Friday, September 28, 2007

US Stocks close Up for the Quarter

Looks like we are headeed for the 5th consecutive quarterly gain for the S&P 500 !

Thursday, September 27, 2007

worst case scenarios don’t seem to be happening

In a recent Rasmussen poll 44% of the respondents believed health care should be free and 99% of the respondents believed Beer should be free, I am one of the 99% anyway …..

Two significant issues yesterday, first looks like GM has gotten back in the car making business and the UAW finally started to get serious and move to modernize the benefit package workers receive. Looks like the UAW finally came to terms with the idea that a company does not stay in business to long if it carries a huge cost disadvantage compared to its competitors. This has been a very long time in coming .This may signal the beginning of a revival for US car making in North America. It’s just the beginning; the next step would be for GM to start making more interesting cars and not have good designs get lost between engineering and production.

The second item is that Investment Groups have been raising money to buy LBO debt imply renewed liquidity for the debt markets .Couple this with the rumor of Warren Buffet looking at Bear. Brokers have been swept with buy out rumors the last couple of week’s .True or not coupled with some of the earning news for brokers and banks and the fact that however difficult the situation it doesn’t seem to be turning in to a contagious crisis engulfing the entire economy and worst case scenarios don’t seem to be materializing.

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Wednesday, September 26, 2007

UAW walks the walk, Hillary looks to nationalize medicine and France prepares for war with Iran..

September 26, 2007


Ok so the UAW walked out and then walked in, Hillary proposed nationalized medicine and France prepares for war with Iran. Mean while the US stock market tries to recover from the triple witch, banks and brokers begin to come clean on sub prime. Critics continue to say there is plenty of blame to go around and it appears the rating agencies are the focal point of the blame game at the moment.

The dreaded “R” word continues to tossed around by the talking heads but forgive for remaining skeptical but most of the data points indicating recession come from the steamy hot days of summer and while Wall Street always forgets that people put off large expenditures during the summer months ,wise investors would be careful not to.

The Real Estate market continues to search for a bottom and given the levels of inventory the search may go on for a couple more years. The big question on everyone’s mind is will a recession in housing spill over to a recession in the economy as a whole? I for one am still not buying it and the answer is simple real-estate since 2000 because of easy money had become more of an investment than a place to live ,excessive liquidity and strong demographics propelled excessive volumes of transaction ,pushing home ownership in the USA to records .In my mind there is no better indication of the power of the middle class than home ownership and there is still no simpler way to move from lower to upper middle class than to hold a steady job ,and be home owners though three generations. Yes speculators will be hit hard and even more normal sales volumes will seem very slow, fringe transactions are no longer viable, some lenders will be punished for poor judgment but at the end of the day there doesn’t seem to be the rampant reckless lending that has been so often predicted.

The market trades on future expectations, and since the “R” word is already out of the box ,it looks like the inverse of buy on the rumor sell on the news ,with bad news its sell on the rumor buy on the news. So a real economic slow down could signal the beginning of the next major BULL market.


Monday, September 24, 2007

GM workers talk Strike

Ok so call me a trouble maker but if GM workers are going on strike and this is a “bad for GM thing” why is the stock up so much? Perhaps the UAW should take notice.

Tuesday, September 18, 2007

the FED Stands and Delivers

HUMMM So the traders wished and dreamed and the FED finally delivered what they wanted but it seems in their hearts traders were not believers in FED policy ,hoping for the best but preparing to be disappointed so when the FED worked its magic and delivered the market catapulted into the sky.

Thursday, September 13, 2007

Now for the Scary Part....................

The scary part of the world’s 10 most polluted cities list is that Chernobyl is number 9. Which brings to mind the point of this post energy and food appear to reemerging as short term issues. With all the focus on sub prime its been little noticed but wheat and oil having been hitting new highs almost everyday. Seems there are fears that supplies won’t meet demand. I have found in the recent past the market can rise for a while in the face of higher energy prices but then there come a breaking point and the market gives in to corrective influences. I would look for the DOW and S&P to stay in the same channel and use the price of the index as a trading point instead of higher fuel prices.

Monday, September 10, 2007

the Devil you know is better than the Devil you dont

Seems to me that until we start getting some earnings from the big banks and brokers the market will remain open to extreme volatility. The market doesn’t like surprises, so bad news is often better than no news. What I would look for is some OK earnings, nothing great but nothing terrible .Current expectations seem to be looking for a massive shortfalls in profits and significant loan losses anything less would go a long way reassure the market and perhaps get us back on the good foot.

Friday, September 07, 2007

Job growth stalled and my house is your house?

I am still not sure I am buying all the recession talk yet after all economist have predicted 9 of the last 2 recessions and have a habit of predicting them during the summer beach season, but perhaps the employment number has given the FED cover to cut rates .

Wednesday, September 05, 2007

the FED's Catch 22

Catch 22 for the FED, a cut is priced in the market, yet the FED’s credibility may on the line not wanting to look like they are orchestrating a bail out for some pressured financial institutions and hedge funds

Monday, September 03, 2007

September Song

Keep in mind since 1920 September has been the worst performing month for the market by a long shot as shown in the table below. The Dow has only had a positive return in the month of September 38% of the time. In contrast the month of December has finished with a positive return 75% of the time.

Dow Monthly Performance 1920-2007
Month Positive Negative

Dec 75% 25%
Jan 66% 34%
Nov 63% 37%
Aug 62% 38%
July 61% 39%
Oct 60% 40%
Mar 58% 42%
April 57% 43%
Feb 53% 47%
May 52% 48%
June 50% 50%
Sep 38% 62%