Is the economy really improving.....is this a new bull market or is this still just a bear market rally?  I think this article goes a long ways in answering this question.

http://biz.yahoo.com/


With foreclosures soaring, there will be further write offs by financial institutions and even more inventory piled on top of a flooded housing market.  Home values continue to decline and the experts don't see an end in sight.  I think it is safe to say the housing sector of our economy is in a depression.  It is going to take years for this sector to pass this turd before a recovery begins.


How is the rest of our economy fairing?  Well, our dollar has weakened to a point in which our exports have helped maintain GDP over the past couple of quarters.   As the rest of the world's economies continue to slow this will have a draw down on our exports.  Lately, the dollar has found new strength which is bad news for our exports and GDP.   Employment losses will begin to increase as there is a decrease in GDP.

If you listen to the CNBC, you will hear the bull market pep rally repeated over and over again.  According to CNBC, we are at the end of this crisis.  If you listen to market pros such as Buffett, you will hear a different message.  Buffett sees this as being the end of the beginning rather than the beginning of the end to this current economic downturn.  He stated this past week many people will be caught by surprise by this recession being much deeper and longer than they anticipated. 

The link above didn't work right.  Try this one....

 

http://biz.yahoo.com/

Buffett  is telling what he knows and is telling the truth on this.  He has enough money where he will break the code and tell the truth.  For some reason people don't read up on history he has been through enough markets both bull and bear to know what he is talking about.  There are tons of books about this stuff and only the hard hardcore folks read them.  Robert K. the author of Rich Dad Poor Dad said it best "I can tell folks what to do to get rich they just don't do it."  And I know everyone knows the saying read up on history or be doomed to repeat it.  Based on tons of books that I've read the same stuff keeps happening just different years with slightly different circumstances.  The next major major moves will occur when the Fed starts to raise the rates again.  Everybody can't think that stock and commodity prices will continue on the path they are on.  Bear markets and crashes are like the reset button that needs to occur every so often.  Companies keep posting losses, remember that companies can and do amortize loses over years, inflation numbers are simply wrong for real people buying real things and media reports are simply wrong or misleading has anyone ever taken a look at some of the retractions(ie.  we meant to say they loss 50 million not profited).  The fact is there is nothing that can be done to improve our countries

situation except letting it play out. 

I agree with you on the cure for the economy.  I don't see a bull market returning until housing and the financial sector hit bottom and start improving.  Financials will not start to improve until housing issues work themselves out.  The rest of the economy will hinge on the financial sector getting back on it's feet.  With Alt-A loans financed in the past 3-4 years resetting from now til 2011, it will be a while before that happens.  We've already experienced the sub prime problem and the Alt A defaults (a 50% bigger problem) are coming around the corner.

The only solution the Fed has is pushing the value of the dollar further down.  Hopefully, we can survive the storm of inflation ahead.

Personally, I think the Bear Sterns debacle was the bottom of the financial market. There certainly is the possibility of another correction as the market trends higher, but I doubt that a 1987 like event will occur because of low-interest rates and low fed funds.

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Aqua

Did you see the Fed report today regarding lending?  Yes, the Fed is trying to support the financial sector with a safety net, but banks are also tightening up lending despite the low rates you speak of.  With it being difficult to borrow, businesses will have trouble making the capital investments needed to push this economy back into positive territory and the housing sector will be slow to recover as the supply of inventory out paces demand causing a further decline in home values (the principle reason for defaults).  I think the economy is still in a slowing down process more so than a bottoming out process before a recovery.  This recession will last much longer than you think.

 

Please explain to me the reasoning behind why you see Bear Sterns as being the bottom to this market.

Ben must have read my posts.....look what he said today:

NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke on Monday said conditions in mortgage markets remain strained, posing a threat to the economy, and urged steps be taken to prevent home foreclosure where possible.

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy," Bernanke said in remarks prepared for delivery to the Columbia University School of Business in New York.

Bernanke said the sharp U.S. housing downturn is producing a steep rise in mortgage delinquencies. Not all foreclosures result in the loss of the home, he said, but the high number of borrowers in distress and sharp declines in home values in regions of the country mean the share of people who lose their homes will be higher in the current situation than in the past.

A widespread decline in home prices is a relatively novel phenomenon, and lenders and loan servicers will have to develop new and flexible strategies to deal with this issue, the Fed chairman said.

Bernanke called on Congress to move quickly on legislation expanding the Federal Housing Administration and strengthening oversight of government-sponsored mortgage finance enterprises Fannie Mae (FNM.N) and Freddie Mac (FRE.N).

"Finding ways to avoid preventable foreclosures is a legitimate and important concern of public policy," he said.

Bernanke's comments come as a sharp spike in problem U.S. home loans and a deep correction in U.S. housing markets have led to financial market turmoil and weighed on U.S. economic growth to the point that many analysts believe it is in recession.

A congressional panel last week passed a sweeping bill to enable the government to finance $300 billion in distressed mortgages. Its authors say the measure would help 2 million homeowners avoid foreclosure.

The Bush administration opposes the measure, saying it exposes taxpayers to potentially significant losses if a large share of loans refinanced by the government fail.

Bernanke stopped well short of endorsing the bill in his speech, saying only that Congress should pass a legislation that would give the Federal Housing Administration greater latitude to set underwriting standards and risk-based premiums for mortgage refinancing.

aquaswim47:

Personally, I think the Bear Sterns debacle was the bottom of the financial market. There certainly is the possibility of another correction as the market trends higher, but I doubt that a 1987 like event will occur because of low-interest rates and low fed funds.

Just based on charts I would have to agree with this.  I just recently bought MER based solely on a weekly chart.  I also have a ultra high yield financial ETF that I'm going to get in also based on a weekly chart.  Once the target is hit I'm going to sell enough shares to cover the cost of the remaining shares.  I should have the leftover shares free and clear for the dividends.  At least that is the plan.   

Looks like ol' Ben is finally seeing the Alt A problem emerging.  LOL.....glad to have you on board Ben!

BeattheMkt:

aquaswim47:

Personally, I think the Bear Sterns debacle was the bottom of the financial market. There certainly is the possibility of another correction as the market trends higher, but I doubt that a 1987 like event will occur because of low-interest rates and low fed funds.

Just based on charts I would have to agree with this.  I just recently bought MER based solely on a weekly chart.  I also have a ultra high yield financial ETF that I'm going to get in also based on a weekly chart.  Once the target is hit I'm going to sell enough shares to cover the cost of the remaining shares.  I should have the leftover shares free and clear for the dividends.  At least that is the plan.   

Hey Be,

Hope your trade is successful but the weekly chart shows an uptrend on declining volume during a longer term downtrend (200 day moving average is still in a steep decline).  Usually this results in the continuation of the primary trend.  If you draw a trendline on the MER weekly chart from the top made in mid May 2007 connecting it to the high body in mid June, July and then mid Oct and extending it to the present the trendline will be between $54 and $55.  You need to break through this trendline for the chart to begin to look bullish.  Be careful out there!


Jack

jackg1606:

BeattheMkt:

aquaswim47:

Personally, I think the Bear Sterns debacle was the bottom of the financial market. There certainly is the possibility of another correction as the market trends higher, but I doubt that a 1987 like event will occur because of low-interest rates and low fed funds.

Just based on charts I would have to agree with this.  I just recently bought MER based solely on a weekly chart.  I also have a ultra high yield financial ETF that I'm going to get in also based on a weekly chart.  Once the target is hit I'm going to sell enough shares to cover the cost of the remaining shares.  I should have the leftover shares free and clear for the dividends.  At least that is the plan.   

Hey Be,

Hope your trade is successful but the weekly chart shows an uptrend on declining volume during a longer term downtrend (200 day moving average is still in a steep decline).  Usually this results in the continuation of the primary trend.  If you draw a trendline on the MER weekly chart from the top made in mid May 2007 connecting it to the high body in mid June, July and then mid Oct and extending it to the present the trendline will be between $54 and $55.  You need to break through this trendline for the chart to begin to look bullish.  Be careful out there!


Jack

 

Generally I see stuff different than alot of folks.  And essentially I'm a serious chart nerd and I see bullish diveregence that has already started a bull trend at least on the weekly chart with my readings.  On the smaller charts I don't like but, I'm trying to get off of solely playing smaller charts.  My thing now is predicting the DOW when I see signals.  I've been pretty good with it so far however, this last time its taken way longer than expected.  Looking at the charts now it finally appears to be happening.

SKF may be the better trade.

Good Luck