Tags: Bianco Stock Market Rallies Will Be Short-Lived

Bianco: Stock Market Rallies Will Be Short-Lived

Tuesday, 30 Aug 2011 11:54 AM

Recent rallies in U.S. stock markets will be short-lived because credit markets have not recovered from the Great Recession and history has shown that stocks don't permanently improve until credit markets regain their health, says Jim Bianco of Bianco Research.

While credit markets are better today than in 2008, the current environment today is similar to that of three years ago, when the stock market was "attempting rallies" even while the credit market worsened, Bianco tells Yahoo's The Daily Ticker.

"Eventually, the stock market gave it up and corrected back to the credit markets," Bianco says.

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NYSE traders
(Getty Images photo)
"There isn't a safe place [to hide]," Bianco adds. "I expect more losses to come. Returns between now and year-end will have a minus sign."

Since stocks are about to slide downward again, investors should buy short-term Treasurys, even at today's miniscule yields. "You're not getting any return but there's no downside risk."

Consumer confidence, meanwhile, hit its lowest level in two years.

The Conference Board, an industry group, said its index sank to 44.5 from a downwardly revised 59.2 the month before, according to Reuters.

"Consumers are in a funk. Most of the decline is in expectations and the expectations tends to be influenced by the stock market — it accounts for 60 percent of the index," says Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina, according to Reuters.

"Certainly folks are concerned about business conditions in general and the outlook for employment and income into the future, and that is where we saw most of the weakness."

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Recent rallies in U.S. stock markets will be short-lived because credit markets have not recovered from the Great Recession and history has shown that stocks don't permanently improve until credit markets regain their health, says Jim Bianco of Bianco Research. While...
Bianco Stock Market Rallies Will Be Short-Lived
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2011-54-30
Tuesday, 30 Aug 2011 11:54 AM
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