FEBRUARY 6, 2008: Markets fell again on comments from Philly Fed President Charles Plosser who said that inflation is still a problem. This put a damper on traders hopes for further rate cuts. The Nasdaq lost 1.3% and made a new 16 month closing low. After the bell Cisco warned of slowing profits which could send stocks lower tomorrow. In the past 3 days most of the gains from last weeks historic run have been wiped out. This is the nature of corrections and bear markets as the bulls still hold on to hopes of higher prices. Stimulus packages, multiple rate cuts, bail-outs, etc. may have brought us a ‘counter-trend’ rally but have failed to change the direction of the markets, which is decidedly down. Counter-trend rallies during corrections are by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day before committing money to the long side of stocks. Don’t forget that the banking system is in serious trouble, the housing sector is in ‘melt-down’ mode and the consumer feeling the pinch of higher inflation and less access to credit. More info at www.goldenticker.com
Zimbabwe – What 1200% annual inflation can do to a country.
Tags: hyper inflation, inflation, runaway, zimbabwe
