Double-dip Recession, or Just a Market Correction?

The Bad News...

European banks are starting to not lend to each other... reminds us a lot of the USA in late-2008.

The spread between junk bonds and treasuries has jumped 200 basis-points, indicating possible "contagion" here from Europe's troubles.

The stock markets are tanking lately.


The Good News...

The rising dollar has pushed down energy prices, which is a boost to the U.S. economy. It's like getting a decent-sized tax cut, some have pointed out.

Interest rates remain low, which helps troubled homeowners and lending banks that need time.

This is probably just a "correction", and so we can buy some good stocks "on sale" this week.


What We Think...

We hate to be pessimistic, but our long-term view is just that. We think the governments of the developed economies will fight-off disaster (another "Great Recession") but the tools used will be impediments to growth.

Avoiding that double-dip would inspire markets, though. Interest rates are so low and there's a ton of cash on the sidelines. Stocks have a lot of potential in the short term. But be flexible.