Wednesday, November 19, 2008

Headlines That Change

A little short on time this evening as the drive home was a bit long. On a solid personal note, I was informed by the boss today that for the year end review I am getting a promotion! Good stuff. I have done a ton or work this year, so I am glad.

Market Dips Below Retest Levels; Well Some Retest Level Anyway
By now, you the readers, know of my hatred of technical analysis and especially for all the catch phrases some market players like to use to try and make sense of things that make no sense. Terms like "retest" and "head and shoulders" especially get me rankled.

So today the DOW and S&P fell below the much celebrated lows that were successfully retested last week or something. So that is bad right? That means new lows and the retest last week was bunk?

Nope. The charty types now mean that crazy intraday low from a while back where the DOW kissed near 7800. That is what they really meant. The 8100-8200 area was a "false low" masked by volatility or something.

I bring this up because a ton of people I know, and many I respect, love talking about the markets in these terms. While I use charts myself, I use them for long term trend watching as well as historical action. Trying to say "8153 on the DOW is the ultimate low" is like trying to guess the correct interest rate the FED should be at: A waste of their time and mine.

Auto Bailout a No Go if Democrats Have to do it Themselves
So you think everything is going to change just because Mr. Bush is gone? You think now that the Dems are in control we are looking at politics by other means? From Yahoo Finance:
Senate cancels vote on doomed auto bailout
WASHINGTON – The Senate's top Democrat has called off a planned vote this week on a $25 billion auto industry bailout. Senate Majority Leader Harry Reid said that he wanted to figure out some way to help Detroit's struggling Big Three but that efforts to do so had stalled.
The White House and congressional Republicans rejected Democrats' plan to dip into the $700 billion Wall Street rescue fund to finance loans to U.S. automakers.


So the republicans (some of them, nowhere near all of them) are balking? The lame duck White House is not in love with the idea? So what? If this is the right thing to do, then make a vote. Get everyone on record, yeah or nay. What is the problem?

Simple, as always. The TARP was dogshit that the public did not want. The auto maker bailout is even more crap that the public has said NO to. While this is nice, the Congress does not care. If the auto bailout had huge support like the TARP did it would go through. But the craven democrats do not want anything to bite them, surely not another bailout with serious opposition. So no vote. New politics, same as the old. Weak and scared politicians (either side) unable to do what is right, only what is politically possible. Remember the big debate Bush promised about the "Flat Tax" if he beat Kerry in 2004? Remember the debate? Of course you don't, it never happened because the opposition was too high. Note: I am against all bailouts, but if the Dems think it is for the best, they should go for it.

Headlines That Change
Saw a strange thing today on Yahoo Finance. After the FED had given their forecasts, you the ones that have been so spot on up to now, Yahoo had this headline up:
AP
Fed sharply lowers forecasts, hints of rate cut

Later in the day when the selling got heavy, the lead headline became:
AP
Fed sharply lowers economic forecasts for this year, 2009; signals another rate cut coming

And then later tonight, an amalgam of the two:
AP
AP
Fed sharply lowers forecasts, hints of rate cutWednesday November 19, 3:13 pm ET
By Jeannine Aversa, AP Economics Writer
Fed sharply lowers economic forecasts for this year, 2009; signals another rate cut coming

Now I am not proposing that there was anything sinister going on here. I am just pointing out that the good old game of "hint of a rate cut" was changed to "rate cut coming". Take from this what you want, I just found it interesting.

As far as rate cuts go, what is the point. The effective FED rate is 0% right now, and they only have 100bps left anyway. I guess they could keep going for the hope of getting a bump, but I do not think that will fly.

What will the FED do? One cut of 100bps? Two 50bps? Four 25bps? I have no idea and it does not matter. Well, I take that back because it matters as it is the new poll question! Please vote on what you think Bernanke should do with his last 100bps of credibility!

Have a good night.

3 comments:

Anonymous said...

GYSC

Coagulations on the promotion.
As far as the markets I expect the DOW to fall another 50% over the next year. S&P may be a little less but not much. YEN to 80.
This is gonna get really ugly.
Kevin

watchtower said...

@ GYSC

Congratulations on the promotion!

Thanks for keeping your blog going, I don't know how you do it with your family and work load but it is appreciated.

Lisa said...

Congrats on the promotion! Understand exactly what you mean about picking the exact numbers for a low/retest. I get sick of hearing it, too, since "everyone is a T/A" now. (Yes, I am a T/A person, with some sense LOL)
Love your blog.