Where are we headed in the stock market now? Unfortunately back to the lows!
Today will be Black Friday in the stock market. The failure of the Congress, specifically the Republicans in the Senate, to pass the rescue bridge loan for the Auto Industry, along with a few Democrats, will scare everyone in coming days. Portfolios will take a haircut and ensure this Christmas is bleak for retailers as well. You are watching the slow unwinding of our economy and unless their is strong leadership to stop this decline we are headed for the Great Depression of 2009.
The Dow is down over 260 before the pre-market opens in 45 minutes. I expect it to be much worse today. The Democrats in Congress are looking to President Bush to save the day and to agree to use TARP funds to come up with the loan. I can hear the argument the Democrats are using to convince the President. It goes something like this.
Mr. President you came to Congress fearing a calamity in the Banking and Insurance Industry and asked us to trust you and Hank Paulson with approval of $700 Billion in TARP money. In fact Mr. President, you submitted only a 1 page document asking us to just trust you, with no strings attached to the money. We added about 400 pages of requirements to the package but nevertheless we passed the legislation to basically give you cart blanche for the funds. Now for only $14 Billion of that $700 Billion, we are asking you to return the favor and save the auto industry at least till March. It costs only 1 month for what we have allowed you to spend in Iraq. So Mr. President, you can once again feel omnipotent as one of your last final acts, and approve this money and walk away a hero to the very Middle Class you nearly destroyed in your 8 years as President.
Getting to the market, if you have bought and held the ETF Ultra Short of the S&P500, symbol SDS, you are sitting pretty this morning. If you also added to your position you are going to see very good gains today and possibly Monday as I see Monday as a possible culmination of the drive to the lows of the market and retesting next week around 7300 to 7500 on the Dow. When we get there we may have Capitulation in the markets worldwide. Ford is down in pre-market to a low of $2.12/share. It may be a good buy back down below $2.00 as something will come along when Barack Obama becomes President on Jan. 20th and pass the funds needed with the new Congress. GM will most likely close factories to save cash until then.
Hold on for a tough ride just before Christmas. And if you are an Auto worker, I am sorry for your situation and the pain you will be going through, at least short term. You didn't create this mess, it was the leadership.
UPDATE 1:20pm P.S.T.
Comments by Paulson regarding the prospect of using TARP funds to provide a bridge loan for the Auto Industry, had the effect of neutralizing the negative outlook of the markets, at least for today. It does not put off the inevitable market pullback, only delays it. That's fine right now. We need a break as the stress can be too much for some. I will write more this weekend on the market so stay tuned.
The Dow is down over 260 before the pre-market opens in 45 minutes. I expect it to be much worse today. The Democrats in Congress are looking to President Bush to save the day and to agree to use TARP funds to come up with the loan. I can hear the argument the Democrats are using to convince the President. It goes something like this.
Mr. President you came to Congress fearing a calamity in the Banking and Insurance Industry and asked us to trust you and Hank Paulson with approval of $700 Billion in TARP money. In fact Mr. President, you submitted only a 1 page document asking us to just trust you, with no strings attached to the money. We added about 400 pages of requirements to the package but nevertheless we passed the legislation to basically give you cart blanche for the funds. Now for only $14 Billion of that $700 Billion, we are asking you to return the favor and save the auto industry at least till March. It costs only 1 month for what we have allowed you to spend in Iraq. So Mr. President, you can once again feel omnipotent as one of your last final acts, and approve this money and walk away a hero to the very Middle Class you nearly destroyed in your 8 years as President.
Getting to the market, if you have bought and held the ETF Ultra Short of the S&P500, symbol SDS, you are sitting pretty this morning. If you also added to your position you are going to see very good gains today and possibly Monday as I see Monday as a possible culmination of the drive to the lows of the market and retesting next week around 7300 to 7500 on the Dow. When we get there we may have Capitulation in the markets worldwide. Ford is down in pre-market to a low of $2.12/share. It may be a good buy back down below $2.00 as something will come along when Barack Obama becomes President on Jan. 20th and pass the funds needed with the new Congress. GM will most likely close factories to save cash until then.
Hold on for a tough ride just before Christmas. And if you are an Auto worker, I am sorry for your situation and the pain you will be going through, at least short term. You didn't create this mess, it was the leadership.
UPDATE 1:20pm P.S.T.
Comments by Paulson regarding the prospect of using TARP funds to provide a bridge loan for the Auto Industry, had the effect of neutralizing the negative outlook of the markets, at least for today. It does not put off the inevitable market pullback, only delays it. That's fine right now. We need a break as the stress can be too much for some. I will write more this weekend on the market so stay tuned.
Labels: Barack Obama, capitulation, Congress, ETF Ultra Short, Ford Motor Co., GM, Middle Class, President Bush, SDS
posted by Charles Amico at 4:47 AM
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