Famous uber-bull Charlie Biderman of TrimTabs Investment Research officially went BEARISH on Bloomberg TV's "Taking Stock" this afternoon. It was only as recent as Oct. 8 when he was still blowing his bull horn on Bloomberg.
According to his research income flows (money to consumers) as well as corporate money flows (from takeover deal's souring) will have a big negative impact on stock market values. Biderman's liquidity theory of stock market forecasting is somewhat controversial and unique.
Today he contends that U.S. official labor data (BLS) does not reflect that most job losses were due to illegal immigrants working in construction (thus job losses are understated). This is also supported by lower cross-border cash transfers between US and Mexico. With fewer construction jobs, reduced capital goods spending, tighter lending and now corporate deals taken off the table (what he calls less corporate buyers of stocks), he is now feeling very bearish for the first time in many years. He expects the Fed to cut at least 2 more times, taking the rate to 3.75% or lower. If housing rebounds from the expected cuts then he expects the economy and stock market to start a recovery in Q2 2008.
What do do now?
Biderman's calls:
- Short XLF (financials)
- Short IYZ (telecom)
- Short IYM (Russell 2000 small caps)
- Long QQQQ (large cap tech)
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