Where is the stock market going next?

According to Stealth Stocks, the markets are in trouble, because the economy is in trouble;

This Friday, we will get the revised GDP report for the second quarter. Estimates are for this to be revised lower from 2.4% down to 1.2%. Next month, the final revision could below 1% and pushing near zero, so it should be no wonder the bulls are having a hard time mustering any kind of offense.

The Fed is under the belief that it’s ZIRP (Zero interest rate policy) will prevent a double dip recession from occurring, based on historical precedence.

“The economy has never contracted with the difference between short- and long-term Treasury yields as wide as it is now. That gap, at 2.11 percentage points for 2- and 10-year notes, signals a 15.5 percent chance of a recession in the next year, according to the Federal Reserve Bank of Cleveland.”

This is deceptive and illusory.

It assumes that banks will lend money because rates are so low. The reality is banks are in terrible shape.

Banks are a canary in the coal mine for the broader stock market! Housing and commercial real estate loans continue to be a nightmare for them.

Whether or not you want to blame President Obama or President Bush or someone else entirely for the current state of affairs, there is clearly zero indication that the current policies have done nothing to mitigate the problems. It can be argued that the efforts of the recovery act ARRA (the stimulus) have exacerbated the problem. Certainly the anti-business agenda has not solved the problem and in fact over the mid term may deepen the problem.  No matter what your political stripe you can't argue that the Democrats have done the job on the economy.  They have failed.  They have failed by the standards they set for themselves, and they have failed by any reasonable measure that is used.  Jobs saved is illusory.  Imagine how bad it would have been if we hadn't acted, is not exactly a winning argument.  Imagine how great things would be if you stayed out of the way and let the economy correct itself.  Perhaps then a real recovery would be underway.