Ordinary Outcomes of Extraordinary Recklessness-The weekly market comment from Hussman Funds
03/15/2010 0 comments
Overvaluation and reckless lending do not always translate into near-term market weakness, but they invariably haunt investors in the form of poor long-term returns.
The earliest data we will observe in terms of Alt-A and Option-ARM loans will be driven by the relatively small initial round of resets that began in November of last year. That implies that any data prior to February is relatively clean of these effects. What we are interested in is the extent to which we observe a spike in 30-day delinquencies in data beginning about the February-March time frame. The size of the delinquency effects is likely to increase through the year, back off in the first half of 2011, and then reach their final peak in late 2011.
As of last week, the Market Climate for stocks was characterized by now strenuousovervaluation, strenuous overbought conditions, and hostile yield pressures. Under those conditions, even positive market breadth has not typically been sufficient to produce positive market returns, on average.
In bonds, the Market Climate last week was characterized by relatively neutral yield levels and unfavorable yield pressures.
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