Its too late for us. Save yourself!

One more chance to save yourself

PATRICK LALANDE ON WORDPRESS

It’s been a long time coming.  On the news that the Federal government is backing the the economy with 100% aggression the stock market boomed. Up 400+ points yesterday (3/18) and currently (delayed price) up another 54. Gold plunged, financial stocks popped, and optimism has re-entered the dance. 

Yesterday was a nice sunny day here where I live. Through observation, it seemed that the weather couldn’t wait for spring and decided that it would give us a preview.  And then the Feds cute their interest rate by 3/4 of a point.  Hugh. HUGH!  How hugh?  That cut amounts to a 25%.  You didn’t get that on your credit card interest. I’d say that the big boys have a new big toy.  No, not a new maserati or a new corporate jet.  Not the new, 10,000 sq. ft. summer house that they live in for 6 weeks a year.  Not the physical trapping of wealth that you might think.  No.  Not those.  I’m talking about the game piece the financial crisis threatened to take away from them.  I’m talking BIG!  I’m talking the Federal government and the American economy.

From 3.0 to 2.25% makes the big boys in the financial markets cry out with relief.   I can hear them now; “Man, The Feds just gave us another Christmas present in March.  Here we were, worried about where we’d be getting  the money to shore up our write-offs from the sub-prime mess, to cover our losses from the other coming crises, and now, the Feds stepped  in to  cover in triplicate, our losses.  No recession here.  Inflation, but not recession. Yea!

Let’s think about this for a minute.  That money is suppose to instill stability to the financial markets.  It is suppose to alleviate the fears that everyone has,  that the economy is still strong, and being supported 100% by the Federal government.  That money is suppose to “turn away our fears that we are in a recession” and help the economy get back on our feet. 

Yes, but, there is a little voice in the back of my head that is saying,

“Don’t tell them this is going to cause inflation.  Don’t tell them that it is just another way of getting us out of our long stock positions. Don’t tell them that the bill for this isn’t going to be paid by us big boys, but by the taxpayer, for years to come.  Don’t tell them anything or we’ll not be able to recover our losses that got us (the big boys) into this mess.

Here is a little technical talk just to add flavor. 

From changing from longs to shorts, the big boys see another opportunity for “mitigating risks” (a big fancy term for putting it the common (little) guy). I see them “adjusting their positions” and “moving to a more capital-friendly position”.  The “smart money” is taking another opportunity to profit and will, very soon, go “short”, once again.  

Think I got this last one wrong?  Want to risk your money on it?  Feel lucky, do you? Huh, well? Do ya?

That’s what I’m talking about.  This market is being driven by fear and the big boys know it.  Until fear turns to capitulation (look this one up) it is just a matter of time until 12,000 is a ceiling rather than a floor. 

Remember my article Testing, Testing 12,000? Cruise passengers and market soon to get wet ?  What?  You didn’t read it?  That’s not surprising.  As the saying goes, “You can’t save the world.”

(Note: As I wrote this, the market dropped over 100 points.  Where’s the momentum the rate cut was suppose to bring.  I hear the big boys chuckling.)

Patrick

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