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
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
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Banks to Nationalize or Not to Nationalize

Stock-Markets / Nationalization Feb 23, 2009 - 05:46 PM GMT

By: Paul_J_Nolte

Stock-Markets To nationalize or not to nationalize, that is the question. Whether it is nobler in the mind to suffer the slings and arrows of (the markets) or to take up arms against the sea of troubles and by opposing end them. With a bit of poetic license we could easily rework the Hamlet's soliloquy to bring it out of the kingdom and into the banking system.


The market movements may actually force the nationalization by essentially making the stocks worthless, it won't take much more to just wipe out the last vestiges of ownership, clean up the books and reissue the banks back into private hands. On top of the banking issue, little in the way of economic news was heartening for investors, as even inflation came back a bit more than expected as energy prices rose last month. There will also be little to bolster investor confidence this week too, as housing data is scheduled for release, a revision (likely lower) for GDP and durable good orders. To die, to sleep – perchance to dream of a better market...ah there's the rub! Without resolution to the financial fix, the markets will continue in their perilous trading pattern.

It didn't take long for the 800-level to be broken and quickly get down to the important 750 zone. Only comments from the White House about keeping banks private gave stocks a minor boost on Friday in an otherwise forgettable week. Many of our indicators are pointing to a rally, however we have seen rather feeble rallies that begin well, but end poorly over the past three months that lead us to believe that any short-term rally should be used to reduce equity exposure rather than trying to guess a bottom in an ever increasingly emotional market.

While gains from current levels should be well above average, an investor is going to have to wait at least 3 it not 7 years to realize them. In the meantime, another drop of 15-20% is not out of the question. Leaving many investors looking like Wiley Coyote just before the decline, holding a sign: Is this trip necessary?? As much as we like the long-term prospects, the pain of the short-term loss may be more than many can bear. If the markets lose the important support around 750 on the SP500, we will further reduce equity exposure until we feel more comfortable that not only the markets look better, but also the financial system is being dealt with in a way to engender “normal” lending practices.

Commodity prices of all stripes have been declining for the past few weeks. The exception has been gold and silver – the harbingers of higher inflation. We don't believe higher inflation is right around the corner, in fact, deflation remains job #1 for the Fed today. While plenty of money is being generated (money supply is sky-rocketing) precious little is actually making its way into the economy. Much of it is being absorbed by banks and saved by consumers, two entities that are in real need of reducing overall debt. Until the economy functions normally and banks begin to seriously lend money, inflation is likely to remain a distant cry in the darkness. The bond model remains in negative territory, but is still close to generating another buy signal – we are keeping maturities relatively short at this time.

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

Copyright © 2009 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