March 18, 2008: The street wanted a full percentage point rate cut but the Fed only gave them 3/4, Wall St. cheered anyway with the Dow closing up over 400 points. The Nasdaq and the S&P 500 vaulted 4.2%. Volume was slightly lower on the NYSE spoiling a follow-through day for the DOW. The pundits on CNBC are cheering the end of the credit crisis. I think we may be just beginning.
Oil got back all of yesterday’s losses and was up 3.7% to $109.42. Gold closed up $1.70 to $1004.30. Banks and brokers rallied hard. Lehman Bros. got back yesterday’s massive losses and closed up over 43%. FC Stone also got back its massive losses closing up over 44%.
If the Federal Reserve plans to bail out every major financial institution that’s in trouble this could well run into the trillions of dollars. With real estate prices collapsing 20% since this summer in southern California and sizable losses in other ‘bubble’ areas like Florida, Nevada, Arizona, etc., this is threatening to take down the financial system as we know it.
The Fed is also signaling that it will do what ever it takes and will add more liquidity if needed. Will this ‘tsunami of liquidity’ be enough to help the $11 trillion US mortgage market? Can it save scores of shaky banks, brokerages and over-leveraged hedge-funds like Carlyle Capital ($21 billion fund who used 32:1 leverage!) from imploding?
FEBRUARY 5, 2008: Recession fears gripped the markets today and sent the Nasdaq down 73pts or 3.1% in heavy volume. In the past 2 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. The Institute for Supply Management’s service-sector index dived below 50 in January, falling well short of estimates. This is the biggest drop in the history of the index which began in 1997. The service sector makes up to 80% of the American economy and this kind of weakness could be foretelling our GDP going negative for the first time in 6 years. Merrill Lynch annalists are saying there is now a big chance of an inter-meeting rate cut, but will it help? 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
“Our Country Is Technically Bankrupt”- Glenn Beck ( A must see video)
FEBRUARY 1, 2008: The Nasdaq rallied 1% today and 3.75% for the week on improving volume. Small caps have been the strongest and the S&P 600 is approaching its 50-day moving average (see chart). Yahoo vaulted 48% on take-over talks with Microsoft in its effort to compete with Google. Intuitive Surgical, one of our favorites of the last rally, gapped up 20% in heavy volume on good earnings. Google fell further below its 200-day line in heavy volume after missing their numbers. The street was expecting 70,000 new jobs but non-farm payroll numbers showed 17,000 jobs were lost – a surprise hit. This was the first drop in 4-years. Traders are betting that this weakness forces the Fed to cut interest rates further next month. Stimulus packages, multiple rate cuts, bail-outs, etc. 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
Jim Rogers tells the Financial Times that “Bernanke has been a disaster.” (video)
JANUARY 28, 2008: The Nasdaq gained 1% but volume was light as traders await Wednesday’s Fed meeting where they are widely expected to cut rates by 1/2%. The Nasdaq has been rallying lately on falling volume-a sign that this unconfirmed rally could fail. Former leaders like Google, Amazon.com, and Apple are still below their 200-day moving averages-a major sign of weakness. Potash, Monsanto, and Deere have been holding up better than most stocks but are rallying on decreasing or ‘wedging’ volume. Laggard groups like homebuilders, financials, and retailers were strong today giving this latest rally has the feel of ’short covering. 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. More info at www.goldenticker.com
Rick Santelli has been dead on during this current financial crisis. In this video he
critisises Ben Bernanke’s comments that a lower dollar does not affect prices at home.
JANUARY 22, 2008: The Nasdaq officially ventured into ‘Bear Market’ territory today when it was down over 20% from it’s October 31st peak. It closed down 2% today after being down as much as 5.1%. Mining, Medical, and Metals stocks were weakest today. Stocks were in trouble as Hong Kong lost 8.6%, Shanghai dropped 7.2%, and the Nikkei swooned 5.6% yesterday. Fearing a ‘free fall’ this morning, the Fed dropped it’s funds rate by 3/4%, the most since 1984. This was also the first inter-meeting cut since 9/11. After the bell Apple missed revenues numbers and was trading down in the mid $130’s in after-hours trading.
For awhile I thought Monsanto and other fertilizer stocks would avoid this steep market correction, but this week they were all taken out to the “woodshed.” As with all bear markets, they eventually take everything down with them.
This is timeless! Cramer has a full and complete meltdown on CNBC as he begs Ben Bernanke to cut interest rates. Seems like Jim is still carrying lots of baggage from his failed hedge fund.
Peter Schiff explains that the Dow has been in a “bear market” since 2000 and has lost ground based in Euros, Swiss Francs, and most other currencies including gold. Your purchasing power is being slowly lost.
According to David Walker, Comptroller General of the United States, we are technically bankrupt and facing a financial “tsunami.” This is scary stuff folks.
It’s great to see predictions a year later and see who got it right. Peter Schiff once again calls it right and “the most smartest investor” Ben Stein gets it wrong again.
The Inevitable Collapse of the US Dollar – A “must see” video.
January 23, 2008Peter Schiff has been a voice of reason for many years and now many of his dire predictions are materializing.
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