FuturesCom Investment Publications
Economic Food for Thought , September 18th ,2001
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"Among the hazards of speculation the happening of the unexpected -I might even say the unexpectable - ranks high. There are certain chances that the most prudent man is justified in taking - chances that he must take if he wishes to be more than a mercantile mollusk" -- Reminiscences of a Stock operator--
We all know what happended last week in the U.S. .. words cannot decribe the incident......
As words cannot descibe the patriotic reaction of the American people ...
As traders we must look forward, keep a cool head and profit , rather than lose our head along with out wallets..
Why is everyone bullish EC… is it because some analysts attribute bad earnings to a strong Dollar in additions and think treasury will ok a weak dollar posture ? or is it fear of a US economy l collapse ???
In my opinion the dollar VS the EC is strong as a result of the political policies in general and public habits.. so to speak of our trading partners...
Furthermore… history as shown us over the last several years that when the US Economy has a sneeze ( for us this is an economical sneeze and a Corporate disaster while OUR general population is OK)
Europe has major problems.. a high unemployment base to begin with and restrictive regulations...and so on…
BUT Funds and many analysts want to be long EC ….suggesting in effect a devaluation in the dollar...
They would rather have US treasury devalue the dollar to get their Asses out of the Whole …
That happened in the late 1970's and in the early 90’s .. the early 90's weakness can be attributed to our recession while Europe was euphoric over the Fall of the Berlin wall....The result was a disaster for our partners.. AND it took a while to regain confidence in the dollar….In my opinion .that is why our government likes the strong dollar. PERIOD…
The Corporations need to learn to hedge the risk.. the powers that be should let the dollar be rather stable and maybe
inch down bit ONLY AFTER the economy and stock market recovers… as history has shown us TIME WILL TAKE CARE
of it all... NOT DOLLAR WEAKNESS...
Traders need to Be patient clearly see thru the noise and profit from it ...Greenspan knows this and is GOING to Correct HIS MISTAKE, and the changes that follow will lead to a NEW BULL mkt.
The stock mkt problem is mainly a result of Corporate Folly not the peoples mistakes or lack of will.
Rate cuts and liquidity additions will help, but the corps have to DO MORE .Fire the CEO's who bought the 12 bil dollar bubbles
As for Our population, 95 % who want to work are working, got sucked in , lost money and is STILL WORKING and saving and spending.. Think about it …go to a bar look around and out of every 10 people in it who want to work 9.5 are working…
In my opinion Greenspan's bailout of Corporate America will work.. the sooner the investment community realizes this
the sooner it will begin to buy !!
Think it through a bit and tell me if you think I am right, .not many people feel the way I do , BUT I bet the powers that be DO!
There are big macroeconomic adjustments going on here and the US Stock mkt, economy will prevail as well as the dollar.
As I feel, THIS IS our BEST Stock market buying chance ...per economic circumstance in 20 yrs.....
And for the goofballs who think the housing mkt will collapse …. Why should housing collapse when the economy is
basically at FULL employment….?
And for the fools who think Christmas will be bad… not likely as bad as last year when Most of the country was sitting around watching TV and wondering who the next president would be !
The US consumer has been thru hell… is saving money.. working hard.. and when I hear experts tell me the Consumer is worried.. I say.. that same consumer is working harder, which leads to better productivity and will WANT to have a good Christmas !.. and for those whose jobs are lost..?
They will work it out.. the pain will be there BUT time will take care of it.. as the FED pumps money in and proceeds with an EASY MONEY policy UNTIL it works…...
There is an old saying…When ALL are Short it’s not too long before they ALL Abort !
That Ole' Copper local who heads the Federal Reserve while cutting rates seven times has kept the ‘presses’ running all night. Thus, increasing money supply this year comparable to 1982.. Corporations, while still being severely punished by the market for their follies of past are becoming lean and mean with rapid re-structuring to ensure profitability in attempts to quell the assault on their existence….
These are seeds bull markets come from….
In addition ..Traders who were buying the highs with reckless abandon in the face of interest rate increases are now generally selling with the same vigor in the face of rate decreases into what may very well be strong hands. (An isolated example of this is evident by the recent announcement of Warren Buffets purchases, purchases he is not likely to exit anytime soon.)