Econony from Nov - March = "Boring"

How is everyone feeling these days?  Blahhh... is what I am guessing.  Right?  Must be the weather, or the time of year, or something... but wait!  This time last year we all were so full of hope.  A new president was just getting started with a stock market tanking and as soon as he took the reigns things could only get better.  And they did!!!  Market went from 6800 to 10,700 and the Federal Reserve along with a slew of others declared victory that the disaster was averted.  So, why are we all feeling so glum?

Simply put, because it is not going to get better for at least a couple of years.  8-10% unemployment is here to stay, and that is the rosy government picture. House prices by optimistic folks will still fall another 10% or thereabouts, and maybe if things go well the Dow will get up to 11,700... maybe.  So it is little wonder that things are bland.  Really, the unemployment rate came out last week and the government was happy it stayed at 9.7%.  Surely with jobs being most important, happy it did not go higher does not seem all that optimistic.

So a couple of charts, just to back up the general malaise of the economy.  First the DJIA, since early Nov we have traded in less than a 1,000 point range.  That is pretty tight. 

This can go on for a while.  I do not believe it will, but it is possible.  As I see it, upside is pretty limited for the market.  P/E ratio is currently 21 which is pretty high on a historical basis (average is 16.34, but we spent the last 15 years above that, which was very odd compared to the last 120 years).  Here is a nice graph of it.

And the debate on inflation vs deflation continues amongst the bears.  Here are links to 2 short videos about 6 minutes each,  First off, Marc "Dr. Doom" Faber is entertaining in and of himself, but there are some really good points within these:

Deflation vs inflation:

I have said before, I believe you will see deflation first, but after that you will see massive inflation (ie most likely hyper-inflation), but either way, you absolutely want to monitor this very closely.  If you believe Dr. Doom you want to get gold and metals now, along with stocks (although I hesitate in saying that).  If you believe Mish, you want cash now, and then will want to go for metals and stocks (and real estate) when the inflation starts (at the "bottom" of a market crash.) 

Oh yes, and the website they refer to on the US Debt is here. 

It continues to be a healthy debate, and likely in the end both sides will attempt to declare victory, but in all honestly it will not matter much.  As long as you are close you will be ok.