Market Crash

[BadThad]

Down we go today, it's just bizzare how this sets in and the market dives on a historic day. Here's a great article:

http://online.wsj.com/article/SB1192...googlenews_wsj

[Grizzums]

Sell off not surprising imo. I am by no means an expert by any stretch. I do not even completely understand all the coreralstions.

The problems today seem to lie in the less visible (by your avg investor) credit markets rather than equities. Many of these credit derivitives are not even able to be valued accurately (from a market perspective). The fed is even having a tough time putting values on them. This credit problem will unravel slower than if the problem was in equities imo.

Couple that with 90 usd oil and tough news coming from some of the fundsmental aspects of the oil services industry that has been a significant part of keeping the market moving north and here is a bit of a cascading effect. Revealing write offs from the finabcial sector doesn't help. Energy and financials can help lead the market in a direction from what I see and with more information coming to light....they lead us down. Oil services has had big gains recently anyway. Encouraging fundamentals from parts of tech growth can't save the market as a whole.

Will enough bulls step in while searching for bargains? I don't think so yet..... Too much uncertainty still.....

Humans..... Emotions.... Uncertainty...... Over leveraged....... Valuations in parts of the credit markets - in question...... Valuations in the equity markets - in part seem resonable, but what if the merits in some of those sector specific valiations are in question?

I think there is plenty of aspects in the market that appear healthy.....inflation (at least in part) seems to be somewhat contained... Interst rates are generally low....employment is still holding fairly well.....

But........ Uncertainty, and human nature seem to be prevailing imo. will the consumer continue to spend? Will global growth continue to hold up parts of our markets (eg financial sector, commodoties, etc). Will volatility in our market roil parts of the asian markets....... Will that create volitility there that will add to and speed up the unwinding carry trades?

What are your thoughts?
I have not had time to look at the technical picture, anyone want to chime in there?

[Evil-Eye]

This is a set up for the next interest rate cut. :D

[Weirdharold]

In Yall's opinion,Will a set up for the next interest rate cut lead to run away inflation?

[Evil-Eye]

Originally Posted by Weirdharold

In Yall's opinion,Will a set up for the next interest rate cut lead to run away inflation?

I don't think it will. I am not an Economist but I
did stay in a stay at a Holiday Inn last night. :D

[Weirdharold]

I know a couple of pretty smart people that think it will.... leaves me concerned... with the dollar crumbling.... inflation is just what we need.

[Grizzums]

Originally Posted by Weirdharold

In Yall's opinion,Will a set up for the next interest rate cut lead to run away inflation?

Not exactly sure what you mean by "set up" but I'll offer my rookie opinion. There are a couple things that really pop out at me....first regarding a rate cut leading to inflation....certainly a possibility. I was not for a rate cut the last time, personally. I think a market nose dive might have been a better choice, perhaps we will get one anyway. I think the FED has put themselves in a tough spot. The last cut not only crushed the USD even more but it also led to another surge in commodity prices, thus raw materials for many companies across the industrial/manufacturing sectors. This will surely raise eyebrows and possibly heighten fears regarding inflation....again. Another cut imo will compound this problem. The recent CPI showed modest increase in consumer prices suggesting that inflation risks are still prevalent. It appears that odds of a cut are increasing... http://www.clevelandfed.org/research...unds/Index.cfm

...it is interesting to note however, that odds of a recession have gone the other way according intrade.com from Sept to now - http://www.intrade.com/jsp/intrade/c...=1192803811921

...you wouldn't know it though if you listened to the increasing chatter from some of the nations (US) leading company's CEOs http://www.reuters.com/article/ousiv...9?pageNumber=2 - which leads me to another question.....is the recession chatter just a ploy to try and influence the FED into another cut in an attempt to kick economic growth back up to booming levels again? The US economy has been booming over the past few years but has since slowed to just slightly below trend http://www.newyorkfed.org/research/d...harts/pi_9.pdf

If housing remains a drag but the global economy continues to boom then US growth may very well remain at around 2-2.5% over the mid term. Something that may be at odds with the "CEO recession chatter" is the insider trading activity. Insiders sold in droves right before economic growth plunged in 2000, but how about right now...??? Well, right now insider selling is at levels more associated with market bottoms than market tops...

http://www.sentimentrader.com/subscr...IDER_SCORE.htm
:confused:

That to me is interesting nonetheless. Do you listen to the chatter, or listen to their activity?

I do not wish to express a real solid view as to any sort of predictions one way or another regarding rate cuts or recession, just laying some of my opinions and gen. info on the table.

[Evil-Eye]

Originally Posted by Weirdharold

I know a couple of pretty smart people that think it will.... leaves me concerned... with the dollar crumbling.... inflation is just what we need.

Hey congradulations, I don't know anyone smart...besides myself of course. I am not much but I am all I think about.

The term you used was "run away" inflation. I put that just below hyper inflation on the economic downturn scale. Could it lead to inflation? Sure. Run away inflation on one more cut? If it's a 2% cut I would have to say yes. Am I going to convert my currency into gold? No. The whole problem was started by rate increases to avoid inflation. What really needs to be done is to concentrate on deficit reduction. That will bring everything back into line. Cut rates enough and the housing industry gets fired up again. The housing industry is a big if not the biggest driver in our domestic economy. There is a lot of trickle down economics in it. I could go back to selling mortgages for a part time job instead of swing trading my child's college savings. Part time community college they go.

I say cut another 1/2 percent so I get another 50% of my money. I will sell all and happily pay the tax on it to further stimulate the government tax roles. The government is like a heroin addict. Doesn't look past it's next fix.

What you don't want to happen is this spill over into China. If China goes, there will be a lot of pissed of Chinese wondering how they will eat. If the Communist Chinese collapse there will nothing holding North Korea and Putin back. That could lead to the Canadians getting drunk in Detroit and starting a massive brawl. Then all hell breaks lose and the Donald would get fired.

This is very complex I may have to revisit this after I watch some TV. WH, don't take any of the above too seriously. Things are going to happen the way they are going to happen. I am getting deployed tomorrow to the Commonwealth of Pennsytuckey. If I don't make it back it was nice knowing you. If I do make it back, it is still nice knowing you. Good luck to all. I did sell out of everything I had a profit in on thursday by luck.

[Grizzums]

Originally Posted by Evil-Eye

Hey congradulations, I don't know anyone smart...besides myself of course. I am not much but I am all I think about.

The term you used was "run away" inflation. I put that just below hyper inflation on the economic downturn scale. Could it lead to inflation? Sure. Run away inflation on one more cut? If it's a 2% cut I would have to say yes. Am I going to convert my currency into gold? No. The whole problem was started by rate increases to avoid inflation. What really needs to be done is to concentrate on deficit reduction. That will bring everything back into line. Cut rates enough and the housing industry gets fired up again. The housing industry is a big if not the biggest driver in our domestic economy. There is a lot of trickle down economics in it. I could go back to selling mortgages for a part time job instead of swing trading my child's college savings. Part time community college they go.

I say cut another 1/2 percent so I get another 50% of my money. I will sell all and happily pay the tax on it to further stimulate the government tax roles. The government is like a heroin addict. Doesn't look past it's next fix.

What you don't want to happen is this spill over into China. If China goes, there will be a lot of pissed of Chinese wondering how they will eat. If the Communist Chinese collapse there will nothing holding North Korea and Putin back. That could lead to the Canadians getting drunk in Detroit and starting a massive brawl. Then all hell breaks lose and the Donald would get fired.

This is very complex I may have to revisit this after I watch some TV. WH, don't take any of the above too seriously. Things are going to happen the way they are going to happen. I am getting deployed tomorrow to the Commonwealth of Pennsytuckey. If I don't make it back it was nice knowing you. If I do make it back, it is still nice knowing you. Good luck to all. I did sell out of everything I had a profit in on thursday by luck.

The sarcasm is deafening...but I did find it quite amusing!

[Weirdharold]

Grizzums and Evil-Eye Great post and props to both of you. Grizzums the links were helpful and left me deep in thought. Evil your last post left me rolling on the floor like only you seem to be able to do. My venture into this attempt to learn enough to do some trading has been a worthwhile journey... I am really happy to have had the chance to meet you. Thank you both.