The markets shrugged off the high PPI numbers and focused on comments by Bear Stearns and Morgan Stanley regarding sub prime market place not spilling over into other aspects of the economy. The market also ignored comments by Alan Greenspan who spoke about the dangers of sub prime mortgage industry meltdown. He did not see sub prime melt down affecting the economy but hinted that recession may be a possiblity. I don't know why it is that he keeps popping up out of the dead to infuse a bit of panic in the market. Geez! If you're retired, stay that way! That is the mantra of this market who is good at being manipulated by the big institutional players. The market should continue to ignore the ominous signs and warnings at their own peril.
Now the markets are spinning the issue with CPI being the major catalyst for the market. I don't know but I highly doubt that even CPI will be able to sway this market one way or the other. But certainly, the market does not seem to care about inflation at this point in favor of the recessionary fears. What the markets should really be fearing is the prospect of stagflation. I don't really care what the CPI shows whether it is too high, too low, or just right. The real thing that will move this market is the big "R" or recesion. We are fixated on it. We know it will be coming but we just don't want to believe that it could happen. We as a whole populace do not want the good times to end. Thus we keep ignoring ominous signs in the market place and continue to believe in things like, if only the feds would cut interest rates, everything will be fine. We are delusional.
The propanganda main stream media continues to pump optimism and sadly many investors are being sucked into the false sense of security in this market. I have people again calling for bottoms in this correction only after two weeks of pain. That tells me we are not yet done going down. This market is fundamentally different from many other market corrections. There are many issues with our economic factors that tells me that it is not healthy. Here are my main reasons why I am so down on the market:
1. Housing Bubble has not yet burst.
2. Liquidity crisis of prime and sub prime mortgage fall out.
3. Highly leveraged state of American consumers.
4. Corporate Corruption- see Countrywide CEO Angelo Mozillo's indiscriminate liqudiation of his stocks while assuring investors that all is fine at his company.
5. Unrestrained inflation.
6. Unstable global oil markets.
7. Weakening economy
8. Manipulative spinster main stream media who are spinning their own agenda.
On a separate note, Countrywide CEO Angelo Mozillo is liqudiating his shares in CFC like it is out of fashion. To avoid Ken Lay type of accusation if and when CFC falters, he is disclosing his activity in plain day light. And yet, the analysts, the main stream media, continue to support CFC even as the insiders are liquidating their holdings. How many times do we as investors have to be burned by such blatant and offensive actions of greed by these corporate level insiders before we realize the objective truth that something is quite not right at CFC despite the spin placed by FBR, Morgan Stanley, Bear Stearns, and other influential media pundits? Do we forget that Enron, Worldcom, Lucent, and many others before CFC had high brokerage ratings and was highly recommended while the insiders sold while the retail investors bought? Are we doomed to repeat this mistake again?
CFC has high exposure to option ARMS (ALT-A) mortgage. Even if the CEO states that they are only exposed to 7% of their entire portfolio of loans to subprime section, the fall out will touch even the prime segments of that company. Additionally, the market needs to have CFC, which is the poster child of this sector, to be placed in the best light as possible to continue to prop up the markets. The shoe will continue to drop and how many times do we have to see the "dead cat bounces" before investors wise up and go to cash? I will do my part to continue to short the market in the mean time.
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Will Friday be an economic doomsday?
http://infohype.blogspot.com
Not Friday but you saw what happened today. Little bits of pieces are falling off of this economy. The foundation of this economy was built upon easy credit, predatory lending practices, debt laden consumers, and spinster main stream media.
The troubling aspect of the CPI report was that there was an unsually high reading on the food prices. You can just imagine that this cannot be trivial as everyone needs to eat. Rising inflation at the food level is a big deal and a negative one at that. But the main stream media has just dismissed this as irrelevant just as they did for the prospects of housing bubble just one year ago.
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