The title quote is from a Marketwatch.com article by Steve Goldstein this morning noting that Wednesday morning stock futures are signalling losses today in the stock market. S&P 500 futures declined 11.9 points at 1,477.60 and Nasdaq 100 futures declined 7 points at 2,017.75. Dow industrial futures fell 80 points.

As Goldstein points out, investors may well be pulling back ahead of key economic data due out later in the week, such as the Beige Book and pending-home sales for August. We could well see a retreat in the stock market, which had the Dow within spitting distance of 13,500.

Until this volatility settles down, we will continue to have the market advancing in fits and starts (due to the core of bullishness remaining, based upon still-decent corporate earnings) and then pulling back, just when it seemed safe to go back in the water. The market cannot play keepaway forever, though, and these tremors should subside.

The older I get, the weirder life seems to get… Early in 2007, I was talking about the subprime problems and their severity, and most people (including Bernanke) snickered at the economists making such Cassandra warnings. Well, maybe not snickered, but Bernanke in particular predicted in March 2007 that the subprime problems would not significantly impact the “broader economy.” Right, that’s why in August, European central banks pumped an aggregate of nearly $300 billion of liquidity into their economies to save big banks getting a giant wedgie from all the profligate credit extended. When German banks are being bailed out, brother, there is much to be concerned about.

Now everyone is taking the problems deadly serious, though a real panic has not yet bloomed. Taking them so seriously, in fact, that I now seem like Pollyanna for saying we still are in a correction and that the bull has farther to run, as newsletter publishers increasingly turn bearish.

But if markets are the result of economic fundamentals, and I’m confident they remain so, then the market should get back on its feet. But this would also mean that before long, probably before the halfway point in 2008, the bear really is going to be large and in charge.

This entry was posted on Wednesday, September 5th, 2007 at 7:28 am and is filed under Markets/Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.