Sour Sentiments could Sour the Fundamentals

by Laura Ehrenberg-Chesler on July 1, 2010

in Credit Crisis,Earnings,Economic Indicators,Employment,Investment Strategies

As we close out the second quarter and the first half of the year, the equity markets seem to be forecasting very slow growth at best, for the remainder of the year.  At worst, the market may be predicting a double dip recession.  For professional and individual investors, this can create some negative sentiment, and for good reason.

The technicals have broken down and they too seem to point to a double dip recession for the U.S.,  and possibly for the rest of the globe.

Sour sentiment and negative real data, may cause some of the fundamentals to be overlooked.  Forward earnings are still rising, corporations still have lots of cash, and the recovery in earnings expectations is still in tact.

That having been said, all may not be well with the market.  As we have stated  in the past few weeks, the credit markets are still tight, and unemployment is high, along with the uncertainty created by an intrusive government causing business to hang on to cash and not hire or invest capital.  However, all the fundamentals need to be reviewed so that we don’t get overwhelmed by the negatives.

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