This Month in Stocks: 9/29 - 11/02/07

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Yeah, semiconductors are hurting because they no longer have a monopolistic grip in their product line. I wonder if they'll ever catch up with the companies keeping the Nasdaq flying high. AAPL, MSFT, CSCO, ORCL and GOOG.
 
Another thought

The Fed is pushing on a string.

If you understand the following you will clearly know that no matter what they do the situation is doomed.

We are in this conundrum because of one simple fact...debt. The 40 year lows in rates under Greenspan spawned the housing bubble which in turn spawned the mortgage bubble. Home prices shot skyward to more than twice historical affordability. That in turn gave birth to all the creative mortgages and the massive amount of equity extractions that fueled the stock market. This is fact not conjecture.

So simple logic would dictate that if lower rates created the problem they cannot solve it. At best, the hope is that lower rates will once more inflate the debt creation cycle and there-by put off the day of reckoning. Americans are in debt to the tune of 49 Trillion $. This debt has accrued parabolicaly. Any 6th grade math student knows that parabolic rises are not sustainable. How then can lower rates which encourage debt to fuel consumption be a good or plausable thing? It cannot.

The problem is housing affordability not mortgages per se. Homes need to fall 50% to come back to historical norms. There is no way to unwind this current situation without homes and other assets returning to the mean. None.

What is different now (and exponentially so) is the amount of alchemy that took place on the backs of these mortgages. Hundreds of Trillions in derivitives have been created based on the false perception that inflated home values would continue inflating and there-by guarantee the security of the underlying mortgages and derivitives built on them. This is faulty as you all can easily see.

Either this economy takes the pain now of rebalancing asset prices or we succeed in re-flating another bubble only to have more dire consequences later. There is no such thing as a free lunch. Your 73 Ford Pinto is only worth $100 no matter how many fools bid it higher. It is still a depreciated asset. Period.

Lower rates since the last cut have only fanned the flames. The ABX index has plunged not risen. The Trillions in derivitives, CDO's SIV's etc are in more trouble not less and lower rates do not encourage more people to bid on your Ford Pinto.

If the fed lowers ( I think they will not) then we face a more sinister side effect. Inflation and a crashing currency are the side effects of Fed chemotherapy and they have equal odds of killing the patient as the cancer itself.

Be very careful what you wish for Bulls, You have had a great run but it has been built on unsustainable foundations. Debt, leverage, asset inflation are not sure footings for bull markets. These underpinnings are being systematically dismanteled and they surely will take the house down when they break.

Do your homework, think outside the box, be sceptical of the shills mantras from the canyons of wall street. There are termites in the basement lads and they have been eating away for several years now. It is not if, it is when.:embarrest:
 
Markets are unbelievable. They are baking in the .50% rate cut that may not come, while oil is at record highs and inflation is accelerating.
 
So now, what do you do? Consumer Confidence on Tuesday, Advanced GDP and FOMC meeting on Wednesday. That is followed my the big PCE Inflation indicator.

If I were B52 Ben I would want those all those numbers before I make a decision for fear of getting egg on my face.
 
Talking about the weak Dollar on the tube. Foreign investor have spent $100 Billion more than last year in the U.S. markets and boosting U.S. Stocks. In 2007 alone foreign investor have acquired 800 American companies.

Followed by Warren Buffet and his campaign for the Progressive Consumption Tax. Warrens tax rate is 17% and his staffs average is around 30% and he is speaking out about it. What a guy!!!
 
markets not liking those numbers. Revised prior upward to 99.8 lessons chance of rate cut tomorrow. Market not happy with that possibility.
 
Anything less than .50 and the market tanks and if ya get the .50 the dollar tanks. Hello $100 oil. See ya in the morning.
 
Now, just thinking out loud. Why do we need a rate cut? The GDP sez we do not need a rate cut and inflation sez we do not need a rate cut. Housing needs a rate cut, but we are not going to bail out speculators and bad investment decisions like Merrill Lynch.

What say you? :)
 
Like Birchtree has been saying all along the market is going up because the USM is on sale cheap to the OS investors. IMO, something has to give eventually. I hate missing out on any rally, but ....................
 
'This thing is a tossup,' said Joel Naroff of Naroff Economic Advisors. Naroff said some Fed governors and bank presidents were against September's half-point rate cut, and that 3.9 pct GDP growth in the third quarter will make it even harder to convince decision-makers that more easing is necessary.
'Solid economic growth was matched by moderate inflation making this about as good a report on the economy as you can get,' Naroff said.
Others indicated that the numbers most likely mean a quarter-point rate cut is now in the cards for today.

http://www.forbes.com/afxnewslimited/feeds/afx/2007/10/31/afx4283660.html
 
There was supposed to be a double top in the S&P according to the charts but on August 16 the market changed it's mind. What happened was a rare planetary constellation where six plants were lined up and involved energy points in the market. This may contribute to a surprise breakout in the context of the 1974-2003 move.

http://www.rosecast.com
 
Buckle up folks! It looks like Wall Street is going to test the removal of the electronic programmed selling stops.
 
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