October 31, 2008

Global Market Comments for October 31, 2008 The Sell in May and Go Away Season is Now Officially Over!! 1) The 'sell at any price' mentality is now broken as the steady improvement in short term liquidity salves investors' nerves. The market is now pricing in a 'U' type recession with a prolonged recovery, not a quickie 'V' type recession. … [Read more...]

October 30, 2008

Global Market Comments for October 30, 2008 1) Q3 GDP came in at -0.3%, the lowest in seven years, indicating that we are solidly in recession. Residential investment fell a gut wrenching -19.1%, while consumer spending is -2.2%, the biggest drop since 1980. Further revisions downward are expected. They don't call this the dismal science for nothing. We've had … [Read more...]

October 29, 2008

Global Market Comments for October 29, 2008 1) The Fed cut rates by 0.50% to 1%, justifying yesterday's monster stock rally. But doesn't 1% sound familiar? Isn't that the rate that Greenspan targeted that planted the seeds of the current crisis? Beware of the unintended consequences! 2) On Monday, when the commercial paper market reopened, Treasury bought … [Read more...]

October 28, 2008

Global Market Comments for October 28, 2008 1) All the recent trends reversed today on imminent Fed and ECB rate cuts. The Dow soared 900, crude and commodities popped, while the dollar and Treasuries sold off. The yen short I strongly recommended yesterday at Â¥92/$ fell back to Â¥97/$. The VIX fell back from 80% to only 66%. Please see last Friday's 'strategy … [Read more...]

October 27, 2008

Global Market Comments for October 27, 2008 1) Another Asia melt down hit the markets. Hong Kong was down 12% to 11,000. Japan was down 6.4%, hitting a new 24 year low. The euro made it to $1.23. Iceland's stock market is now down 90% from its top. The Great Global Deleverage continues. Futures markets are increasing margin requirements. Prime brokers are increasing … [Read more...]

October 24, 2008

Global Market Comments for October 24, 2008 STRATEGY CALL OF THE DECADE We are building up to a textbook capitulation in global stock markets, and I believe that equities will hit multigenerational valuation lows sometime in the next ten days. The extremely rare limit down move in the S&P Index futures at the opening today, driving the VIX to another new record high … [Read more...]

October 23, 2008

Global Market Comments for October 23, 2008 1) The blame game for the financial crisis on capitol hill continued in earnest, with everyone from the SEC's Christopher Cox, to former Fed governor Allan Greenspan pointing fingers. Greenspan was 'shocked' that his own 40 year old models blew up. Sounds like one of Claude Rains' lines from the movie … [Read more...]

October 22, 2008

Global Market Comments for October 22, 2008 1) Today global deflation trumped the continuing decline in LIBOR, knocking the Dow down 700 at one point. There was a five cent move in the euro today down to $1.27 as global funds poured into Treasuries. It turns out that a global recession is great for the dollar because it dramatically shrinks the trade and current account … [Read more...]

October 21, 2008

Global Market Comments for October 21, 2008 1) More light at the end of the credit tunnel. Three month T-bill yields made it back from 0.25% up to 1.27% vs., a normal range around 1.75%. LIBOR has dropped for seven consecutive days, pointing to a slow thaw of European lending. Now that most major banks have been nationalized, the interbank loan market is essentially an all … [Read more...]

October 20, 2008

Global Market Comments for October 20, 2008 1) China's third quarter GDP slowed by 12% to 9%, the slowest since 2003. Copper imports, a reliable leading indicator, have almost completely halted. Stocks rose 413 to 9,265. The November S&P 500 1,000 calls I strongly recommended at $22 last week hit $60 today. 2) US job creation for the past eight years was nearly … [Read more...]

October 17, 2008

Global Market Comments for October 17, 2008 1) September housing starts dropped by -6.3% to an annualized rate of only 817,000, the biggest drop in 17 years. This is the third consecutive monthly steep drop. Demographic demand is 1.2 million units/year, so this will help cut into the industry's 11 month inventory. More falling off a cliff type economic data. 2) The … [Read more...]

October 16, 2008

Global Market Comments for October 16, 2008 1) Rumors of the country's biggest hedge funds closing down savaged the market again, knocking it down 400 at the opening, only to be followed by a 700 point rally. The volatility index (VIX) hit an all time high of 81%. If you feel depressed, go buy a tank of gas, now that crude is at $68, down 54% in three months. Look for $2 … [Read more...]

October 15, 2008

Global Market Comments for October 15, 2008 1) The Dow cratered 7.9% today, the greatest one day loss since 1987. Sell programs from distressed hedge funds hammered the market right into the close. LIBOR is coming down, but not fast enough. The Treasury/Eurodollar interest rate spread (TED) is now 300 basis points, compared to 75 basis points before the Lehman bankruptcy and … [Read more...]

October 14, 2008

Global Market Comments for October 14, 2008 1) There is no doubt now that we hit the bottom in the stock market on Friday at 7,700. The question now is how long we will bounce along the bottom between 8,000 and 10,000 while the air bubble works its way through the economy. Many smaller banks are still going under despite government aid because they are beyond redemption. A … [Read more...]

October 13, 2008

Global Market Comments for October 13, 2008 Special Post Apocalypse Issue 1) I spent my weekend convincing people that we are not entering a thirties style Depression and not to sell their stocks. We are entering a recession that will be longer and deeper than previously forecast. The net decline in GDP has probably jumped from 1% to 5%, and the duration has extended … [Read more...]

October 10, 2008

Global Market Comments for October 10, 2008 1) The mother of all margin calls hit the market this morning, opening the Dow down 700 at 7,800, just 100 points above the 2002 low. I went to the next room to refill my coffee and when I came back the market had rallied 800 points, pushing the VIX up to another record high over 70%. Then Bush spoke to the nation, and his … [Read more...]

October 9, 2008

Global Market Comments for October 9, 2008 1) It's looking like the Treasury will partially nationalize the US banking system, taking equity stakes in hundreds of firms in preferred stock form. This is why secretary Hank Paulson was so mum on the details of his program. Socialization of the American financial system would not have garnered a single republican vote in the … [Read more...]

October 8, 2008

Global Market Comments for October 8, 2008 1) The global interest rate cuts brought the world's stock markets exactly one hour of respite. The Dow rallied 1,000 points, then sold off 900. From top to bottom, the Dow has dropped 1,800 points since passage of the bail out bill on Friday. The Fed is running out of bullets. People are now talking about Armageddon scenarios … [Read more...]

October 7, 2008

Global Market Comments for October 7, 2008 1) There was a pretty dramatic improvement in credit spreads today after the Fed announced its entry into the commercial paper market. We saw it in LIBOR, TED spreads, and a stronger euro. One month Treasury yields rocketed up to 0.35%. The Fed is now massively flooding every credit market of any description. While I believe this … [Read more...]

October 6, 2008

Global Market Comments for October 6, 2008 1) Treasury Secretary Hank Paulson stood on the roof of the House and screamed fire!, frightening 58 congressmen into changing their votes to pass the bail out bill. Unfortunately, the rest of the country heard him along with Bush, who warned Americans several times last week that we are on the verge of an economic collapse. This, … [Read more...]

October 3, 2008

Global Market Comments for October 3, 2008 1) The September non farm payroll came in at 159,000, worse than even the most dire estimates, and the unemployment rate jumped to 6.1%. Q3 will now almost certainly come in with a negative GDP, the new jobs figure indicating a -0.5% rate, delivering a body blow to business confidence. So far 760,000 jobs have been lost in this … [Read more...]

October 2, 2008

Global Market Comments for October 2, 2008 1) One month T-bills are at 0.50%. The credit markets are still locked. If the house bill fails, the Dow will drop another 1,000 very quickly. Even if the bill passes, traders are starting to realize that it may bail out the banks, but not the economy or the stock market. That is what took the market down 350 today. Commodity and … [Read more...]

October 1, 2008

Global Market Comments for October 1, 2008 1) The democrats are going to get the bail out bill through by turning it into a Christmas tree with presents for all of the wavering members. So far on the list: subsidies for mental health, alternative energy, makers of US based wooden arrows, and a tax cut for small businesses for Republicans. Poulson's original three page … [Read more...]