November 12, 2007
Here is a link to 'The Dollar In Danger', by Sebastian Mallaby of the Washington Post. I quote it below.
...But the world may also draw the lesson that an alternative global currency needs to be the long-term goal. Households don't like saving in a currency that won't hold its value. Companies don't like building global supply chains based on a unit of account that fluctuates unstably."
And here is a link to a related article titled 'The End of National Currency', by Benn Steil on the Council of Foreign Affairs site. I quote it below.
...Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today's instability."
Richard Kolon sends along this link to M3 and other charts that look like they were drawn by the grim reaper. It looks like the fiction I wrote for Halloween, where I predicted in a tongue-and-cheek manner an expansion of M3 by 30 percent in one year, may not be too far off afterall.
My stops took me out of my positions in SMSI today and I sold early my positions in ICE, AAPL, and GMXR. My ICON and GRMN positions have been hanging in there, but I tightened my stops on those anyway. I also shorted GLD and bought SRS and SKF.
November 8, 2007
The Orange Section writes today:
We had Greed, now we have Fear."
A friend sends this link to 'Quietening down on the building sites', from The Times Online. The home builders in England are suffering just like ours are. It seems that home buyers are doing something new: nothing. I quote the article below.
The psychological impact of falling house prices can not be over- stated. If your bicycle falls in value you might think: cool, now it will cost less when I go to buy a new one. When your automobile falls in value you probably think: o.k. it was going to depreciate anyway. But when you have $50k equity in a $250k house, and the houses all around it start selling for $200k, you might just think that all your equity had just been wiped out. As a consumer, that has to affect your mood. You're not nearly as likely then to run out and buy a new car. Oh yeah, did you see where General Motors posted a company record $39 billion loss in the third quarter? And CISCO's comments today about a less bright future were due, like IBM before it, to a big drop in demand for technology coming from...drum roll please... the financial sector! The waves keep rippling out of housing and mortgages. Oh, follow the yellow brick road. Houses and mortgages tra la.
Ben Smith sent along this link to ' Markets Have Had a Coup de Whiskey', by Bob Hoye of 321Gold.Com. I quote it below.
Technically, participants are no longer bulling the whole market, but have been focusing on some outstanding leaders leaving behind the rest of the flock. In so many words market breadth has been lagging, which is symptomatic of a topping market."
I had stops set on all my stocks. Only one kicked in today: RIMM. I voluntarily sold my FSLR shares, pocketing $60 per share in one week's time. I thought it time to take the money and run. I did buy some more of one of my holdings because it was holding up pretty well: ICON. I am hoping that strength translates into 'upward momentum' when markets turn around. That's a pretty optimistic view. I know that, so I'm keeping a stop on ICON.
November 6, 2007
Yesterday I sold my AOB early. It's a good thing I did. I also sold my NVEC and bought GRMN yesterday. I picked up more GRMN today.
Jay Steele is in a bearish mood. He has good justification. Here is some of his reasoning.
The Transports tell the tale. Our view is that the declining market breadth is a negative divergence conflicting with the current positive headlines of the good Tech Earnings. We feel it’s strange that with such good news the market breadth continues to come in.
Our interpreratation of the Dow Theory would suggest negative divergence as well. The Markets new Highs in early October were unconfirmed with the transports as they continue to fall below their 200 day and 50 day moving averages respectfully."
The Financial Times reported today that the Superfund project is on hold for lack of other (should read 'stupid') bank participants. Hmmm, let's see you're a good honest bank that did not get involved in the subprime mess and now the guys who did want you to give them money to bail them out of their mess. Do you do it? Never in your right mind!
November 5, 2007
This subprime mess is the gift that keeps on giving huh? It sounds like most of the boards of directors were asleep. It is different this time though. Instead of the masses crazy to buy internet stocks or tulips. This madness occurred in the deep background with most of us, me included, pretty much unaware of what was going on.
This whole thing makes one want to run right out and buy a new house tomorrow, and pay top dollar right?
The rest of the economy may be doing alright. But housing and mortgages are going to give us a recession yet.
The really bad news isn't out yet. Next year the foreclosure rates climb through the ceiling.
November 4, 2007
Big Dave MacCarter sent me this transcript of Public Radio's Marketplace.
JOHN DIMSDALE: When the Fed cut interest rates again yesterday, so did Saudi Arabia, Dubai and other oil-rich kingdoms. Even though lower interest rates are likely to worsen the raging inflation in their countries, they've decided to keep their link to the dollar. For now.
If oil-producing countries decide they've had enough, Nobel-prize winning economist Joseph Stiglitz worries the dollar's value could spiral down.
JOSEPH STIGLITZ: It has a certain symbolic effect of reminding everyone that the dollar is no longer the global currency, is no longer a good store of value. As people get reminded it's not a good store of value, people won't want to hold as much dollars. That means they'll try to sell their dollars and that means the value of the dollar will go down.
If oil were priced in another, stronger currency -- euros for example -- oil exporters could be earning even more profits. But Princeton's Alan Blinder, a former vice chairman of the Federal Reserve Board, isn't so sure they'll abandon the dollar.
ALAN BLINDER: They're receiving dollars in great gobs. So they have to decide what to do with these dollars. If they started selling them aggressively, that would tend to push the dollar down. They would be shooting themselves in the foot, because they would impose losses on themselves.
If oil producers drop the dollar, Americans will find their weaker currency buys even less overseas. The trade deficit would probably improve, as foreigners bought cheap U.S. products. But imports, especially oil, would cost more. And economists agree the biggest threat would be more inflation.
In Washington, I'm John Dimsdale for Marketplace."
For a truely great piece of news, here is a link to 'Booster Shot', by Robert Langreth of Forbes.Com.
November 2, 2007
Here is a link to 'Five Things You Need to Know', by Kevin Depew of Minyanville.Com. This is all about the Federal Home Loan Board.
And here is a link to 'How Powerful or Wise is the Federal Reserve?', by David Merkel. This is one of the best depictions of the FED I have ever read. I quote it below.
...E.g. employment is slightly weak, but present policy is adequate to handle it if we wait 12 months? No problem, we'll loosen policy further. (We can always take it back later, right?)
I would argue that no, you can't take it back. Yes, the Fed can reverse the cut later, but the effect is not the same as if they had not done the additional cut. Here's why, and this speaks to the power of the Federal Reserve: when the Fed lowers rates, more assets become financable at the lower short-term interest rates. The lower rates go, even if for a time, the more economic players think that they can afford a given asset.
...Back to my original questions. How powerful is the Fed? Very powerful when they move rates far enough, but weak before then. How wise is the Fed? Pretty smart, but hamstrung by politics and bureaucracy, which keeps them from implementing the right strategy even if they have it. They don't always have the right strategy; they still miss turning points the same way that external economists do as a group, and often their actions add to economic volatility by being accidentally pro-cyclical."
I put a lot of my horde of cash to work on Thursday. I bought FSLR, RIMM, SMSI, ICE, and AAPL.
October 31, 2007
I had just finished up the case of the frozen steak knives and had dropped into one of my favorite dives on the lower east side. When suddenly my eye was caught by a familiar and tantalyzing sight, Market Marne. She was wearing a black glittery number, with a slit up one side, that fit her like a second skin over the perfectly tanned one she sported underneath. She walked past me, with the motions and the fluid grace of a stalking leopard. Then she turned around and faced me.
"Hi Jake," she said with breathy undertones. "I didn't recognize you at first. It's been a long time."
"It sure has doll," I replied. "I've been outta town for a while, and I've missed you. What are you doin' in a dive like this?" I asked.
"Oh, I'm laying low for a while, Jake," Marne said in a conspiratorial tone as she sat in the chair next to mine.
"Why would you, of all people, be doin' that?" I asked her.
"I'm scared Jake, and that's the truth of it," Marne blurted out. "And it's awfully good to see you Jake. I always feel better when I'm around you. I think it would a good idea if I just hung out with you for a while."
"Well thank you for the compliment," I told her. "You're welcome to tag along with me any time you want, Doll. But what precisely has you scared?"
"Well Jake," she began, "it's like this. Last week I was in the company of two gentlemen, each the head of really big financial firms listed on the big board, private corporate jets, three or four vacation get-away spots available to each on twenty four hour notice, all paid for by the company; neither one being run off, or even being rumored to be. What they said frightened me.
They said that Big Ben had swollen the money supply last year by 15 percent and that he was just getting warmed up. He's going to increase it by 30 percent or more in '08. The banks are going to be swimming in an ocean of cash, Jake. Furthermore Big George and Congress have already cut a deal to dampen inflation. They're going to make a law that forces eveyone to take out a loan for 30 grand. If there are four people under your roof, you're going to have to take a loan for 120 grand.
They figure everyone will run out and buy stuff and the economy is going to get jumpstarted like never before. But won't that still be inflationary Jake? I mean, I've never been to college, but it seems to me that all that money has to attach itself to something, doesn't it? And whatever it sticks to is going to have a really inflated price, right?"
"That's right doll," I told her. "Thirty grand, huh, I think I beat the rush and buy stuff now. I'll go out and buy 150 bicycles at $200 apiece now. After the big 'loan out', they oughta be worth a grand apiece."
That's one way to deal with it," Marne replied. "For myself, I just converted my life savings to gold. That should cover it no matter what happens."
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Happy Holloween folks!
October 30, 2007
Here is a link to Bill Gross's November comments on Pimco.Com. Gross is estimating that the FED is going to have to keep lowering for a while. I quote below.
Ben Bernanke has no such luxury. While he does have the backstop of a global economy powering on at a 4-5% annual clip, today's U.S. IPOs were more a creation of leverage and the shadow banking system's ability to create productivity gains through finance, as opposed to technological innovation. With banks and their shadows in retreat and modern day 'world saving committees' relatively impotent, Bernanke must do some heavy lifting as opposed to the light housework required of Alan Greenspan in 1998. An increasingly recessionary looking U.S. economy will likely require 1% real short rates and 3 1/2% Fed Funds in order to stabilize a potential growth contraction in lending not witnessed since the early 1970s or, to be honest, Roosevelt's depressionary 1930s."
Here is a link to the most recent housing story: 'S&P/Case- Shiller Home Prices Fell 4.4% in August', by Courtney Schlisserman, of Bloomberg.Com.
Sentiment numbers were out today and they were not good, particularly not as we are heading into the holidays. The consumer drives two thirds of the economy.
We may, I say may, already be in a recession. No one really knows for sure until we are well into it. The Federal Reserve has expanded the money supply over 15 percent in the past year. It seems that no matter how much cash the FED throws at the problem the economy is still responding sluggishly. That's not a good sign folks and neither is the prospect of more rate cuts. Both are signs of weakness ahead, of slowing momentum.
If, indeed, the consumer is two thirds of the economy, and the consumer is no longer borrowing money against the shrinking value of his house in order to finance a new vehicle or a summer trip to Yellowstone for the family; if that prop has been kicked out from under the economy, if the consumer has turned instead to borrowing from the last resort and thereby running up his credit cards, can fiscal responsibility be far behind? I have to ask myself what the economy will look like if the consumer actually stops or even severely curtails borrowing for even a short while.
One effect for certain will be a sharp slowing of the economy as a whole. Companies selling 'expensive' items to the middle class will be hurt worst. Autos and appliances and really expensive electronic items come to mind.
October 28, 2007
Richard Kolon sent this link to 'Gold Stocks - Crucial Information for the Investor - Not All Rosy', by Kenneth J. Gerbino of 321Gold.com. Mr. Gerbino makes a good case for having some gold in the old portfolio. I quote the article below.
...China now has more money in circulation (M1) than the United States. $1.9 trillion vs. $1.4 trillion. The reason is that they have been double dipping.
...India has increased it's money supply 15.3% in the last year."
Duncan sends along this link to 'Apocalypse Now?', by Patrick Buchanan on RealClearPolitics.com. I warn my readers that Mr. Buchanan's views come down strongly on the global warming issue and that I agree with him completely.
My step daughter was very liberal before she went away to school and got a hard science degree from a good school. She got a bachelor's degree in geology from the University of Wyoming. You'll never guess what she wrote her senior paper on...so I am going to tell you. Her paper was on barrier islands, you know, like the kind off the coast of North Carolina. It seems you only get barrier islands off of continents when waters are rising. But wait a minute, weren't those islands there thousands of years ago? Why yes Dorothy, they were. And that implies that the earth's climate has been warming for a very long time.
Big Dave MacCarter sent me a note today and I include it here.
I guess they will pull any trick they can to keep it off their own balance sheets. I like the "Superfund" connotation. Like the Superfund put together to clean up the Love Canal pollution mess. Home mortgages as industrial waste......what a concept."
Dave also sent a link to this audio: http://www.publicradio.org/tools/ media/player/marketplace/2007/10/26_mpp?start=00:03:27.8&end=00:07: 33.0. I include the transcript here.
KAI RYSSDAL: It's been a week of ugly reminders about the state of the credit market and the lingering effects of the whole subprime thing. Countrywide today, as Steve was telling us... Merrill Lynch with an $8-billion credit-related writedown earlier this week.
But never fear, Wall Street's got a plan. It's called the Superfund, basically -- it's come to be called that, anyway. Some big investment banks, with the encouragement of Treasury Secretary Henry Paulson, have set it up.
The basic idea is to backstop some of those complicated structured finance deals and keep things liquid. Today, John Snow, who used to run the Treasury Department, said he thinks that fund isn't really going to work. Which led us to ask: Why not?
James Saft is a columnist for Reuters. Mr. Saft, hello.
James Saft: Hello.
RYSSDAL: It's not officially called a Superfund, I guess it's called something else. But remind us how it's supposed to work.
Saft: Well, it's supposed to be a fund that buys a number of assets that have been distressed and have been difficult to trade, from other funds that the bank set up earlier. And the banks are worried that these other funds are going bad and that they will be forced to buy the loans back on their own balance sheets.
RYSSDAL: Seems to me that these banks are sort of on both sides of the fence, right? They've made these investments in subprimes and all the structured investment vehicles and funds that are out there -- and yet, now they're also starting this superfund that they're hoping is going to solve the whole thing.
Saft: I think that's exactly right, and that's because it would be very painful to go down the other options that are available to them. If they go out into the market and say "We have these structured vehicles, we have these complicated bonds, and we want to sell them" the price that they're going to get -- especially since there's so much of it that they'd all trying to be selling at the same time -- would be very low. And that's going to hit those banks, going to hit their balance sheets, and it's going to hit their ability to loan to everybody else who might need money. On the other hand, if they do what they're proposing to do, which is to set up a kind of club which will create a new vehicle and buy these loans, some of the loans, at a stated price which is not so bad, the problem there is that it doesn't give everybody else the confidence that that's a real price. You've got Citibank, for example, who's affiliated with some of the funds that are selling -- and Citibank, on the other hand, which is affiliated with the funds that are buying. It just doesn't seem as if it's the same thing as the New York Stock Exchange quotation, where one person comes in and buys from another person, and they're not in business together or affiliated.
RYSSDAL: And here we have former Treasury Secretary Snow this morning saying: "You know, this fund is only delaying the inevitable" -- that the market's eventually going to work itself all out. What are your thoughts on that?
Saft: Well, I tend to agree -- there isn't any easy way out. And if you take one bank, and it buys a bit of the loan from another bit of the bank -- which is essentially what we're talking about -- that doesn't convince me that it's produced a real price that I myself would want to invest at. The banks have too much of an interest in these loans, in these vehicles being priced at a high level so they don't have to take losses. And if they go ahead with this thing, what it won't do is it won't allow everybody else in the marketplace to confidently go out and say "I know I've got an assets that's like this, and it's worth, let's say, 95 or 90 cents on the dollar."
RYSSDAL: What I hear you saying is that really they're being incredibly short-sighted -- that they're not really understanding what's going to happen in the long run out of this fund and the whole rest of this mess.
Saft: I'm not sure that that's fair. I think that they probably understand what would happen, and that that is going to be painful for them particularly -- and holds a risk for the economy in specific -- but that there isn't a great other alternative that can get them out of that situation. I don't think that they're foolish. I don't think that they're short-sighted. I think they're simply in a really tight corner.
RYSSDAL: James Saft is a columnist for Reuters based out of London. Mr. Saft, thank you for your time.
Saft: Thank you.
October 25, 2007
I sold half of three of my stocks today. They had risen nicely and I decided to take some profit and run. I'd like to buy back all three at a lower level sometime in the next four weeks. Those stocks partially sold are: GMXR, ICE, and AAPL.
October 24, 2007
Today this story titled 'Pulte posts big loss after charges', by Ilaina Jonas of Reuters, appeared. Pulte's stock went up. The markets are still crammed full of people trying to buy the dips. I think, therefore, that the averages still have a long way to fall yet.
Then there was the existing home sales figures which were out today. Here is a link to 'Housing market takes turn for the worse', by Joanne Morrison of Reuters. I quote it below.
Boy, this story just will not go away. And that, my friends, was completely predictable months ago.
October 22, 2007
I received a note from Richard Kolon on Saturday. I include it here.
I was lax in keeping up my NYSE member stats for a few weeks. Friday I entered the last few readings, and ... looks like they were expecting a dip too!
For the first time in years, the Specialist Short Sale Ratio exceeded 40% for the last three weeks ending October 5th. The numbers were a very high 47.44%, 41.43%, and 47.43%. (To get the ratio, divide the short sales by the specialists by the total sales. See the weekly reports here: http://www.nyse.com/ marketinfo/datalib/1022743347465.html. The last time we ever had a higher number was in Feb 2005 when one week was an astounding 59.59%. Soon after that level was hit the Dow dropped 600 points. If you go back to Aug and Sep 2004 for a 3 week period that averaged over 40%, that preceeded a drop below Dow 10000 at that time.
Neither occurrence led to a bear market, just times of difficulty in the long term multiyear uptrend for stocks. The annual rate of change in M3 money supply in the U.S. is now near +13% (see: http://www.nowandfutures.com/key_stats.html). The government is doing all it can to keep asset bubbles from collapsing, weakening the dollar to record lows against major foreign currencies. Worldwide money supply is supposedly growing near +8% a year. I expect helicopters will flown to the rescue, and that king of money growth will park itself into stocks once again.
James Turk thinks he has found evidence that the U.S. government has less gold in their vaults than claimed (see: http://www.marketwatch.com/news/story/gold-bugs-were-right/story.aspx? guid=%7B537BB029%2DB47F%2D46F0%2D8537%2DBD170ED0B224%7D).
Gold is now rising against all currencies.
Check the Multi Year Gold box for 1975-2007 and the View Charts button below it (http://www.kitco.com/charts/historicalgold. html).
Rich"
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There were a lot of interesting news bits on Saturday. Here are some of those. Sorry I am late getting them up.
Here is a ling to 'Hedge fund legend Julian Robertson said Friday he expects the U.S. economy is heading for a 'doozy of a recession'', on CNBC.com. I quote it below.
Robertson, founder of the investment firm Tiger Management, also expressed some concerns about the devaluation of the dollar.
'I think the Federal Reserve will trash the dollar until such times that there is some turn around in the economy, or until such time that they see that as self defeating,' he said."
Also on CNBC was this article titled 'Foreign Investors Bail As Paulson States The Obvious', by Patti Domm. I quote it below.
This compares to an inflow of $21.2 billion into stocks in July. The previous record outflow was $11.5 billion, set in September 2001. The total outflow from U.S. long-term securities was $69.3 billion, the largest amount since 1990.
Why do we care? The decline in the dollar has been accompanied by a lot of parallel chatter about foreigners pulling money from Treasury securities. This report shows that when things go bad, money gets moving."
And another gloomy report is this link to 'Bernanke Spooks Investors With Market Outlook', by Rueters. I quote it below.
'Conditions in financial markets have shown improvement since the worst of the storm in mid-August,' Bernanke told the New York Economic Club Monday night. 'But a full recovery of market functioning is likely to take time, and we may well see some setbacks.'
The Fed chairman also said the central bank will act as needed to support market stability as well as sustainable growth and stable prices, signaling that more rate cuts will be needed."
And Icahn was also interviewed on CNBC. Here is a link to 'An American Icahn' by Lee Brodie. I quote it below.
CNBC: Why?
ICAHN: 'I think this market is on a precipice and could go either way. You sort of have a credit crunch and remember in 1990 nobody recognized the manifestation that credit crunch would have. It took about a year (to work though),' says Icahn.
He adds, 'I'm not saying that we won't get out of it. I'm saying you have to be extremely careful. It takes all the king's horses and all the king's men and they still can't turn it around again.'"
It occurred to me that with all this doom and gloom about there should be something, more substanitive, to support those gloomy views, particularly Julian Robertson's. Here is a story I found that seems to support Robertson's view. The link is to 'Living Paycheck to Paycheck Gets Harder', by Anne D'Innocenzio, AP Business Writer. I quote.
Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn't as steep in August.
And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can't afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.
....The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.
Maureen Schnellmann, senior director of food and nutrition programs at the American Red Cross Food Pantry in Boston, reported a 30 percent increase from January through August over last year."
I have not quoted Gene Inger lately, so I went over to view the 'The Inger Letter'. Here is a really gloomy quote.
As to getting through the evolving economic situation; it won't be most of the builders doing selling at the bottom; getting this 'over'. It will be bankruptcy holders or lenders, such as banks that provided construction or bridge loans to the many condo builders. If this occurs, it won't be because we're selling off pieces to China, Dubai or anyone else. It's a normal manner of reluctantly caving-into reality, into a deepening ongoing recession. Yes, I know why global markets have been strong superficially (not broad, on light volume). It's fairly clear Americans won't be told of recession, 'til near its end."
Today I was reading the folks at Minyanville.com. Here is a link to 'Jeff Saut: It's My Party...' Mr. Saut touches upon an idea I have already written about. What if the FED throws a cash party and only the very rich and the banks show up? What if the consumer simply stops borrowing for a while? I quote this gloomy thing below.
I have saved the gloomiest, the scariest for last. Here is a link to 'Enron Accounting at Citigroup', by Mike Mish Shedlock. I quote it below.
Citigroup Net tangible assets as of June 30, 2007 are $65.5 billion. That's kind of interesting isn't it? Citigroup has $65.5 billion in net tangible assets but $160 billion invested in off balance sheet SIVs and conduits.
If a fire sale of those SIVs and conduits resulted in a 25% loss, Citigroup would have net tangible assets of $25.5 billion. If a fire sale of SIVs and conduits resulted in a 41% loss in those SIVs and conduits, Citigroup would have zero net tangible assets.
Does Paulson, the Fed, or Citigroup want to find out what those assets are worth? Of course not. That is the reason for a Don't Ask - Don't Sell policy and approval of Enron-style accounting by Paulson."
There. Had enough?
October 18, 2007
I covered my Citigroup short yesterday. I bought some NVEC today.
October 17, 2007
Jay Steele sent me his latest thinking. I will share a quote with you.
Here are links to two stories on housing starts. The first is to 'Housing starts, permits plunge', by Chris Isidore of CNNMoney.com. I quote it below.
And here is a link to 'September housing starts seen extending slump', by Reuters. I quote it below.
Why is this important? Housing is one of the six legs that the economy rests upon. Commercial construction is one of the other six. Problems in this area will extend to the other five legs. Note that the builders themselves expect housing starts to keep falling at least into mid 2008, and possibly into 2009.
October 14, 2007
I shorted Citigroup first thing this morning. The light is beginning to dawn folks. Having financials substantially reduce what they earned from a year ago is a bad thing, not a good thing. Their stocks should go down, not up. Having banks set up a fund to 'limit the credit crunch' is a bad thing, not a good thing. Why? They wouldn't set up that fund unless they knew for sure it was going to be needed. And they probably know that by reading their own books. Having the FED lower interest rates is a bad thing, not a good thing. Why? The FED would not be lowering unless it sees weakness 6 to 12 months out.
The light is just beginning to shine. Let it shine on, but don't expect miracles. I expect it will take a few bodies thrown onto the bonfires of vanity (it's different this time) before light gets shown down all the rat holes. Like all good reversals this will be very slow in developing. One reason for that is that parts of the economy are still doing well.
Here is a link to 'Credit Crisis Still Haunts Citi', by Evelyn M. Rusli of Forbes.com. All it takes is a quick glance at this quote.
When I read something like this alarm bells go off in my head. My ears are still ringing. I linked yesterday to what Herb Greenberg had to say about Citigroup. It is still worth a careful read.
Did you catch that? ...MORTGAGE MESS OR NO MORTGAGE MESS, EARNINGS STILL MIGHT HAVE MISSED EXPECTATIONS. Tonight Cramer was calling for the resignation of Citigroup's CEO.
Here is a link to 'Credit crunch will weigh on U.S. growth: Greenspan' by Reuters. Note that Uncle Al (who pushed money into the system the old-fashioned way: with barges) now sounds a bit more pessimistic. Give him three more months and he'll sound more pessimistic yet. I love this quote.
'The notion of looking at a core price requires that energy and food have no long-term trend and that their fluctuations are essentially random. That is now becoming an increasingly questioned premise,' Greenspan said."
Gosh, Dorothy, the Wizard really doesn't have any clothes on. And oil is at a record high. Oh My!
And while I'm at it, is it only me, or have others noticed the falacy of logic in the old FED-think? What could be more 'core' to our well being and our economy than food and energy?
Did you notice the sell off today? I think it is the beginning of a mini correction. I would expect the markets to rebound a bit tomorrow. This move down won't be in a straight line.
October 14, 2007
Here are three interesting links. From Ben Smith comes 'Considerations for gold investors, tech stocks and emerging markets', by Dr. Marc Faber on the Gloom Boom and Doom Report.
The second was sent by Duncan. Here is 'Banks to set up $80 billion fund to limit credit crunch', by Dan Wilchins and Patrick Rucker of Reuters.
The third link is to 'What Citigroup didn't say', by Herb Greenberg, of MarketWatch.com.
I have a lot of cash now. I am going to hold onto it until some buying opportunities present themselves. With markets at record highs, that may not be until next month.
