AM 1150 Kelowna - Radio Rallies & Reversals

The front page of the Financial Post this morning has an article which sums up a number of the themes I've been talking about for the past couple of months: consumer de-leveraging and high unemployment in the US, and deteriorating finances and a weakening housing market in Canada are starting to show up in the recent weakening economic indicators. Yet despite all this, the market believes otherwise, driving stocks higher in September, a month that is historically been the worst for equities. There's another front page article in the Financial Post, which highlights similarities between now 1939. Personally, I think there are similarities between now and 2006. Despite the fundamentals, the markets are running higher, fueled by speculation and back-stopped by moral hazard. Seasonally, September and October are known as being challenging months for long only investors. What you may not know is that when markets do break the seasonal trend, the gains are large. All this Government and central bank intervention is making the tea leaves harder to read, but the fact remains that interest rates are low and that bodes well for stocks. The consensus seems to be coming around that economic growth will be slow. The opportunity then is in dividends.

GB