The second quarter ended mercifully yesterday with the DOW losing nearly 10% in the month of June alone. It was the worst June since 1930 for the DOW. Unfortunately, it appears as though there is still a good bit of selling pressure that remains to be wrung out of the markets. How much? Tough to tell, but looking at profits and the expectations thereof, I would expect to see prices fall a good deal further in order for many stocks to maintain their current P/E ratios. If the markets decide on lower P/E’s then we have A LOT of selling left. We will start to learn more in the next few weeks as earnings reports for the second quarter come out.
After market close, Starbucks announced that it was closing 600 stores in an effort to ‘revitalize’ operations. This is management-speak for ‘we’re in trouble’. Could there be trouble brewing in Coffeeland? An alarming trend is developing showing that perhaps the almighty US consumer is beginning to roll over under the mountain of debt. This will tie into stock prices vis a vis corporate profits.