No question about it, the stock market has enjoyed a nice rebound from deeply oversold conditions, amounting to a recovery of just under 1/3 of losses that the market suffered from its 2007 peak. This has been accompanied, until recent weeks, by an easing in risk aversion from what, in hindsight, could be called “fear lows” (though not necessarily the “revulsion lows”) of this downturn.
I say “until recent weeks” because over the past couple of weeks, we've observed a persistent climb in credit default swap spreads on a number of major banks. It's not clear whether this is simply mean-reversion from the giddiness about secondary offerings a couple of weeks ago, or whether there is information content there about fresh credit concerns. Suffice it to say, however, that credit concerns are off of their peak, but still persist.
I remain concerned about the poor level of price-volume sponsorship we've observed, about the massive second-wave of adjustable rate resets that will begin later this year, and about the clear structural headwinds posed by a deleveraging economy (historically, economic expansions are paced by lively growth in debt-financed gross domestic investment, which is going to be hard to come by). In recent weeks, however, we've seen some new concerns – a fairly subtle deterioration in measures of risk aversion that were already tenuous, which prompted us close the 1-2% position in index calls that we've been using as an “anti-hedge” since March.
Continue to read the complete [url=http://www.gurufocus.com/StockBuy.php?GuruName=John+Hussman]John Hussman Weekly Market Comment[/url]
I say “until recent weeks” because over the past couple of weeks, we've observed a persistent climb in credit default swap spreads on a number of major banks. It's not clear whether this is simply mean-reversion from the giddiness about secondary offerings a couple of weeks ago, or whether there is information content there about fresh credit concerns. Suffice it to say, however, that credit concerns are off of their peak, but still persist.
I remain concerned about the poor level of price-volume sponsorship we've observed, about the massive second-wave of adjustable rate resets that will begin later this year, and about the clear structural headwinds posed by a deleveraging economy (historically, economic expansions are paced by lively growth in debt-financed gross domestic investment, which is going to be hard to come by). In recent weeks, however, we've seen some new concerns – a fairly subtle deterioration in measures of risk aversion that were already tenuous, which prompted us close the 1-2% position in index calls that we've been using as an “anti-hedge” since March.
Continue to read the complete [url=http://www.gurufocus.com/StockBuy.php?GuruName=John+Hussman]John Hussman Weekly Market Comment[/url]
