Long time reader Riccardo passed along a quote from this week's Hussman report that I think is worth commenting on. I mention John quite a bit here has I have a lot of respect for his work and his approach. In his latest post he expresses concern about stagflation as he feels last Friday's rally came from a stagflationary GDP report. I first mentioned stagflation as being on my radar as a remote possibility about a year and a half ago.
I suppose that stagflation is more of a possibility today than a year ago February as inflation is higher and growth is slowing down but John seems to have stronger feelings than I do. He is clear to say that he is not making a prediction but I read his post to say that a 30% decline has more than a remote chance of happening.
That certainly could turn out to be the case but that is not my conclusion. Any decline more than 25% is big and not all that common. I don't really believe in worrying about such a big move and taking action all at once against such a big move.
I heard on Asia Squawk Box that the Nasdaq is down four months in a row. That is troubling and in my mind lends credence to a down a lot scenario. Remember bear markets start slowly over a period of months by rolling over. It seems like most folks have less riding on tech than they used to so there may be less emotional pain tied to the Nasdaq's direction but this matters (whether it matters a lot or a little is of course the variable).
There is plenty of bad confronting the markets right now, are there positives? There are always some positives.
This three month chart could contain one positive. The action has not been good for the last few months but the last couple of weeks have been good and this break of the down trend could matter.
I still think, as I have for a while, that the negatives outweigh the positives but as I have been saying for a a long time none of us has to nail it to the day.
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