Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets Discounting Recessionary Fears

Stock-Markets / Stocks Bear Market Oct 27, 2008 - 05:58 PM GMT

By: Paul_J_Nolte

Stock-Markets Best Financial Markets Analysis ArticleIs October over yet?? The markets are down over 25% for the month, however on the four up days that actually did occur during the month, the indexes managed to gain over 20% - just image the carnage without the those fabulous four days! Liquidations by both mutual and hedge funds have made the last hour of trading something of an art form as investors guess whether the markets will tack on or drop a few hundred points. The recessionary fears of just a month ago have now morphed into full-blown depression fears and not just here, but around the world. The historic market declines to this point likely have already captured much of the economic pain we will experience in the weeks/months ahead.


Next week the Fed is likely to lower rates again – by a half of one percent and there also may be additional news on more funding/guarantees extended to various financial entities. The employment report will likely leave a bad taste in investor's mouths before the weekend, as non-farm payrolls could drop near 200,000. Earnings reports will also be a regular feature next week and are likely to continue the past trend of lousy guidance. The credit markets are beginning to unfreeze, but not at a pace to entirely calm the jittery market. Next week could be the markets' denouement, allowing us to finally begin to put money to work more confidently.

Negative and still going down is the best we can say about the markets. They should be rallying, with the unrelenting selling a relief rally of more than one day would point to at least a short term bottom being put in place. However, trying to pick an actual bottom is pure folly, but what we have been saying for the past two weeks is that we are in range of a bottom, meaning that the long-term valuations point to a cheap market that should return well above average rates of return in the future.

Whether the bottom is this week, next week, next month or sometime next year, we are slowly adding to existing positions to average them down, taking advantage of the very high volatility in the markets to get accounts back to “normal” market weights after being under weighted for the past year. While we'd like to be confident that the bottom is in and happy days are soon here, we won't be able to say that until well after a recovery is in place – and so far we are a long way away.

The Fed meeting this week is likely to be important for a multitude of reasons, not the least of which is to get, in action, the Fed's feelings about the economy. Expectations are for a half percentage point cut to an even 1%. We don't expect this to spur economic activity just yet, but it is a far cry from the actions during the early 1930s in response to the market crash of 1929, when the banking authorities actually increased rates and cut monetary growth, making a bad situation into something much worse.

Today, the governments around the world are tossing money around the financial system trying to develop some trust between loan participants. We are beginning to see some benefits, but they are very small and not yet back to the “normal” levels we saw in July/August. As we have mentioned often in the past, unlike many other recessions before this, time will heal these wounds – not just money.

By Paul J. Nolte CFA
http://www.hinsdaleassociates.com
mailto:pnolte@hinsdaleassociates.com

Copyright © 2008 Paul J. Nolte - All Rights Reserved.
Paul J Nolte is Director of Investments at Hinsdale Associates of Hinsdale. His qualifications include : Chartered Financial Analyst (CFA) , and a Member Investment Analyst Society of Chicago.

Disclaimer - The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.

Paul J. Nolte Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in