Uncertainty reigns (but not for stocks gurus)

September 20, 2010

Gold hit another record high and economists and bond traders are fretting about whether the Federal Reserve will give the U.S. economy another shot in the arm. Uncertainty reigns for everyone — – except stock market strategists, it seems.

MARKETS-STOCKS/Last week’s Reuters poll of 350 equity market strategists and portfolio managers showed most major stock market indexes, including Wall Street, would make solid gains from here through to the end of this year and beyond. And they sounded pretty confident.

Compared with the June poll, the range between the highest and lowest forecasts was narrower for every one of the 17 stock markets covered in both polls. India’s BSE Sensex was the sole exception.

Since a large range of forecasts can be read as a reflection of uncertainty about the future, the fact it has narrowed for every stock index bar one is a pretty clear sign people doing the talking in the market are more confident about where stocks are heading over the next year or so.

This doesn’t sit well with the price of gold, the classic safe haven, hitting a record high. Nor does it chime with our recent polls of economists.

The range of forecasts polled for U.S. GDP widened in September compared with August.

This disconnect between equity bulls and everyone else might sound strange, but as one seasoned equities strategist told Reuters, stock indexes don’t need big fundamental reasons to keep rising. “I think the biggest (upward) driver is the fact that everybody’s bearish ,” he said.

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Treasury needs a taxpayer “Bail-In.” We need this system to improve before we can fix it. We need taxation based on a “tax bond” that returns based on tax-base improvements or keeps what it needs to pay some bills to leverage a better future. We also need to go to 32 hour work weeks to add employees and allow more family time. Other options would be far worse. Scientifically we need a competitive base to grow and yet protect innovation with protections. Survival of the fittest won’t work when you need a Doctor, Plumber, Electrician, Grocer, etc. and this is worth protecting.

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