Take advantage of the pullback
I think we should FINALLY consider buying in today.
I held off, missing much of the rally, because I did not think the Fed would do 0.5% rate cut.
Wall Street did not like the results but I think that they will respect that the Fed is running a balancing act between helping the economy, dealing with the banking crisis, and not alllowing inflation to spike.
I figure the market will rebound a bit today, but ease by the afternoon.
The Fed move was very telling. It revealed that, despite claims to the contrary, the economy is a lot weaker than they thought. Last month, the 0.25% rate cut was highly contentious with several not voting for it and 1 voting against it. This month, it was unanimous AND 1 Governor wanted it to be higher.
Considering that the Q3 GDP was revised upwards just 2 weeks ago, that means even more recent data shows Q4 to be a problem.
And, indeed, anecdotes are suggesting that retailers are struggling a bit. JC Penney announced problems. I was shopping and noticed that several high end clothing manufacturers (Armani, Gucci) are participating in sales: they never do, according to sales clerks. Even Apple had to have a special sale. Add it up and it says that things aren't as strong as these retailers would like.
The January retail earnings will probably hit revenue targets but the guidance will be awful. This will be the necessary writing on the wall that consumers are belt tightening.
http://www.msnbc.msn.com/id/22147235/
Consumer sentiment is at a 15 year low after falling 3 months in a row. This level is strongly correlated to a recession (in fact, it is only at this level just before and just after a recession).
I've written a lot about my theory that this is a blue collar recession. Look at this choice nugget from that article:
"'The survey also revealed a widening gap in sentiment between rich and poor. 'Additional losses among lower-income households more than offset the gains among upper-income households"
Blue collar workers are already in a recession, white collar workers are not. Will professionals be spared? Not likely. As we get past the holidays, a lot of pink slips will be given to more and more financial folks, among others.
I held off, missing much of the rally, because I did not think the Fed would do 0.5% rate cut.
Wall Street did not like the results but I think that they will respect that the Fed is running a balancing act between helping the economy, dealing with the banking crisis, and not alllowing inflation to spike.
I figure the market will rebound a bit today, but ease by the afternoon.
The Fed move was very telling. It revealed that, despite claims to the contrary, the economy is a lot weaker than they thought. Last month, the 0.25% rate cut was highly contentious with several not voting for it and 1 voting against it. This month, it was unanimous AND 1 Governor wanted it to be higher.
Considering that the Q3 GDP was revised upwards just 2 weeks ago, that means even more recent data shows Q4 to be a problem.
And, indeed, anecdotes are suggesting that retailers are struggling a bit. JC Penney announced problems. I was shopping and noticed that several high end clothing manufacturers (Armani, Gucci) are participating in sales: they never do, according to sales clerks. Even Apple had to have a special sale. Add it up and it says that things aren't as strong as these retailers would like.
The January retail earnings will probably hit revenue targets but the guidance will be awful. This will be the necessary writing on the wall that consumers are belt tightening.
http://www.msnbc.msn.com/id/22147235/
Consumer sentiment is at a 15 year low after falling 3 months in a row. This level is strongly correlated to a recession (in fact, it is only at this level just before and just after a recession).
I've written a lot about my theory that this is a blue collar recession. Look at this choice nugget from that article:
"'The survey also revealed a widening gap in sentiment between rich and poor. 'Additional losses among lower-income households more than offset the gains among upper-income households"
Blue collar workers are already in a recession, white collar workers are not. Will professionals be spared? Not likely. As we get past the holidays, a lot of pink slips will be given to more and more financial folks, among others.
posted by Andrew at
4:18 AM
3 Comments:
Very good analysis as usual. Please let us know what and when you buy in. Also, do you plan to get some puts or short on the portfolio?
Thanks!
I posted the what, now it's the when.
I keep delaying and watching my companies surge (I hate that we got STOPped out of so many choice companies like PCP, ATW, etc...)
As for shorts, I have a list of companies. I actually think WaMu is heading for insolvency - they'll get bought on the cheap. I'll just post a list of short targets.
Sorry, I know you had a detailed analysis of the stocks. So, you are right the question is when? I am getting pessimistic about santa rally this year :(
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