The market turnaround today is both expected and unexpected. Simply, I had no clue which way it would go, even though yesterday’s price action suggested the bears were waning and the bulls were gearing up.
In any case, it is nice to see a pop, even if it might be temporary. As I wrote yesterday, tomorrow’s employment news is the big deal the market is anticipating. Given today’s drop in initial jobless claims, the market just might be a bit too far out in front of the news.
Yesterday, I received a comment on my suggestion the increase in lending is a sign that the US economy is picking up steam. The commenter, a banker form Canada, suggested that might be true in the short term, but, in the long term, the US economy is heading south.
- Short term maybe up, after bottom. In the YEARS to come, DOWN. BUY some leaps on next up move. Ever hear–Beginning of the END. ME—BANKER–with one of the top 5 in Canada. Good luck.
Note, the commenter does not specifically state the reason for this prediction, but I assume he is referencing the fact that lending/loans are going up and this will lead to the same credit collapse we saw in 2008. Since the commenter is a banker and the language “Beginning of the END” is sufficiently dramatic, it is not hard for me to make this leap.
I have no reason to doubt the commenter’s veracity when he or she shouts, “ME —BANKER” and follows that up with the “top 5” qualifier, but my position is, as I have written so many times before, “expert is as expert does” (to hack up a cool phrase).
In other words, just because one is in a position of expertise, it does not mean one is right when one makes claims, especially when the claims are not supported with evidence and when claims are made loudly as predictions about “YEARS”.
In any case, the banker might be right, increased lending will lead to another bubble. For now, though, not only is lending increasing on all fronts, but delinquencies overall are dropping. So, what we are seeing is responsible lending and responsible borrowing working in tandem. This type of symbiotic relationship could go on for many years, driving the US economy to greater heights heretofore unseen.
Then again, it could all go south from excessive greed, as it did in 2008. I suspect one big difference between then and now, though, is we all know the signs to watch for, at least I do.
Tomorrow is the news we all await. Let’s hope the employment picture improved over the last disappointment, if for no other reason than the market should be rewarded for it optimism.
Trade in the day; Invest in your life …
