Dear Sir:
In absence of the injection plan, the Dow would have been down 2000 points today, rather than less than 400. We have no control group, now do we?
We have not had a bone crushing crash in a while - I think this one qualifies. Anybody who does not think we have wrung the excesses out of the market since August 28 just ain't paying attention - or has no skin in the game.
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Oil is following equities, not the other way around. If equities were paying attention to Oil, the rally would have been deafening. Instead, the crash has done its work on equities, and Oil is following equities.
MY BET IS, and I would caution you not to bet unless you know how to take losses (which I seem to be pretty good at with commodities... equities? not so much...), is that we are VERY close to a bottom for Oil. VERY, very close. So, I bought some futures today. I will have NO patience with this trade, because there is no guarantee that the bottom won't drop out of the equity markets - but my bet is the selling is close to over there, too. A number of smart folks think we test 7800 on the Dow, but I doubt it. Maybe there is 10% further to go on the down side, and then again, maybe not.
My biggest single position remains Gold, because for all of my bravado, none of us has ever seen anything like this before. I have a bunch of energy equities that are trading with VERY low multiples and VERY high dividends. Problem is, the P/E's keep getting lower. and lower (along with the %$##!! stock prices). Problem is, I am not a credit analyst. I follow Oil inventories. Looking these i would have thought the world would be freaking out. I guess the economic contraction is happening faster than the Oil supply contraction.
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A friend of mine that actually reads my stuff - he forgot more than I ever knew about the mortgage market - called me today to point out that if the current crisis was JUST mortgages, it would likely be over already. The latest is fallout from the Credit Default Swap market was his opinion. Problem is, I have no idea how to even begin wrapping my arms around that one.
Back soon,
mentatt (at) yahoo (d0t) com
Th
3 comments:
What did anyone expect? The investors have no confidence in these corrupt politicians. This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground. So much for Keynesian economics. If the goal is to stimulate the economy, why not give the money directly to the American taxpayers? The government could do twice as much good for the economy by returning half as much money (as the bailout requires) directly to the hardworking American taxpayers. A bird in the hand is worth two in the bush administration.
We allowed the overborrowing of money to people that should have never been given loans in the first place. That simple.
Mr. Maszka:
The Federal Reserve has ONE client - the U.S. banking system. For better or worse, the Fed did not have the CAPACITY to save its only client, and all of the regular folks that depend on US$'s in the form of paychecks and transfer payments, from an outright, systemic collapse.
We can debate the merits of running a credit based system of money creation and economics, but unless you are ready to go through the vigors of martial law et al, any decision to migrate from a credit based system will have to be done gradually.
The development of the corporate establishment was a natural outcome of the corporation's PERFECT position as payroll tax collector. No income tax, no large corporate establishment. The political Left, the folks in FAVOR of a progressive income tax might ponder that for a moment.
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