Having "satisfied" the "First Five Days" Rule...
on the Seventh day the Markets rested... Or so it seems.
Clearly, the ABSOLUTE NEED to go up for the first five days of January has exhausted the markets...and left a lot of explaining to do.
Indeed. Robert Doll's 10 market predictions on NBR last night embodied the GLOOM AND DOOM scenario so well...I'm speechless:
Here is the NBR transcript:
GHARIB: LET'S GO OVER YOUR PREDICTIONS IN MORE DETAIL FOR 2006 BEGINNING WITH PREDICTION NUMBER ONE. YOU SAY HERE THE U.S. ECONOMY SLOWS TO 3% GROWTH. AND THEN YOUR PREDICTION FOR NUMBER 2, CORPORATE EARNINGS GROW BETWEEN 5% AND 7%. THAT'S BELOW CONSENSUS EXPECTATIONS OF DOUBLE DIGITS.NUMBER THREE, THE U.S. YIELD CURVE INVERTS. NUMBER FOUR, THE STOCK MARKET EXPERIENCES ITS FIRST 10% CORRECTION SINCE 2002. WE JUST DISCUSSED THAT.AND NUMBER FIVE, GROWTH STOCKS DO BETTER THAN VALUE, LARGE STOCKS OUTPERFORM SMALL STOCKS. BOB, YOU KNOW, LOOKING OVER THESE FIRST FIVE, IT SOUNDS LIKE A BLEAK YEAR. WHAT'S THE MESSAGE HERE?
DOLL: WE THINK MARKETS WILL BE UP THIS YEAR DESPITE ALL THAT, SUSIE. WE THINK THE ECONOMY WILL SLOW TO ABOUT 3% GROWTH AS THE U.S. CONSUMER SLOWS REACTING TO HIGHER INTEREST RATES, HIGHER OIL PRICES, AND SLOWING GAINS IN HOUSING PRICES.
GHARIB: AND THAT'S EVEN THOUGH YOU SAID THAT THE FED STOPS RAISING RATES?
DOLL: THAT IS CORRECT. AND THAT WILL LEAD, IN OUR OPINION, TO EARNINGS DISAPPOINTMENT WHICH IS CAUSES THE SETBACK IN STOCK PRICES. BUT THE SECOND HALF OF THAT PREDICTION IS PAVING THE WAY FOR THE SECOND HALF OF THE EQUITY BULL MARKET WHICH WE THINK COMMENCES. IN THE MID-'80s AND THE MID-'90s WE HAD A PULLBACK. WE THINK WE'LL GET ONE THE MIDDLE OF THIS DECADE ON THE WAY TO HIGHER HIGHS IN THE YEARS TO COME.
GHARIB: LET'S LOOK AT THE NEXT OF YOUR PREDICTIONS.NUMBER SIX, THE U.S. DOLLAR RESUMES ITS DOWN TREND. NUMBER SEVEN, OVERSEAS STOCK MARKETS OUTPERFORM THE U.S.STOCK MARKET.NUMBER EIGHT, YOU PREDICT ANOTHER YEAR OF HIGH DIVIDEND INCREASES, SHARE BUYBACKS AND MERGERS. NUMBER NINE, COMMODITY PRICES RISE, INCLUDING OIL AND GOLD.AND THEN NUMBER TEN, IN THE MIDTERM ELECTIONS REPUBLICANS RETAIN CONTROL OF CONGRESS.
AND ON THIS THEY EXPECT MOM AN POP TO JUMP INTO THE MARKETS...? I COULD NOT HAVE COME UP WITH A GLOOMIER MARKET FORECAST THAT THE ONE DOLL HAS OUTLINED...OF COURSE I MIGHT SAY THE DEMOCRATS TAKE THE SENATE PERHAPS...
