Tuesday, March 17, 2009

St. Patrick's Day - A Time for Optimism?

The market has started to respond to positive news. A few banks reporting positive earnings. Interest rates at near zero levels. Housing market with increased sales on MLS by 8% since January. Although early, signs are starting to point to a recovery. It might be a good time to buy, but is it a false positive? There are still some major shoes to drop, although GM reports they are working through March and does not need more funds for the moment, but how much longer after that? Will the company be able to turn it around or can we expect another major failure?

Just a few moments ago, Canada reported a 5% drop in manufacturing shipments (a slowing decline - but a decline compounded by previous declines) with automotive being a big drag (without which it is a more moderate 1.2% compared to Dec according to BNN).

Remember, the stock market is a leading indicator so it will be the first place that starts to improve in an economic upswing (unlike employment which is a lagging indicator for those of you with employment issues). Keeping the fact that a recovery is expected in 6 months to a year, it might be a good time buy if you can sustain a bit of volatility.

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