I think the key in the market is technology, because what has been giving us this extraordinary earnings growth is spectacular earnings growth from a lot of tech companies. They are telling us the second half is going to be slower. So I think the broader market earnings trend is going to be not sharply down, but trending down.
The jobs report is much like the previous ones this year. There's something in it for everyone.
The way the economy tends to slow down is in things that either we as individuals or businesses can push off into the future. Auto sales are slowing. That is [due to] individuals this time. We can wait to buy a new car. These announcements from the technology sector appear to imply that a lot of companies are saying we can wait a little while with our business spending.
It's hard to disagree with Greenspan. Our own market view is equities are fairly valued, but they had a tremendous period of catch-up last year and the year before when they were very undervalued We would expect only 7, 8, 9 percent price appreciation next year.
The groups that will do well in this kind of environment are groups that were ignored for some time; food, beverages, household products, necessities.
Technology is such a huge part of market cap right now; if that part of the market is performing poorly, it's really tough for the other indices to go up.
The market is adjusting to a trend that the market hasn't lived with in some time. Inflation is going up and interest rate are going up.
Realistically, if it eliminates a degree of risk about the future, that's good news.
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