Fundamentals…or Star Wars Memorabilia - June 21, 2009

This week marks the last full week of the first half of 2009. Hard to believe! So what do we know?

We know that things are less bad than they were 6 months ago.

· The economy is still falling, but at a slower rate.
· Fewer people are losing jobs.
· Fewer companies are losing customers
· The 3-year slide in the housing market may be bottoming.

All encouraging signs…but less bad does not equal good.

If a recovery is to happen in the 2nd half of this year, it must be grounded on more than stimulus money. It must be grounded in fundamentals…like: new jobs…more income…increased output.

These are not happening yet. They will only happen by continuing to take baby steps and nurture the improvements we have seen. It’s too early for the FED to reverse its positions…and too early for Washington to pull back.

The data this week will show that new home sales, capital spending, and consumer spending will all confirm that the economy is still being propped up by government assistance. I don’t like it, but it’s time to be patient.

If we don’t get strong fundamentals in place, the recovery will be delayed and short lived, and Star Wars memorabilia will continue to be a better bet than the stock market.