by The Investment U Research Team
As the afterglow from the Fed’s rate decision and statement wore off, the market soberly digesting the impact of lowered retail sales and decreased consumer spending from July’s Commerce Department report.
It’s sent market sideways yesterday and brought new concern over the economic recovery. Today it sent the market sharply down almost 2%.
Consumer confidence numbers didn’t help things either, with Americans feeling less secure than they did last month.
For the bearish, it gave new credence to the idea that the markets are overbought and due for a pullback.
For the bullish, it definitely makes them question valuations and whether they should aggressively be adding to positions right now.
Regardless of which camp you find yourself, this will have a chilling effect on the markets next week.
Even as economies around the world officially move out of recession by posting positive domestic growth – Germany and France announced earlier this week, today Hong Kong adds to that list – the reality is that true recovery will not be a “V” shape.
The markets may make it look that way, or perhaps even a “W.”
But the movements of the markets don’t equate to the movements of the economy. The markets are an emotional construct of what we believe the economy to be. And when we’re proven wrong, Wall Street begrudgingly returns to cold economic facts.
It’s why a correction of sorts is already in the works.
Related Investment U Articles:
- Why Markets Move When Bernanke Says Nothing
- What European Crisis? German GDP Growth Hits a Quarterly Record
- The 69,000 Discrepancy
- A Tale of Three Slumber Parties
- Are the Bears Going Back into Hibernation?
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