CautiousInvestor

Those Illusory Stimulus Packages

I tend to agree with most of your points, particularly that a market bottom and subsequent upturn hinges significantly on the belief that monetary policy, along with the massive stimulus effort, will turn the economy around. The problem with both policy initiatives is lag times and the singular problem with the yet to be passed stimulus act is its size and implementation. Once passed and enacted into law, I suspect it will passed down through states, counties and munincipalites........... requiring time. In the meantime, the Conference Board and other organization that measure and track CEO sentiments are predicting dire conditions for the next six months. ISM indicators show no hope as well. And housing, which led us into this mess, must recover before the recession ends if history is torepeat itself. In my mind, this puts the recovery well into the second half of 09 or sometime into 10...........meaning that the real market recovery, at the earliest, will occur sometime in the second half of 09. I have studied past recessions and concurrent bear markets and have observed that the bottoming out process involves three or four tests of market lows and that the last test occurs three months prior to the end of the recession as defined by the NBER.