A co-worker asked me last Friday morning (before the market opened) what I thought the market would do in the short-term. I told him that because companies had just reported earnings that we were due to get a dose of reality, and my best guess was that we were bound to see the market trade sidways at best but likely downward. Since then I have watched the major indices drop nearly 3% - my intuition was right.
Germany, France, and now Japan have reported positive GDP and have shown the world that recovery is just around the corner. I expect us (U.S.) to pull out of the recession in the third quarter with a reading between 0%-1% (real GDP), but most likely on the lower side of this range.
Government programs such as the Cash for Clunkers along with housing programs, mortgage rates, and other stimulus efforts have impacted our current results, and we are seeing signs in the housing market of stabilization, and moods are generally better.
The end is in sight although there are still several months of pain to be felt. I expect unemployment to stay relatively flat for several months with the potential for an extended recovery time.
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