-- Posted Tuesday, 2 December 2008 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Tuesday, December 2, 2008

“Phenomenally accurate forecasts

So volatile have the markets become in recent months that the Dow’s fourth-biggest drop in history may warrant barely a yawn if stocks spend the rest of the week recovering, more or less. Some were attributing yesterday’s avalanche to news that November manufacturing activity in the U.S. took its biggest plunge in 26 years. But what will the pundits say if the Indoos gain it all back and perhaps more by week’s end? Will they tell us that investors are “optimistic” about the recession ending now that it has finally been declared? Sooner or later, these guys are going to figure out that the stock market’s ups and downs don’t correlate with events in the real world.

Our take is that shares plummeted simply because the short squeeze that drove them to hysteria last week ran out of laughing gas. Not that Helicopter Ben didn’t try his darndest to keep the guffaws coming. The quote of the day from the Fed chairman was that more interest rate cuts are “certainly feasible.” As indeed they are. Actually, if the Fed plays its cards right we could be enjoying monthly rate cuts, five basis points at a time, till the summer of 2010. But would that help pick up the tempo of the economy? Our guess is no, but you don’t need to be an economist to understand why. Consumers simply aren’t in a borrowing mood. They’d probably come around, though, if they were confident home prices were about to soar again.  How low would interest rates have to be for that to happen?   Bernanke acts like he knows the answer to that question, but in truth, it’s like asking, what would it take to recapitalize Lehmann Brothers or Bear Stearns at $200 per share.

***

Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Tuesday, 2 December 2008 | Digg This Article | Source: GoldSeek.com

Previous Articles by Rick Ackerman

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer