This morning, I find myself wondering how long investors can continue to support cash raising activities. That’s probably not the best way to pose the question. Perhaps after I set the stage, the question will make more sense.
That may not sound like a big deal. But
Who can afford to lend $2.4 billion to
And then there’s
Plus, the Treasury is about to start selling 7 billion shares of Citigroup NYSE:C). And if that’s not enough, the Fed’s about to stop supplying liquidity in the form of mortgage-backed asset purchases.
It should be pretty clear why the Fed is adamant that rates must remain at essentially zero. Otherwise, where will all the cash come from?
About a week ago, I gave you a target for the S&P 500 of 1,200. I still think we’ll see that level in the near future. But I won’t be surprised if we get a correction after that.
The stock market has come a long way. In fact, investors seem to have priced an absolutely perfect recovery for housing, employment and corporate profits. It seems to me that we are probably due for a bit of a let down.
Now, I will treat a correction as a buying opportunity. Because of the three (housing, employment and corporate profits), I think corporate profits are the most reliable.