Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Bond Market Investors Near the Exit, Stock Market Rally Over Already?

Stock-Markets / Financial Markets 2009 Jan 03, 2009 - 11:53 AM GMT

By: Anthony_Cherniawski

Stock-Markets Best Financial Markets Analysis ArticleThe Federal Reserve and Wall Street are congratulating themselves on averting disaster in the financial markets. A report issued by the Department of Treasury had this to say, "Treasury, working with the Federal Reserve, the FDIC (Federal Deposit Insurance Corp.) and other regulators, has taken the necessary steps to prevent a financial collapse." "The most important evidence that our strategy is working is that Treasury's actions, in combination with other actions, stemmed a series of financial institution failures. The financial system is fundamentally more stable than it was when Congress passed the legislation.”


But have they averted disaster, or simply postponed it? Remember, their prescription for saving our financial institutions was the same as what caused the problem in the first place…more debt. These institutions don't have a liquidity problem. They have a solvency problem. Extending more debt to an insolvent institution doesn't make it any healthier. It may even make the problem larger.

In the meantime, there is a dearth of positive forecasts for 2009. There is little faith in the markets.

Playing the blame game.

Global economic imbalances helped to foster the credit crisis by pushing down global interest rates and driving investors towards riskier assets, outgoing US Treasury Secretary Hank Paulson told the Financial Times. In a valedictory interview, Mr Paulson cast the crisis as partly the result of a collective failure to come to terms with the way the rise of emerging markets was reshaping the global financial system. These imbalances – arising from differences in the inclinations of different nations to save and invest – are reflected in large current account deficits and surpluses around the world.

No, Mr Paulson, it was too much debt and the willingness of the Federal Reserve and Treasury to extend even more.

Is the rally overdone?

( Bloomberg ) -- The decline in U.S. manufacturing deepened in December as demand for such products as cars, appliances and furniture reached the lowest level since at least 1948, signaling further cutbacks in factory jobs and production this year. The Institute for Supply Management's factory index fell to 32.4, below economists' forecasts and the lowest level since 1980, from 36.2 the prior month. Readings less than 50 signal contraction. The group's new-orders measure reached the lowest level on record and prices slid the most since 1949. Folks, this doesn't look good for 4 th quarter corporate profits.

 

 

Bond holders are near the exits.

-- Treasuries started 2009 on a down note Friday in the first trading day of the new year. Government-issued bonds are coming off their best year since 1995, returning more than 13.7% to investors in 2008, but analysts say support for bonds could come to a crashing end in 2009. Investor appetite for government debt has kept funding rates impressively low, but continued appetite is a potential concern in 2009," said Thomas Lee, a strategist for JPMorgan. "We believe investors are beginning to appreciate that risk aversion has hit maximum levels. "

 

 

Gold rally may be over.

( Bloomberg ) -- Gold fell as the dollar climbed against the euro, eroding the appeal of the precious metal as an alternative investment. Silver and platinum futures rose. “The dollar is a little stronger, which was an additional weight that gold is fighting against,” said Frank McGhee , the head dealer at Integrated Brokerage Services LLC in Chicago. Gold futures for February delivery dropped $4.80, or 0.5 percent, to $879.50 an ounce on the Comex division of New York Mercantile Exchange. The metal still climbed almost 1 percent this week.

 

 

 

 

Japanese stocks finish their worst year ever.

-- ( Bloomberg ) -- Japan stocks posted their biggest annual drop in 2008, a year punctuated with market records as the global recession and the surging yen imperiled company earnings.

The benchmark Nikkei 225 Stock Average sank 42 percent, eclipsing the next-biggest slumps of 39 percent in 1990 and 27 percent in 2000. The broader Topix index also fell by the most ever, with all but one of its 33 industry groups losing ground.

 

 

 

Chinese investors see record declines, too.

-- ( Bloomberg ) -- Chinese stocks fell for an eighth day, with the benchmark completing its first annual decline as economic growth cooled and exports and industrial production shrank. The CSI 300 Index , which tracks yuan-denominated A shares listed on China's two exchanges, retreated 15.71, or 0.9 percent, to 1,817.72 at the close. It has lost 66 percent this year, after more than doubling in each of the past two years since it was introduced in April 2005. The stock market is closed for the rest of the week for the New Year holiday.

 

 

 

…and you think it's bad here?

( Bloomberg ) -- The euro fell the most in two weeks against the dollar and dropped versus the yen after a European manufacturing report showed the recession is deepening in the 16- nation region. “There's a lot more weakness in Europe ahead,” said Sean Callow , a senior currency strategist at Westpac Banking Corp. in Sydney. It appears that the Eurozone is planning on lowering its interest rates as their economy stumbles.

 

 

 

 

Priced for foreclosure?

How bad has the housing market gotten? With home values dropping by faster rates each month, a real estate agent near Detroit said that if houses weren't priced as low as foreclosures, they simply would not sell. That grim assessment underscored numbers released Tuesday showing that home prices in 20 metropolitan areas across the country dropped at a record rate of 18 percent in October from a year earlier as the fallout from the financial collapse reverberated through the housing market.

 

 

 

Gasoline prices still trending down.

The Energy Information Administration reports that, “For the fifteenth consecutive week, the national average price for regular gasoline fell. The price shrank 4 cents to 161.3 cents per gallon – the lowest since January 19, 2004 and 144 cents lower than the price a year ago. Prices also fell in all major regions, with the price on the East Coast slipping 4.1 cents to 163 cents per gallon. In the Midwest, the price dropped the most of any region, shrinking 5.6 cents to 156.7 cents per gallon.”

 

 

 

Natural gas prices decreased for the week in the lower 48 states.

The Energy Information Agency's Natural Gas Weekly Update reports, The coldest temperatures of the season to date covered much of the northern half of the country this report week, boosting demand related to space heating on both coasts and across the Northern Plains and Midwest population centers. Prices increased throughout the country outside the Northeast, with the biggest increases occurring for supplies from the Rocky Mountains (particularly for delivery into the Northwest).”

 

 

 

How little we know.

It's the end of an era . We know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best. The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today's insecurity, which in turn is now a governing reality of the crisis.

Go back to the onset of the crisis in mid-2007. Who then thought that the federal government would rescue Citigroup or the insurance giant AIG ; or that the Federal Reserve , striving to prevent a financial collapse, would pump out more than $1 trillion in new credit; or that Congress would allocate $700 billion to the Treasury for the same purpose; or that General Motors would flirt with bankruptcy?

In 2008, much conventional wisdom crashed.

We're on the air every Friday.

Tim Wood, John Grant and I are back in our weekly session on the markets. The market has been a real roller coaster ride this week. You will be able to access the interview by clicking here .

New IPTV program going strong.

This week's show on www.yorba.tv is packed with information about the direction of the markets. I'm on every Tuesday at 4:00 pm EDT . You can find the archives of my latest programs by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2019 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

6 Critical Money Making Rules