From the BBC at around 5:20 pm ET:
Anchor: Why did the market come back after selling off 8%?
Pundit: That's a terrific question - we're trying to figure that out
ourselves. Someone with deep pockets came in and started buying, but
we don't know who. The stocks that are considered recession-proof --
McDonald's, Pepsi, Coca-Cola -- led the comeback.
John
Financial topics
Re: The Comeback
I had lunch with my co-workers today. Some of them said waiting for some points to jump in the market and pick up some bargains. I think some of these guys may regret not jump into the market this afternoon by seeing the come back.John wrote:From the BBC at around 5:20 pm ET:
Anchor: Why did the market come back after selling off 8%?
Pundit: That's a terrific question - we're trying to figure that out
ourselves. Someone with deep pockets came in and started buying, but
we don't know who. The stocks that are considered recession-proof --
McDonald's, Pepsi, Coca-Cola -- led the comeback.
John
Re: The Comeback
Gordo wrote: > I could not be more pleased with what I saw today from a traders
> perspective. We got a beautiful key reversal on massive volume.
The Principle of Maximum Ruin proceeds anon.Timon wrote: > I had lunch with my co-workers today. Some of them said waiting
> for some points to jump in the market and pick up some bargains. I
> think some of these guys may regret not jump into the market this
> afternoon by seeing the come back.
John
Re: Financial topics
I am very concerned about the whole maximum ruin concept, believe me. That's the reason I'm not going nutzo in my trading right now. But this year has been fantastic for me, best year in a long time.
Here are thoughts from another trader, written today, we are very much on the same page, but I certainly am not recommending any course of action to anyone else. You have to make up your own mind, do your own research, and do what you feel comfortable doing.
The market in Brazil had to actually close this morning, as its bourse plummeted. It later reopened and recovered half of its early losses. These are classic signs of panic which mark multi-year bottoms.
Another indication of heavy amateur participation is the time of day when the market was weakest, and when it was strongest. There was a sharp selloff in the first hour, followed by a partial recovery, and then a massive lunchtime collapse to a low shortly after 2:45 p.m., then followed by a steady recovery.
Amateurs had the whole weekend to feel gloomy about the financial markets. Probably many people spoke with their spouses. “Tell ya what, honey, let’s just dump the whole stock thing.” Something like that happened in millions or billions of homes across the world, and therefore led to the collapse. The vast majority of global equity indices reached multi-year bottoms—most commonly four-year nadirs.
When do amateurs trade? They probably placed many sell orders on the weekend, which caused some funds to open at or near their lowest points of the day. When do amateurs have time to trade, other than the weekend? Obviously during lunch hour, when they get a break and have a chance to use the internet and place trades. They probably talked all morning with their co-workers, to get up the courage to finally sell those shares they had bought near their 2000 peaks. So it’s hardly surprising that the selloff continued throughout the early afternoon. Some chart slaves no doubt saw the alleged “downside breakout”, or some other such purported pattern, and unloaded or even went short around 2 p.m. This provided additional fuel for the mid-afternoon plunge, and then their short covering accelerated the late-day rebound.
Headlines tomorrow across the world will read, “Dow breaks below 10 thousand!” So there could be additional short-term weakness over the next week, especially near the open, and perhaps again during lunchtime. I plan to use any pullbacks to continue to accumulate mostly closed-end equity funds which have been selling at their highest discounts in years or even decades in some cases. I have discussed these funds in great detail in past updates.
I also saw chat sites talking about when the Dow would reach 7000. Not if—but when. It reminded me very much of the buzz in July about when—not if--the price of oil would reach $200 a barrel, or in March when everyone asked when the gold price would reach $2000 an ounce.
During the past week, I have never overheard so many conversations dealing directly or indirectly with the global financial markets. Along with the existence of extremely heavy trading volume, this is a clear sign of a bottom.
Be forewarned: many assets will continue to experience sharp intraday swings. In October 1987, after the market recovered from its record collapse, it had a second sharp plunge just one week later—also on a Monday. Therefore, don’t buy after a rebound: only make purchases into weakness.
Speaking of weakness, gold mining shares slumped to new three-year lows today even as gold itself rose sharply—again just like October 1987--and therefore I continued to heavily accumulate them.
Speaking of October 1987, VXO reached a historic zenith of 69.42 shortly after 2:45 p.m., which was its highest reading by far in 21 years. The October 1998 peak was “only” 60.63. VXO closed today at 59.50. Notice how VXO failed to reach the important round number of 70, and failed to hold above the important round number of 60. VIX reached a high of 58.24, which also never happened during the 1990s or in the past decade, before closing at 52.05.
All of these pieces of information strongly suggest that today was the final bottom for the global stock market. If equities close with a net loss tomorrow, the media will say, “Plunging market falls again”—but if you see higher lows, you’ll be among the few who know that the recovery is already in place.
We are likely to see numerous positive divergences over the next couple of weeks, in advance of what is likely to be a sharp rally in anticipation of the U.S. Presidential election on November 4, 2008, as well as the Fed meeting on October 29. Another and even more substantial rise is likely to occur perhaps one month in advance of the inauguration of the next U.S. President on January 20, 2009.
In-between periods, such as the second half of November and the first half of December, may suffer from moderate weakness, which could provide additional buying opportunities. If closed-end funds sport above-average discounts due to disappointment and heavy tax-loss selling, they should continue to be purchased in modest quantities through December.
Assuming random behavior (which the market is not, but that’s a story for another update), the chance of any given security falling by half is mathematically identical to the chance of its doubling. If you sell short something and it falls by half, you make 50%; if you buy something and it doubles, you make 100%. So even though the next year will likely be less volatile than the last, the total gain in your portfolio is likely to be higher in percentage terms as a result of this long-side bias.
Yes, of course I’m aware of bear funds which sell short 2:1. But you’re actually using 2:1 leverage with such funds, which you can also do on the long side and make a 200% profit. Long positions are inherently more profitable than short ones by twice as much, given equal volatility in both directions.
Back on December 20, 2007, I explained why the euro would probably not survive as a currency beyond 2018.
This was an extremely unpopular point of view, to put it mildly. I received dozens of e-mails telling me why I was totally out of my mind, and why it was the U.S. dollar that would cease to exist. Many people told me that they were switching even relatively “safe” time deposits into euro-based accounts.
Even more rapidly than I had anticipated, events are happening which could cause the euro to cease to exist well before my original target date of 2018.
It is impossible to have economic unity without political unity. When times are good, it’s not a big deal. However, as soon as times turn tough, there will be nationalist politicians who make speeches such as this one:
“My friends and fellow citizens, we once had a proud currency. Those politicians from Brussels conned us into joining the euro. I spoke out against it at the time, but it passed by a vote of 51% to 49% in favor of joining, so we foolishly joined. Unemployment at that time was 5%; now it’s 15%. You all can see what’s happened to this country since we’ve been using the euro. Elect me, and my first act will be to leave the euro and readopt the currency that our fathers, our grandfathers, our great-grandfathers, and all of our beloved heroes had used for centuries. Elect me. Dump the euro. Long live [fill in the blank with name of yet another country which is about to drop the euro as its currency]!
Even the most pro-euro nations adopted that currency by relatively small margins. Throw a moderate recession into the mix—never mind a severe one—and it will be tough to find three countries which decide to stick with it. If only France, Germany, and Belgium are using the euro, it’s not going to be viable.
What’s more serious is if the euro experiences a true crisis of confidence. The euro was at $1.60 in March and again in July. Imagine if two or three years from now, it plunges to something like 80 cents—or even 19 cents. Stock prices in European countries will surge higher to adjust for the currency factor, thus causing investor confusion. Global trading and business contracts will become obsolete and unenforceable.
In the short run, the Swiss franc and the U.S. dollar and the Japanese yen will pick up some of the slack, but the loss of a major reserve currency will still be a cataclysmic event that will probably be as serious as a sharp stock-market pullback. Sooner or later, the German mark or the French franc and some other currencies will re-establish themselves as valid, strong alternatives—but not until after at least several months have passed.
When I wrote my original update in December 2007, my objective was to warn readers to leisurely sell euro-based assets, while the U.S. dollar was still hated. Now, it’s already getting rather late in the day. No doubt the euro will enjoy a short-term rebound every now and then, but its future is as bleak now as I perceived it to be near the end of last year.
If you live in Europe, then convert your assets into gold, or silver, or platinum, or palladium, or GDX—even the U.S. dollar as a last resort--or something which will not be tied to the fate of the euro. European stocks are perfectly safe; even if the euro is worth one cent, equities will rise enough in U.S. dollar terms to adjust for the collapse.
A useful example might be Argentina. When that country’s currency collapsed, its stock market did not suffer; the per-share numbers just became very large. Real companies which have real earnings will do okay. However, if they have major contracts which state that they will pay so many euros per unit of something, or will sell their goods for so many euros per unit, then there will be massive confusion and legal wrangling.
It will not be a pretty picture. The financial world will eventually get through, but it will be a very bumpy ride.
The positive side, as usual, is that if you anticipate these events in advance, you can profit enormously from them. A lot of the recent strength in the U.S. dollar and in gold is a result of people slowly realizing that the euro cannot survive if Ireland decides to bail out all of its banks, while Germany insists on strict fiscal discipline, and meanwhile Greece doesn’t mind if its inflation rate doubles as long as that helps to fight recession.
Maybe now you realize why several smart countries did not join the euro. Or maybe they were just lucky; the votes against using the euro were often something like 51% no, 49% yes, and were sometimes decided because a particular film celebrity was dressed fetchingly in a sexy piece of clothing, draped with a banner reading “NO”.
Here are thoughts from another trader, written today, we are very much on the same page, but I certainly am not recommending any course of action to anyone else. You have to make up your own mind, do your own research, and do what you feel comfortable doing.
The market in Brazil had to actually close this morning, as its bourse plummeted. It later reopened and recovered half of its early losses. These are classic signs of panic which mark multi-year bottoms.
Another indication of heavy amateur participation is the time of day when the market was weakest, and when it was strongest. There was a sharp selloff in the first hour, followed by a partial recovery, and then a massive lunchtime collapse to a low shortly after 2:45 p.m., then followed by a steady recovery.
Amateurs had the whole weekend to feel gloomy about the financial markets. Probably many people spoke with their spouses. “Tell ya what, honey, let’s just dump the whole stock thing.” Something like that happened in millions or billions of homes across the world, and therefore led to the collapse. The vast majority of global equity indices reached multi-year bottoms—most commonly four-year nadirs.
When do amateurs trade? They probably placed many sell orders on the weekend, which caused some funds to open at or near their lowest points of the day. When do amateurs have time to trade, other than the weekend? Obviously during lunch hour, when they get a break and have a chance to use the internet and place trades. They probably talked all morning with their co-workers, to get up the courage to finally sell those shares they had bought near their 2000 peaks. So it’s hardly surprising that the selloff continued throughout the early afternoon. Some chart slaves no doubt saw the alleged “downside breakout”, or some other such purported pattern, and unloaded or even went short around 2 p.m. This provided additional fuel for the mid-afternoon plunge, and then their short covering accelerated the late-day rebound.
Headlines tomorrow across the world will read, “Dow breaks below 10 thousand!” So there could be additional short-term weakness over the next week, especially near the open, and perhaps again during lunchtime. I plan to use any pullbacks to continue to accumulate mostly closed-end equity funds which have been selling at their highest discounts in years or even decades in some cases. I have discussed these funds in great detail in past updates.
I also saw chat sites talking about when the Dow would reach 7000. Not if—but when. It reminded me very much of the buzz in July about when—not if--the price of oil would reach $200 a barrel, or in March when everyone asked when the gold price would reach $2000 an ounce.
During the past week, I have never overheard so many conversations dealing directly or indirectly with the global financial markets. Along with the existence of extremely heavy trading volume, this is a clear sign of a bottom.
Be forewarned: many assets will continue to experience sharp intraday swings. In October 1987, after the market recovered from its record collapse, it had a second sharp plunge just one week later—also on a Monday. Therefore, don’t buy after a rebound: only make purchases into weakness.
Speaking of weakness, gold mining shares slumped to new three-year lows today even as gold itself rose sharply—again just like October 1987--and therefore I continued to heavily accumulate them.
Speaking of October 1987, VXO reached a historic zenith of 69.42 shortly after 2:45 p.m., which was its highest reading by far in 21 years. The October 1998 peak was “only” 60.63. VXO closed today at 59.50. Notice how VXO failed to reach the important round number of 70, and failed to hold above the important round number of 60. VIX reached a high of 58.24, which also never happened during the 1990s or in the past decade, before closing at 52.05.
All of these pieces of information strongly suggest that today was the final bottom for the global stock market. If equities close with a net loss tomorrow, the media will say, “Plunging market falls again”—but if you see higher lows, you’ll be among the few who know that the recovery is already in place.
We are likely to see numerous positive divergences over the next couple of weeks, in advance of what is likely to be a sharp rally in anticipation of the U.S. Presidential election on November 4, 2008, as well as the Fed meeting on October 29. Another and even more substantial rise is likely to occur perhaps one month in advance of the inauguration of the next U.S. President on January 20, 2009.
In-between periods, such as the second half of November and the first half of December, may suffer from moderate weakness, which could provide additional buying opportunities. If closed-end funds sport above-average discounts due to disappointment and heavy tax-loss selling, they should continue to be purchased in modest quantities through December.
Assuming random behavior (which the market is not, but that’s a story for another update), the chance of any given security falling by half is mathematically identical to the chance of its doubling. If you sell short something and it falls by half, you make 50%; if you buy something and it doubles, you make 100%. So even though the next year will likely be less volatile than the last, the total gain in your portfolio is likely to be higher in percentage terms as a result of this long-side bias.
Yes, of course I’m aware of bear funds which sell short 2:1. But you’re actually using 2:1 leverage with such funds, which you can also do on the long side and make a 200% profit. Long positions are inherently more profitable than short ones by twice as much, given equal volatility in both directions.
Back on December 20, 2007, I explained why the euro would probably not survive as a currency beyond 2018.
This was an extremely unpopular point of view, to put it mildly. I received dozens of e-mails telling me why I was totally out of my mind, and why it was the U.S. dollar that would cease to exist. Many people told me that they were switching even relatively “safe” time deposits into euro-based accounts.
Even more rapidly than I had anticipated, events are happening which could cause the euro to cease to exist well before my original target date of 2018.
It is impossible to have economic unity without political unity. When times are good, it’s not a big deal. However, as soon as times turn tough, there will be nationalist politicians who make speeches such as this one:
“My friends and fellow citizens, we once had a proud currency. Those politicians from Brussels conned us into joining the euro. I spoke out against it at the time, but it passed by a vote of 51% to 49% in favor of joining, so we foolishly joined. Unemployment at that time was 5%; now it’s 15%. You all can see what’s happened to this country since we’ve been using the euro. Elect me, and my first act will be to leave the euro and readopt the currency that our fathers, our grandfathers, our great-grandfathers, and all of our beloved heroes had used for centuries. Elect me. Dump the euro. Long live [fill in the blank with name of yet another country which is about to drop the euro as its currency]!
Even the most pro-euro nations adopted that currency by relatively small margins. Throw a moderate recession into the mix—never mind a severe one—and it will be tough to find three countries which decide to stick with it. If only France, Germany, and Belgium are using the euro, it’s not going to be viable.
What’s more serious is if the euro experiences a true crisis of confidence. The euro was at $1.60 in March and again in July. Imagine if two or three years from now, it plunges to something like 80 cents—or even 19 cents. Stock prices in European countries will surge higher to adjust for the currency factor, thus causing investor confusion. Global trading and business contracts will become obsolete and unenforceable.
In the short run, the Swiss franc and the U.S. dollar and the Japanese yen will pick up some of the slack, but the loss of a major reserve currency will still be a cataclysmic event that will probably be as serious as a sharp stock-market pullback. Sooner or later, the German mark or the French franc and some other currencies will re-establish themselves as valid, strong alternatives—but not until after at least several months have passed.
When I wrote my original update in December 2007, my objective was to warn readers to leisurely sell euro-based assets, while the U.S. dollar was still hated. Now, it’s already getting rather late in the day. No doubt the euro will enjoy a short-term rebound every now and then, but its future is as bleak now as I perceived it to be near the end of last year.
If you live in Europe, then convert your assets into gold, or silver, or platinum, or palladium, or GDX—even the U.S. dollar as a last resort--or something which will not be tied to the fate of the euro. European stocks are perfectly safe; even if the euro is worth one cent, equities will rise enough in U.S. dollar terms to adjust for the collapse.
A useful example might be Argentina. When that country’s currency collapsed, its stock market did not suffer; the per-share numbers just became very large. Real companies which have real earnings will do okay. However, if they have major contracts which state that they will pay so many euros per unit of something, or will sell their goods for so many euros per unit, then there will be massive confusion and legal wrangling.
It will not be a pretty picture. The financial world will eventually get through, but it will be a very bumpy ride.
The positive side, as usual, is that if you anticipate these events in advance, you can profit enormously from them. A lot of the recent strength in the U.S. dollar and in gold is a result of people slowly realizing that the euro cannot survive if Ireland decides to bail out all of its banks, while Germany insists on strict fiscal discipline, and meanwhile Greece doesn’t mind if its inflation rate doubles as long as that helps to fight recession.
Maybe now you realize why several smart countries did not join the euro. Or maybe they were just lucky; the votes against using the euro were often something like 51% no, 49% yes, and were sometimes decided because a particular film celebrity was dressed fetchingly in a sexy piece of clothing, draped with a banner reading “NO”.
Re: Financial topics
Message from a web site reader:
> BOTW is good but I like the "Wooden Arrow Plan" personally. It
> seems quite poetic, it highlights the idiocy of our government and
> most likely describes the effects.
> As for the 401K, I believe you can get your money out at 55
> without penalty, if you lose your job. Still have to pay tax
> though.
> As for the money market funds. Probably does not matter in the
> "long run". I told a co-worker "the 401K money is most likely
> 'Monopoly Money'". Sad because I am up at least 10% YTD, by
> listening to you and others.
Re: Financial topics
Hope I don't have to explain what this means... folks - "we ain't goin' down like dat"
Poll: Almost 6 of 10 Americans see depression as likely
Monday October 6, 4:23 pm ET
By Chris Isidore, CNNMoney.com senior writer
Nearly six out of ten Americans believe another economic depression is likely, according to a poll released Monday.
The CNN/Opinion Research Corp. poll, which surveyed more than 1,000 Americans over the weekend, cited common measures of the economic pain of the 1930s:
25% unemployment rate; widespread bank failures; and millions of Americans homeless and unable to feed their families.
In response, 21% of those polled say that a depression is very likely and another 38% say it is somewhat likely.
The poll also found that 29% feel a depression is not very likely, while 13% believe it is not likely at all.
But economists, even many who feel current economic risks are dire, generally don't believe another depression is likely.
"We've been in a recession all year and it's going to get worse," said Anirvan Banerji, director of research for the Economic Cycle Research Institute. "We're going from a relatively mild recession to a more painful recession. But we're a long, long way from a depression."
A survey taken last week by the National Association of Business Economists asked members what would happen if the $700 billion bailout that passed Friday fails to fix frozen credit markets. The consensus forecast of those economists was that, even if continued problems choke off credit to businesses and consumers, unemployment would rise to just 7% in the second quarter of next year.
Other economists recently contacted by CNNMoney.com said that the unemployment rate could rise as high as 10% to 12% next year if the bailout does not work. While that could be roughly double the current 6.1% unemployment rate, it would be only half of the worst rate seen in the Great Depression of the 1930s.
What defines a depression?
Banerji's worst-case scenario sees unemployment topping out at just under 10%. That's one of the key reasons that he thinks a true depression is unlikely.
"A depression rate would imply more than doubling or tripling the current unemployment rate," he said.
The Great Depression also saw the gross domestic product, the broad measure of the nation's economic activity, plunge by 13% in 1932.
The NABE survey forecast that GDP will drop 1.1% in the fourth quarter of 2008 if the bailout does not get credit flowing again, and another 0.5% in the first quarter of next year. The economists surveyed by CNNMoney.com said they could foresee a drop of 2% to 4% in a worst-case scenario.
Part of the reason for the far less severe economic pain expected this time are the social safety net programs - including Social Security, unemployment insurance and insurance on bank deposits - that were not in place at the start of the Great Depression.
And experts believe that the Federal Reserve and other officials made many policy mistakes during the Depression that are not likely to be repeated. In fact, the Fed at that time kept lending tight, while today's Fed is pumping hundreds of billions of dollars into the banking system to try to restart lending and spur economic activity.
"The fact is that central banks around the globe will move heaven and earth to avoid having a depression," said Banerji.
Still, other findings of the CNN poll were more in agreement with those of top economists.
The poll found 84% of Americans polled believe that economic conditions are somewhat or very poor, with a majority, 53%, now believing the economy is very poor. That's not far off from the two-thirds of NABE economists who believe the economy is now in a recession or will enter one by the end of this year.
The view of the economy is much bleaker than a comparable CNN/USA Today poll found during the last economic downturn at the start of the decade. During the recession of 2001, only one-third to one-half of those polled felt economic conditions were somewhat or very poor.
Unemployment continued to rise after the recession ended in late 2001, and not surprisingly the view of the economy continued to deteriorate. But at its worst, in a February 2003 poll, only two-thirds of those surveyed described the economy as somewhat or very poor. Just 25% of those surveyed at that time described the economy as very poor, or less than half the level who believe that today.
In addition, the CNN poll released Monday found that 36% believe the current crisis in the nation's financial sector will affect them immediately, while another 19% expect to be affected within the next year. Only 8% believe they will never be affected by the crisis.
Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke have frequently warned in recent weeks that the credit crisis would be felt on Main Street, not just on Wall Street.
And Banerji said that the increasingly grim view of the economy will by itself lead to cutbacks in spending by both consumers and businesses. That in turn will result in greater job losses and more economic pain.
"The fact that the majority of people believe we are going into a depression ensures that the recession will get worse," Banerji said.
Poll: Almost 6 of 10 Americans see depression as likely
Monday October 6, 4:23 pm ET
By Chris Isidore, CNNMoney.com senior writer
Nearly six out of ten Americans believe another economic depression is likely, according to a poll released Monday.
The CNN/Opinion Research Corp. poll, which surveyed more than 1,000 Americans over the weekend, cited common measures of the economic pain of the 1930s:
25% unemployment rate; widespread bank failures; and millions of Americans homeless and unable to feed their families.
In response, 21% of those polled say that a depression is very likely and another 38% say it is somewhat likely.
The poll also found that 29% feel a depression is not very likely, while 13% believe it is not likely at all.
But economists, even many who feel current economic risks are dire, generally don't believe another depression is likely.
"We've been in a recession all year and it's going to get worse," said Anirvan Banerji, director of research for the Economic Cycle Research Institute. "We're going from a relatively mild recession to a more painful recession. But we're a long, long way from a depression."
A survey taken last week by the National Association of Business Economists asked members what would happen if the $700 billion bailout that passed Friday fails to fix frozen credit markets. The consensus forecast of those economists was that, even if continued problems choke off credit to businesses and consumers, unemployment would rise to just 7% in the second quarter of next year.
Other economists recently contacted by CNNMoney.com said that the unemployment rate could rise as high as 10% to 12% next year if the bailout does not work. While that could be roughly double the current 6.1% unemployment rate, it would be only half of the worst rate seen in the Great Depression of the 1930s.
What defines a depression?
Banerji's worst-case scenario sees unemployment topping out at just under 10%. That's one of the key reasons that he thinks a true depression is unlikely.
"A depression rate would imply more than doubling or tripling the current unemployment rate," he said.
The Great Depression also saw the gross domestic product, the broad measure of the nation's economic activity, plunge by 13% in 1932.
The NABE survey forecast that GDP will drop 1.1% in the fourth quarter of 2008 if the bailout does not get credit flowing again, and another 0.5% in the first quarter of next year. The economists surveyed by CNNMoney.com said they could foresee a drop of 2% to 4% in a worst-case scenario.
Part of the reason for the far less severe economic pain expected this time are the social safety net programs - including Social Security, unemployment insurance and insurance on bank deposits - that were not in place at the start of the Great Depression.
And experts believe that the Federal Reserve and other officials made many policy mistakes during the Depression that are not likely to be repeated. In fact, the Fed at that time kept lending tight, while today's Fed is pumping hundreds of billions of dollars into the banking system to try to restart lending and spur economic activity.
"The fact is that central banks around the globe will move heaven and earth to avoid having a depression," said Banerji.
Still, other findings of the CNN poll were more in agreement with those of top economists.
The poll found 84% of Americans polled believe that economic conditions are somewhat or very poor, with a majority, 53%, now believing the economy is very poor. That's not far off from the two-thirds of NABE economists who believe the economy is now in a recession or will enter one by the end of this year.
The view of the economy is much bleaker than a comparable CNN/USA Today poll found during the last economic downturn at the start of the decade. During the recession of 2001, only one-third to one-half of those polled felt economic conditions were somewhat or very poor.
Unemployment continued to rise after the recession ended in late 2001, and not surprisingly the view of the economy continued to deteriorate. But at its worst, in a February 2003 poll, only two-thirds of those surveyed described the economy as somewhat or very poor. Just 25% of those surveyed at that time described the economy as very poor, or less than half the level who believe that today.
In addition, the CNN poll released Monday found that 36% believe the current crisis in the nation's financial sector will affect them immediately, while another 19% expect to be affected within the next year. Only 8% believe they will never be affected by the crisis.
Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke have frequently warned in recent weeks that the credit crisis would be felt on Main Street, not just on Wall Street.
And Banerji said that the increasingly grim view of the economy will by itself lead to cutbacks in spending by both consumers and businesses. That in turn will result in greater job losses and more economic pain.
"The fact that the majority of people believe we are going into a depression ensures that the recession will get worse," Banerji said.
Re: Financial topics
The XAU ratio just hit an extreme of a lifetime. If you want to actually make money, you know what to do. So don't whine about it later.
Market status, Tuesday morning, Oct 7, 2008
** Market status, Tuesday morning, Oct 7, 2008
Iceland is bankrupt (or almost bankrupt) this morning. At least,
that's what Prime Minister Geir Haarde says.
http://online.wsj.com/article/SB1223318 ... lenews_wsj
With the króna ("krona" or "crown") currency crashing, Iceland
apparently went begging from country to country for a bailout, and
finally got Russia to loan Iceland €4 billion.
http://afp.google.com/article/ALeqM5gnc ... vlYsD_ZnHw
There's an irony to that because Russia itself is in a downward
spiral.
Or, as Ambrose Evans-Pritchard of the Telegraph says,
appears to have any idea what's going on.
Meanwhile, you'd never know there was a problem if you listen to the
pundits on tv. They're debating whether the Fed should lower
interest rates by 1/4 point or 1/2 point to solve the problem.
Can you believe these airheads?
John
Iceland is bankrupt (or almost bankrupt) this morning. At least,
that's what Prime Minister Geir Haarde says.
http://online.wsj.com/article/SB1223318 ... lenews_wsj
With the króna ("krona" or "crown") currency crashing, Iceland
apparently went begging from country to country for a bailout, and
finally got Russia to loan Iceland €4 billion.
http://afp.google.com/article/ALeqM5gnc ... vlYsD_ZnHw
There's an irony to that because Russia itself is in a downward
spiral.
Or, as Ambrose Evans-Pritchard of the Telegraph says,
Right now, this is the only mainstream journalist in the world whoAmbrose Evans-Pritchard wrote:
> Russia and Brazil crumble as commodity prices crash
> The entire complex of commodities and emerging market stocks,
> bonds, and currencies is now in free-fall as the economic crisis
> spreads like brushfire, threatening to draw every corner of the
> globe into the vortex of recession. ...
> The euro’s dramatic slide over the past two weeks has for the
> first time exposed the instability of the twin-pillar system
> holding up global finance. ...
> There are fears that Russia could slip into a downward spiral if
> oil drops to $50 a barrel, which is now the lower end of Merrill
> Lynch’s forecast.
> Moscow has become addicted to the oil bonanza, ratcheting up
> spending so quickly that it may now need prices to stay above $90
> to fund spending plans. Veteran analysts say they have seen this
> movie before.
> http://www.telegraph.co.uk/finance/mark ... crash.html
appears to have any idea what's going on.
Meanwhile, you'd never know there was a problem if you listen to the
pundits on tv. They're debating whether the Fed should lower
interest rates by 1/4 point or 1/2 point to solve the problem.
Can you believe these airheads?
John
What to do now
A few days ago I was buying gold in the form of DGP. Looks like it will be going up for a while and this is a low risk point to get in.
As for the stock market, If you go to the chart page at tradersalpha.com you can see that prices tend to find support and resistance at Reaction lines........which incidentally were used by Roger Babson in the 1920's to forecast the crash in New Yorker Magazine.
Based upon that chart and what I see in the market right now, we appear to be having a few days to take a deep breath before it gets interesting.
Traderman
As for the stock market, If you go to the chart page at tradersalpha.com you can see that prices tend to find support and resistance at Reaction lines........which incidentally were used by Roger Babson in the 1920's to forecast the crash in New Yorker Magazine.
Based upon that chart and what I see in the market right now, we appear to be having a few days to take a deep breath before it gets interesting.
Traderman
Re: Financial topics
An analyst on Bloomberg this afternoon:
John
Amazing.> I would like to see the market have a wholesale panic. You know,
> we go down, then we go up, and that isn't good. I would like to
> see the Dow go down 1000 points.
> As compared to 1987, this is more like Chinese water torture. I
> think you'll see the selling become exhausted, as opposed to a lot
> of selling on just one day.
> There's so much cash on the sidelines -- that's why the market
> will go up 25%, once the worst is over.
> There's been a lot of bottom-fishing, and we've got to get those
> people to get completely discouraged.
> By the end of the year we should be up around 1000, maybe 1100.
> [Referring to the S&P 500 index.]
John
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