460,000 US citizens losing their job every week.
US car manufacturers looking for government support rather than letting them go to the wall.
US$ being supported because investors are buying it to get out of other investments.
The US will probably show negative growth this Friday.
US consumer confidence at an all time low.
UK in recession.
US and UK borrowing money they cannot afford from investors who will never get their money back. These investors will have to keep lending to the US to keep their own economies afloat.
Banks still not owning up to the toxic equity, mezzanine and subordinated shareholder loans (read equity) loans they have. RBS anyone?
Banks still shedding jobs; Credit Suisse this week. Who's next?
What does the US and UK make? We are distribution hubs for imported products, that's all. The money has all been spent on new kitchens, cars and holidays and there's nothing to pay it back with.
That's right. Equities are cheap so FILL YOUR BOOTS. There's a thousand reasons why equities are cheap. This is a suckers rally. The US will cut rates, so will Europe and the UK. Normally, this will lead to a rally and upward valuation of equities. You've just seen it. Now what? Has anything changed for the better? No. Are banks going to start lending to failing companies because Al and Gordon ask them to? No. Are you going to go out and make any big purchases because interest rates are low? No. You're not going to because you should be thinking about the possibility of job loss.
The equity markets are a side show right now stuffed with analysts with valuations based on hope. These have to come down, then there will be a fundmental revaluation. You need to watch the CREDIT MARKETS. The credit markets are locked. Banks are pulling in the reigns. Deals that would have been done 6-12 months ago are not getting done. The bond markets are trading at massive wides; maybe on forced selling by hedge funds but you want to do a sub-debt bond right now? That'll be 20% interest please sir; and that's if we can find buyers. Want to refinance right now? Shoulda taken the refi 6 months ago Mr FD. Mezzanine will set you back probably 20%+ all in and you'll give up equity. Investment grade bonds are getting done at 400bps; IBM did a bond recently that they'd have got done for maybe 300bps less 12-18 months ago. 400bps is where sub debt was pricing 12-18 months ago. There's always the US insurance companies. They are always up for a good bit of investment grade debt. Oh, hang on, they are going cap in hand to the government too.
So, there's nothing to worry about. Equities are a screaming buy folks.