Most of you know I’m not a big bear when it comes to the financial markets. But I do have to say I think we have forgotten the impact of Japan awfully quick. Despite the fact that some companies are returning to normal, there is something to be said for the interruption of the supply chain for numerous global manufacturing companies.
Seriously, while long-term things will normalize, the situation with Japan is still very serious. The markets are responding with a nice little rally, which makes little sense. I think for the short-term, we’ll continue to see this. Just remember, April companies will release 1st quarter results. While they may not be bad now, prolonged disruption of the Asian markets, along with increased overhead (reduction in unemployment from increased hiring), may lead to both lower earnings and profits.
Some will see this as a temporary setback (which it is), but much of the momentum will be lost and valuations may drop.
I urge everybody to be a little cautious.