The mystery about Steve Jobs' weight loss is now known. He has a hormone imbalance that is easily treatable and he is not dying nor stepping down as CEO of Apple. The markets can now breathe easier on this topic.
Last week, we had a New Years' rally. Stocks went up on light volume. When all the sellers were on vacation, the buyers were able to push up stocks. This week will determine the true test of its resiliency. There is a rumor of an Obama tax cut as part of the stimulus plan which would probably be welcome news. The economy is not getting better any time soon and will likely get worse in the next few months. The markets will continue to keep a close eye on the economic tea leaves and we may even get a real Obama rally but we anticipate even a strong rally will run into some headwinds until the accelerating economic decline slows down.
2009 will continue to see analysts downgrade their recommendations on stocks and companies will also report lower earnings than expected. Bankruptcies will be a weekly story, consumers will default on all types of loans, and Israeli type conflicts will abound. Expect the stock markets to be choppy with some strong rallies in between. The credit markets are starting to improve but until the corporate loan and bond markets move up dramatically, we are unlikely to see a new bull market in stocks.
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