For several months now, we've been telling you that any recovery for corporate earnings won't begin until at least next year. Even the Fed has admitted that a recovery may be a ways off . It won't be long before investors realize it, too.
They're already starting to waiver. Just a few weeks ago, investors were upbeat and confident that the economy was beginning to turn around. But, this week's market activity shows that investors are uncertain about the economy's chances of steering clear of recession.
They might not be selling off everything right now, but it's just a matter of time. Not only are stock fundamentals weak, so are the economy's. Low corporate profits have forced companies to tighten their belts by reducing spending and laying off employees. Although the unemployment rate dipped slightly in May, it's not because there are more jobs out there. Instead, frustrated workers have simply given up looking, a recent survey reveals. That doesn't bode well for consumer spending, especially with the majority of Americans living paycheck to paycheck and the average American household buried under $9,000 in debt, according to the Federal Reserve.
Stocks won't be able to support their current valuations as the economy sinks further into recession. Smart investors will sell now before the stock market resumes its downward spiral.
