Stocks Slide

21Jan10

Over the last couple of days we’ve seen a sharp decline in the market, recording the largest one day and two day drops in months.

So what’s going on?

A mixture of a few things have created this week’s decline. First, the change in the Senate seat of Massachusetts. This long held Democratic seat going to the GOP creates big questions about the current administration’s ability to move forward with their health care reform plans. Secondly, it has been a mixed bag of earnings reports this week. What seemed like a roaring recovery just a couple months, or even a couple weeks ago, doesn’t seem to feel as good right now. The word on the street is that things aren’t getting worse, but they aren’t getting much better either. Third, China’s Annual GDP grew at 10.5% for 2009. This causes concern of future inflation, and they have hinted towards increasing their interest rates. This will of course increase the cost of borrowing to the U.S. Last, but certainly not least, President Obama’s proposition to limit or prohibit banks from owning or investing in hedge funds hasn’t seemed to sit well with the financial markets today. This very well may be a good new safeguard against future bubbles and excess leveraging, but it screams slower growth and lower profitability today.

The first half of 2010 could be more volatile than we expected. However, this will also create many opportunities moving forward. We still feel 2010 will be a positive year

Best regards,

Ron Sloy

Learn more about Ron Sloy.

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