannie and Freddie bailout, his rates reset graph and thoughts, like this;
the Market Climate for stocks remained characterized by unfavorable valuations and unfavorable market action, holding the Strategic Growth Fund to a fully hedged investment stance. The recent selloff has certainly compressed short-term technical conditions enough to allow for a “fast, furious, prone-to –failure” rally, but again, there is nothing in the government’s takeover of Fannie Mae and Freddie Mac that changes the fundamental state of the economy.
A recession starting at the beginning of 2008 has been my thesis since late 2007. It’s why I’ve kept the FI fund predominately in cash.
Probable:
US is in recession, Europe six months behind, China takes foot of pedal for a few months, Australia has mild recession.
Possible:
US goes in to deeper recession. So how long does a deeper recession last for? A year? Earnings drop plus multiples compress. S&P500 goes for what? 800ish
US miraculously resuscitates its financial markets, housing and economy and we’ve seen the bottom or at least within 15% of it.
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