These days, it’s getting harder and harder to predict what exchange traded funds (ETFs) and the larger market are going to do. One day, it’s up. The next day it’s down. One day, there’s good news, followed by another day of dire predictions.
The GaveKal Daily Report says the fate of the U.S. economy is dependent on one of four possible scenarios:
1) The Federal Reserve doesn’t cut rates any further than it already has, and the U.S. economy eventually overcomes the credit crunch. Such a scenario would lead to a shift toward more traditional "growth" sectors such as technology, health care and consumer goods, but it would be bearish for government bonds and gold, says the newsletter.
2) The Fed doesn’t cut rates, and the U.S. economy collapses under the weight of the credit crunch. In this scenario, according to the newsletter, equities and commodities all over the world would collapse and government bonds would skyrocket.