Saturday, November 22, 2008

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Thursday, November 13, 2008

Time to shop till you drop

A lot has happened since the last post in which a MS analyst claim that the bear market has ended. Yes indeed it is just beginning. Let's summarized some points
  • Election rallies ended with 800 points drops the next two days
  • China to spend almost $600B in stimulus to their own infrastructure
  • Paulson changed his mind to use TARP money to help consumer credit. Spend baby spend!
  • Use trade deficit felt to $56.5B, China trading surplus hit another record.
  • Unemployment number shoot over the roof. Continued claims are now at 3.897 million, the highest level since 1983.
So what is next, gov is reacting but not being proactive in solving problem. Buy toxic security "seem" to be such a great idea and now it is totally abandon because the economy's health has deteriorate significantly. Fundamentally, it is as bad as a month ago, only worst because of what the gov did. So, what do I see in the horizon:
  • Retailers get clobbered this xmas, regardless of what the gov might do
  • A consistent drop of appetite for US treasuries, rate has to increase up to 8% (now at 3.7%)
  • Pension fund is smacked with a $5B lost in US treasuries holding.
  • The next bubbles! the BOND bubble - corporate, tax-exempt state, city and gov bonds
  • Food crisis!
  • Frozen international trades.
  • Hyper inflation
Are the gov addressing any of those problems right now. In fact, they are making them worst for when it might occur. Tons of US bonds are being sold and money being printed. Again, they are only reacting and chasing after a problem. Paulson definitely earned his PHD (Permanent Head Damaged)

Wednesday, November 5, 2008

Morgan Stanley says: "Bear market has ended"

Analysts at the US investment bank Morgan Stanley are recommending that clients start to buy shares again after more than a year of falling markets. In an investment strategy report, analysts at the bank said that all four indicators they use to gauge the equity market outlook have started to indicate a turn in the downward trend.

"We have now come full circle: our market timing indicators are giving us a full house buy signal," said the statement. "Each of the four indicators – valuation, capitulation, risk, fundamentals – tells us to buy."

"These models tend to work some 80 to 90 per cent of the time," they said. "And in the 10 to 20 per cent that they don't work, the move the other way can be spectacular."


Unfortunately the model tends to NOT work this time.