12 replies to this topic

[zman]

I do not think Chairman Bernanke is getting involved in these days, he must be primarily concerned about the USD and US Treasuries at the moment, or inflation. This country has still a huge debt to service, even if it stops borrowing now and we know it won't. The markets are merely 5.5% off from the highs, this is nothing compared to billions of dollars at risk for the borrowing costs, if the rates go higher. There is also the risk of foreigners selling more the US equities because of the weak dollar. I would think that the Fed would start to act after some 8-10% decline this time and stop it around 10-12%. The US equities will be attractively priced for a long term buy and hold there. No institution should step in here, if the correction stops here and gains another 8% toward the new highs and then there will be a bigger crisis with the credit and USD. I expect the trend to stay down until Sep or Oct, the credit growth rate at the banks is also still declining, no new money is coming in for a while...

Maybe, the market will form a right shoulder this summer, toward the final lows in fall...

- kisa

Kisa, an excellent point of view and I cannot offer anything to say otherwise...thanks

[thespookyone]

Kisa-I agree. With the dollar in the situation it is in, I doubt the printing presses get fired up hard to save a normal correction. Alos agree that a spooked US dollar isn't very inviting to foreign investors to our markets. Truth is, I don't feel there has been a lot of "pump money" in the market lately anyway. I think the last runup had much more to do with lighter summer volume and lack of sellers than it had to do with any "pumping". Sure, they'll catch a hard drop, but for ideal marginal utility on the pump, it will be at a time when the dollar is strenghtening against foreign currency, actually adding foreign ivestors to the fire-while also being a much safer time to print.

[arbman]

Didn't you guys get the memo? The rates and the stocks will rally together next and all of the world central banks will have to run their money printers overtime tonight against the depreciating USD. But, I bet Fed will be able to beat them anyway!

as for rates....no doubt in my mind that they are headed much higher than most expect...this is a bullish situation as it gives a further push for corporations to increase their borrowings to accomodate their expansions before rates get out of hand...