I’m looking for 4 things:
- A liquid housing market, which is required for a return in consumer confidence. No sign of this yet.
- Monetary policy underpinning a healthier banking/financial sector. Lending is the lifeblood of our economy. The news is mixed here. Lending activity has increased somewhat, but Bernanke made a speech today mentioning the ongoing issues in the banking sector (witness Citigroup’s breakup) and the need for further financial assistance.
- Early evidence of positive impact from fiscal stimulus. Nothing to report here yet. Passage through Congress will be a welcome first step.
- Signs that deleveraging is slowing and market confidence is returning, or at least fears have bottomed. This will be the most difficult to judge, but will also be required for the markets to move out of a narrow trading range. No positive indicators here yet.