Current Market Condition

11/21/07

There is only one word to describe the last few trading days, Brutal. Market tried to rebound and the Nas actually made it to the green for a second or two, only to visciously retreat. As i said in the 1pm post I don't believe in this intra-day rebound, referring to the 11am post. We are way oversold, I think the market is heading to 12500 on the Dow, 1370 on the S&P 500, I am less certain about the NAS since it hasnt collapsed as badly as the other US averages. I think people have been hiding in the NAS, the Brazilian, Indian and Central and Eastern Euro ETF's as well as the Ag, metals, and oil ETF's and that may be the next shoe to drop. I'll put up the charts soon.

So here are the facts the Fed has managed to have a "soft landing" only twice in the last ten economic downturns. The last one was in 1995, when Greenspan somehow pulled that rabbitt out of a hat. It was the only one he had in 20 years in office, so the chances of Dr. Bernanke taking us to a soft landing are slim and none and slim maybe on vacation. The Fed always raises rates more than they have to and cuts too late and too often and the cycle continues.

The Consumer Price Index, CPI, rose 3.5% year-over-year, up from 2.8% in September, due to the increase in energy costs.

The Producer Price Index, PPI rose less than expected, up only 0.1% last month, but the year-over-year gain of 6.1% is more telling, as expectations are that it will continue to rise with energy prices.

Consumer Confidence is at Katrina like levels.

Oil is in nose bleed territory.

Housing bubble and the credit crisis isn't going away.

The fed really blew it at the last meeting when Fed said it felt that the risks of inflation and the downside risks of a slower economy were roughly in balance. Yesterday they said inflation is in check and the risk to a weaker economy is greater, but they will wait for further. What data are they waiting for, to see people flying out windows.

With all that good cheer


HAPPY THANKSGIVING