The dollar seems to get stronger by the day. Stocks have come in with good earnings in the second quarter. Every pitchman on the floor of the NYSE claims the technology sector will pull us out of the recession and on to happy days again.
Whats Important in the Stock Market?
Everyone watches the US dollar vs other currencies to get a feel for where we are headed. As the dollar gains strength commodities seems to go lower in price. Oil hangs around $70 per barrel, metals in general seem to go up then down. Everyone expects China to drag us out of the recession single handedly. The Dow Industrials keep seeming to climb. So whats important in the stock market?
Well jobs are whats going to help this economy not communism. Until we see unemployment getting significantly lower this rally will stall. But once the unemployment numbers get right we will be off to the races.
Why are Jobs Important?
Jobs help governments receive tax revenue, people become more secure with a weekly pay check and will spend money in the marketplace. This fuels earnings and our ability to create more jobs. Innovation comes easier when people aren’t always worried about the bottom line.
Stocks start to rise on future expectations and as real dollars flow into the market from earnings we start to see capital and credit become more available.
Jobs help everyone.
Will Technology Lead Us Out of the Recession?
I believe the answer to that question is no, but I do believe that technology will enable us to sustain a long-term rally upward in the stock market.
So what will lead us out of the recession? I believe if we can avoid inflation and thats a big IF, we will see the homebuilders, material vendors, banks and consumer staples and discretionary goods will lead us out. But as thats happens very quickly you will see other sectors jump on board the rally train as well.
This is where inflation will be fueled as we try and keep a steady growth pace we see commodities start inching up especially oil. Oil is not our friend.
The Case for Natural Gas
As the economy heats up we will see our demand for oil once again rise to unsustainable heights giving others control over global wealth and power at our expense.
The United States has vast reserves of natural gas that will act as an oil alternative. First we must build an interstate pipeline system to deliver natural gas to the consumer. This will increase jobs and decrease foreign dependency on oil.
Why would the consumer buy natural gas?
Easy it is one-third the price of gasoline with twice the mileage, doesn’t harm our cars, burns clean and doesn’t harm the environment.
Honda has already come out with a limited number of cars that run on natural gas. Converting old cars and trucks is easy and would also provide spending money in the marketplace creating more earnings.
Housing and Credit Got Us in This Mess and They Will Lead Us Out
Thats right home builders and banks will lead us out. The biggest holders of foreclosed homes are the banks. As that supply starts to dwindle builders will start building. While banks increase their wealth selling foreclosed properties, contractors will turn to remodels in droves. Home building speculation will start with the capital contractors receive from remodeling.
Our Government really needs to start stimulating the housing markets by helping banks to unload their foreclosed properties. This can be accomplished by lowering restrictions to home buying. Lets get credit back in the market place to stimulate middle America and we will soon get the results we need.
Homebuilding and natural gas will solve a lot of our problems and provide must needed leadership in this recession.