George Soros Interview

Today, George Soros gave an interview in which he stated that, in his view, the banking system is being kept on life support.   He also likened banks to zombies.  While he thinks that the danger of the crisis has already passed, he doesn’t see a quick V-shaped recovery ahead.  Instead, he believes that we’ll have (or already had) a short bounce, followed by a flat period afterward.

If he is correct, we may face a situation similar to 1970’s, when the market regained two thirds of its losses in less than a year and then went through a consolidation stage for the next five years before 1980’s bull market started.  In any event, Soros’ comments contributed to the decline today.  The markets are already nervous after the four week rally and in anticipation of poor first quarter earnings reports.  While bad earnings are already largely baked into the prices, the key will be outlooks for the rest of the year.