Daily Investment Interpretations
August 26, 2010
2010-8-26: This
morning's unexpectedly improved jobless number--473,000 compared to the 495,000
that MarketWatch had predicted--gave the stock market an opening boost but it
didn't last: Stocks slide as cheer fades. The NASDAQ Composite
fell 22.85
points (-1.07%)
to 2,118.59. The Dow lost 74.25
points (-0.74%)
to close
at 9,985.81, and the S&P 500
subtracted 8.11
points (0.77%)
to end at 1,047.24. Oil closed at $73.44 a barrel,
while Gold moved down to $1,240. The VIX rose
to 27.37.
Apparently, everyone is waiting on tomorrow's numbers (the
downward revision to the GDP, and the consumer confidence reading) and upon Ben
Bernanke's speech.
A level of 1,040 on the S&P 500 index is a "line in
the sand". A close below this level would signify a downward breakout of
the current trading range. If this should happen tomorrow night, then to
paraphrase "Anthony and Cleopatra", 'Rome will in Tiber melt
and wide arch of the rang'd empire fall'.
Nouriel Roubini ("Dr. Doom") is predicting that 2nd
qtr. GDP will be revised to "well below 1%" and could wind up
being close to 0. It seems to me that Dr. Roubini has laid his reputation on the
line with this specific forecast. Now, PIMCO's CEO, Mohamed El-Erian, whom I
quoted on August 20th as having put the odds of a double-dip recession at 1-in-4
has just tonight endorsed Nouriel Roubini's dire assessment of the economy. Both
Dr. El-Erian and Dr. Roubini agree that the risk of recession is rapidly rising.
My investment advisory service, which, so far, has bought the thesis that this
is just a temporary soft patch in the road, and that the recovery will slowly
continue, has been shaken by Dr. El-Erian's ratification of Dr. Roubini's
warning. If the 2nd-qtr. GDP is revised below 1%, it would suggest to me that
GDP growth is negative by now. Of course, that would not necessarily make this a
double-dip recession, since a recession requires two back-to-back quarters of
negative growth. Still,...
Irish woes continue to flow
This is another reminder that Ireland's austerity program seems to be
backfiring.
Bond buyers are killing the recovery
This article refers to the fact that ultra-low bond interest rates are fueling a
feeding frenzy of mergers and acquisitions.
S&P 500 to retrace steps to 900,
and S&P 500 to hit 450, SocGen strategist warns
When these kinds of gloom-and-doom articles appear, it's usually a sign that the
markets are about to turn around and go up.
Ex-Fed
banker: Low on ammo The Fed's former vice-chairman, Alan Blinder,
warns that the Fed is running low on ammunition, and that buying private
assets... corporate bonds, small business loans, and credit-card receivables...
would be more effective than buying U. S. Treasuries.