(Complimentary excerpt of Gene's weekend report posted at www.ingerletter.com formembers. Our continuing S&P guideline short for big-picture work reflected ourview regarding the forecast multi-week rebounds as being an upward consolidation 'only'. Iremind visitors the March call was rebounds into early April then make hay into May.)
Gene Inger's Daily Briefing . . .for Monday April 14, 2008:
Good evening,
'Imagination at work' . . .reflects the perennially unjustifiedoptimism, that all heard from many analysts and spokesmen with 'agendas' about big-cap orother overpriced (and illogically valued) stocks, as we forewarned, not only back at thetail-end of 2006 . . . via our 'distribution-under-cover-of-a-strong Dow forecast for year2007 (including calling for periodic Summer & Fall rallies with 'zero' sustainabilityodds); but lately, as a slew of pundits confused 'systemic stabilization againstinsolvency', with economic turnaround.Not that we don't believe (per GE's mantra) of turning 'imaginative ideas' into servicesto solve tough problems; they have, they do, and they will. In fact that's essentiallywhat we did for financial forecasting, during a time that a majority on Wall Street andbig economists, instead focused on 'imaginary' ratings or price valuations.
Daily action . . .
The Nation could be shocked absorbingpotential writedowns and capital-raising pending;
(Reserved comment on) sufficiency of'term lending facilities'; suffice to say 'concerned';
Volker addressed these situations lastweek; media assessed only superficially (at best);
Remember our big 'reflation' call in2002? Well, can primary dealers handle new demand?;
Last year's call for housing to be a drag into '09-'10 continues(others embrace our call);
Pension issues (San Diego & Florabama situations as examples)barely surfacing as yet;
Trailing S&P 500 Price/Earningsratio recently hit almost 21; saw that as a negative portend;
Commercial property implosions followdrastic retailing contractions; ongoing forecast here;
Global economic decline started; inlinewith ongoing forecast of economic contagion;
All along argued impossible for worldto 'decoupling' from 'U.S. credit pandemic';
Remember our theory: 'solo-walk' '07 Dow highs masked (redactedstructural core forecast);
Deleveraging remains 'a b*tch', as unpleasant (secular) scenariosrotationally evolve;
Year-plus macro key forecast: not short and shallow economic dip;but long and deep;
(We included a few more of our macro bullet points; about a dozenreserved for members).
Further points:
Call was big-caps artificially creating false comfort; then'grand dames' to start succumbing;
Pyramiding mountains of compounding debt have not ended;facilitation assisted banks;
Lehman or others now becoming 'sobered', likely a warning theybegin to realize what's next;
Canada blockingU.S. firm's buy of Canadian satellite firm is a trade-shot across our bow;
Forewarned February-May 2008 mortgagereset tsunami for a year; ramifications extend;
Overall multiplier effect may force(reserved); housing bottoming optimism still unrealistic;
Forecast '05-'06 real-estate bubbleburst as microcosm of bigger issues; as are unraveling;
Capitalism requires credit; restoring equilibrium takes more time;
Mideast and Persian Gulf tensionsincreasingly unstable with rising threats from Islamists;
Terrorists in Lebanon or Gaza (or evenin Egypt) share radical goals irrespective of 'clan';
Remember; we ramped our videos last year in-anticipation of'epic' historical distribution;
Combined with 'deleveraging', it enhanced prospects for 'thepanic of 2007 / 2008' per call;
Our year-earlier forecast contrasted this 1880's 'railroad bonddebacle' and 'panic of 1907';
Ironically those events prompted creation of thenow-compromised major rating agencies;
(Additional bullet points reserved for ingerletter.com membersonly; we invite your joining).
MarketCast (intraday analysis & embedded Daily Briefing audio-video).. . remarks forecast substantive irregular but volatile rallies over the preceding fewweeks. At the risk of reminding everyone markets remained 'at risk' as 'oversold'eliminated; in past week called new threat in 'so-called' safer 'big-cap' Grand Dames.
We retain our macro (forward-roll adjusted) June S&P 1599 short-sale; irrespective ofinterim oscillations; as clearly outlined all these weeks. Evolving short-term toppingprocess irrespective of daily trading shifts. Multi-Index macro perspective
After the video's, a few comments about computers & chips; Intel, Nvidia, and Apple.
Twin video comments provided; with pre-close remarks reflecting background about some ofthe continuing factors today, and as dovetail with overall conditions, as well. Then theusual nightly technical MarketCast final overview will follow per usual.
Bits & Bytes . . . provide investors ideas in afew stocks, often special-situations, but also covers an assortment of technology issues(needed for assessment of general factors in tech overall, or as compelling developmentscall for) that are key movers in the NDX, SOX or S&P, plus ideas ingerletter.comthinks might merit further reflection. (Individual stock comments generally are providedin the video overviews only; once in awhile I'll have some thoughts here, wheresomething's particularly emphasized or of technical nature necessitating some discussion.Increasingly most all is via video.)
Over the past year, one of the reasons we've warned about buyingtechnology earlier in the distribution saga, has relied upon two factors: a) the belieftechnology was not at all immune to the contracting expenditures, and slower CapEx weanticipated for a good period of time in 2007, 2008, and beyond to some extent, includingconsumers, who are unwilling to pay-up for electronics in general, or PC's in particular(more); commoditized changes in technology, that were influenced by the stupidoutsourcing of production, allowing mundane chips to be manufactured (or knocked-off) inAsia, and that's on-top of contract players (more); or if you like c) the belief that masslow-cost PC's would enlarge what is called the 'computer user universe' (conclusion anddiscussion of effect on particular stocks; Intel, Nvidia, AMD and Apple; are reserved).
Commentsare interpretative speculative postulations provided 'as is with allfaults' and all risks with no assurance about future performance of anything(markets or stocks) in any way whatsoever. Personal necessity, irrespective of opinions,may require buys or sells deemed necessary, without prior notice.
In summary . . events continue reminding us of risks Allied fighting forcesface, given continued attacks on free peoples, by elements including organized terroristforces in various countries. A world addressing terror threats continues, asdomestic issues absorb us more while as we also focus on Middle East and World War IIIavoidance.
Our 2007 view had been that we're in an ill-defined recession; finally recognizedas it evolves. As to whether it descends into something akin to post-railroad debacles wayback in the 1880's; is likely what the Fed worries about (as to longevity); while actionsaffirm they're desperately engaged to stabilize fluidity of functionality. Regressionto the mean or traditional affordability 'rules' likely hallmarks of home lendingguidelines for years. I hasten to add, whether depressing or realistic (per 3 yearforecast here of the housing break combined with 'junk debt' investment avoidance); stockseventually get interesting. Gilded Age globalists unflaggingly failed to see the era'stransition, or detect the public's mood of increased populism; essential reform calls; andlow taxes.
McClellan Oscillator finds NYSE 'Mac' fluctuating via intervening bull-bearshuffles on the NYSE & NASDAQ. Reflex rallies allowed 'risk off-loading'tactics; as 'Street' debt holdings aren't investment grade. Multi-month efforts evolving.In this regard, we suspect that strategy fluctuates (as) expectations remain out-of-lineoptimistic for the actual world situation. (The overall world situation is clearly denotedto our members.)
Issues continue including oil, terror; China
Fifteen months ago I called it an 'accident waiting to happen'; noting it wasaffirmed historically that long-duration periods of free money (a Gilded Agementality) do not create permanent liquidity; but give that illusion while the oppositetranspires. There will be various trading swings; through 2008 or later. We scalp these,while retaining our (adjusted) position shortfrom June S&P 1599
Since early 2007 we noted economic conditions more similar to post the Gilded Age endingin 1929, the panic of 1907 (hence our call for the start to be the 'panic of 2007' lastyear at the end of that Gilded Age, and it's NOT coming back (further remarks).
Enjoy theweekend!
Gene
Gene Inger,
Publisher
~Gene Ingers Daily Briefing(The Inger Letter daily analysis on www.ingerletter.com)
~Gene Ingers MarketCast (Intraday audioupdates emphasizing S&P futures and market action)
Updates about 10 minutes after:the opening bell, 10 a.m. ET, noon, 3 p.m., with a nightly final issued at approximately 8p.m. In times of volatility, an additional interim report update is frequently provided.
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