Depression Watch (Nov. 21 2008)

   
Dow Close (Fri)       8,046.42    494.13
Last Friday's close      8,497.31    337.94 (-)
Fri-to-Fri Change =    450.89 (-)
previous FFC  =         446.5 (-)
Oil (Fri)              $49.93         4.00 (-)
Oil (Last Fri)             $57.04       1.20 (-)
Oil (FFC)            $7.11 (-)

Friday's "spectacular" close up is being credited, by popular media, as a positive outlook on Obama's announcement that he will announce his White House economic position choices on Monday. However, if you look at the week to week trend - it's still a downward trend. In fact, it's as large as the previous FFC (Friday to Friday Change). Take a look at a 3 month graph of the Dow (Sept to Friday) [2]. The problem, economic trends are of no use to day traders, because they don't emerge until the week is over. Trends appear week to week (specifically FFC), Month to Month, Year to Year, Year to Date, and then historical. Graphical analysis is also available in 5 and 10 years prior. This is, also, of no use to program trading, which use statistical models aimed at tight focus trading.

The other problem, in making calls, as much of the media does, is the hedge fund factor. George Soros, and reports from the BBC stated that hedge funds are deleveraging - so when a hedge fund deleverages (let alone pull out of the market) what does that curve look like. Is it a sharp downturn, followed by a buy at the bottom (the reverse of profit taking on the upside) - with this cycle repeating itself until the hedge funds that can have moved to safety, and the others implode. Soros, a hedge fund star, has predicted an implosion of 75% of hedge funds.

Next, there is market (trader) psychology, which very much follows the mechanisms of herd animals. Taking cues from the lead (a perception) they follow fearing being left behind. Leaders, not there for the benefit of others, become the cowboys herding cattle. Pushing them (the traders) in a direction that benefits the leaders. This curve needs to be identified and mapped as well.

Supporting Quote

[1]
U.S. stocks on Friday rallied on a report President-elect Barack Obama would nominate Timothy Geithner to be the nation's Treasury secretary - MarketWatch

[2]

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Depression Watch (Nov. 19 2008)

Dow Close (Wed)       7,552.29    444.99 (-)
Oil                         $49.62         4.00 (-)

What do you think is happening here with Obama? We have already bought into the banks (with no comment from Obama). He plans to continue with wealth redistribution and a new green economy (sans oil and gas) - where do you think he will get the money. Look at what's happening with the market! All quotes below show how the market reacts to tax increases and increased regulation. In quote [4], the new tax replaces a tougher regulatory environment, and effectively signals deregulation. Quote [3] shows major Socialist Democrat supporter George Soros, moving away from US regulation.


Supporting Quotes

[1]
LOS ANGELES (MarketWatch) -- Argentine assets dropped Thursday, ahead of a government vote to nationalize locally-run private pension funds. --- Argentina's equity index, the Merval, fell 6.5% to 863.81, closing before an expected vote by the Senate on a proposal that, if approved, would allow the government to take over about $24 billion managed by 10 private funds. The lower house of Argentina's Congress passed the proposal earlier this month. - MarketWatch

[2]
State, municipal, corporate pensions lost hundreds of billions on derivative swaps - MarketWatch (Depression Watch Nov.17.08)

[3]
The hedge fund of billionaire investor George Soros increased its stake in Brazilian state-run oil company Petroleo Brasileiro  to 21.1 million American Depositary Receipts as of Sept. 30 from 11.5 million at June 30. ---  The Petrobras stake was by far the largest in the Soros fund's reported holdings, which totaled $3.8 billion at Sept. 30, up from $3.7 billion at June 30. --- The change in portfolio size could reflect the performance of the portfolio, a shift toward, or away from, investments that have to be reported to the Securities and Exchange Commission, or some combination of the two.  - MarketWatch

[4]
HONG KONG (MarketWatch) -- Asian stocks recovered from steep losses to trade mixed late Wednesday, with Shanghai's Composite surging 6.1% to lead regional gainers, as investors chased Sinopec shares on hopes that a new gasoline tax under consideration could herald market-based pricing for fuels. --- Other regional indexes traded lower, while India and the Philippines rose. Most declining markets pared back early losses in late trade, although the mood remained fairly downbeat amid evidence of further economic slowing in the region.

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Depression Watch Nov. 19 2008

Dow Close (Wed)       7,997.28    427.47 (-)
Oil                         $52.69 -0.93

Economics from the perspective of astrophysics. Economics and astrophysics are highly mathematical, and both use models as predictors of the future. However, with the advent of modern physics (with the atomic bomb) the limitations of statistical models became blatantly clear. This is where economics and astrophysics diverge. Economics continued with the faulty statistical models (todate), while the experimentalists in physics continue to redefine the boundaries of physics. The problem is that with a statistical model there are no real restrictions or boundaries, they are pure thought experiments. While a dynamic model (like a CCD chip that makes a digital video camera work) has real physical limitations. If the model drifts outside these limits, the results will be readily visible. An example of this is the image quality as the number of pixels increases. Improvements in digital imaging technology are an improvement in pixel density. Errors in the model, produce errors in the image. The higher the pixel density the lower the errors must be.  This is extended, further, into the computational models that produce the image standards jpeg, mpeg, avi, divx, Xvid or any other digital image compression model.

Standard, and current, economics models are the old statistical models with no such reality limitations, as with a dynamic model like the CCD chip. Under these models, and economic theories the financial crisis arose. Without alternatives, economists are turning to these very models, once again to steer through the problems. However, the physics dynamic modelling standards can by applied to any system - including economics.

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Depression Watch Nov. 18 2008

Dow Close (Tues)       8,424.75    151.17
Oil                          $53.55         0.84 (-)

While the recession appears to be global, the extent to which the recession is truly global may depend on a new look at Asia.

Supporting Quotes

[1]
HONG KONG (MarketWatch) -- Asian stocks recovered from steep losses to trade mixed late Wednesday, with Shanghai's Composite surging 6.1% to lead regional gainers, as investors chased Sinopec shares on hopes that a new gasoline tax under consideration could herald market-based pricing for fuels. --- Other regional indexes traded lower, while India and the Philippines rose. Most declining markets pared back early losses in late trade, although the mood remained fairly downbeat amid evidence of further economic slowing in the region.

[2]
The head of Japan's largest brokerage, Nomura Holdings, has suggested the global liquidity crisis is over. --- Nomura chief executive Kenichi Watanabe said the main problem now was how to revive the real economy. -- BBC

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Depression Watch (Nov. 17 2008)

Dow Close (Mon)         8,273.58    223.73 (-)
Dow Close (Fri)           8,497.31    337.94 (-)
 Oil                         $55.18         0.23 (-)

The question on minds now, is what to do next. This is in light of "The Big Three" dire cries for help. However, the understanding of what actually has occurred seems to elude many of the "economists" in the media, and in the roles of advisors to political "leaders". Many (if not most), incorrectly, blame Reaganomics, Bush and the free-market. However, quote [2] shows that the pension funds were integrally involved with the hedge funds, private equity, and investment banks now at the center of the crisis. Pension funds had stopped being pension funds, and began acquiring companies in vast LBO (private equity deals). This moved pension funds from the relative safety of pension funds to M&A (Merger & Acquisition) and hedge funds, at the opposite end of the risk spectrum. Quote [3] shows how the government supporters of Freddie Mac and Fannie Mae, became the very core that caused the market collapse. Other articles, in the Economic Notebook, also point to the role of F. Mae & Mac (and their supporters in the government) in this economic crisis. This is not Reaganomics!! It's the socialist Community Reinvestment Act (Carter-Clinton-Dodd/Reid/Frank). Yet, no one is talking about this.

Quotes

[1]
Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse. - MarketWatch

[2]
State, municipal, corporate pensions lost hundreds of billions on derivative swaps - MarketWatch (same article as 1)

[3]
Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars  - MarketWatch (same article as 1)

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Depression Watch (Nov. 16 2008)

Dow Close (Wed)        8,282.66   411.30 (-)    
Dow Close (Thurs)      8,835.25    552.59
Dow Close (Fri)          8,497.31    337.94 (-)
Last Friday's close      8,943.81    248.02
Fri-to-Fri change                         446.5 (-)
Oil                           $57.04        1.20 (-)

Welcome to Obama's world of change. Investment, and the jobs they created are fleeing the seen, looking for places to park their money until the socialist (income redistribution) storm blows over. Just look at the past Democrat supporters like George Soros!

Supporting Quotes

G20
"At the same time, we must lay the foundation for reform to help to ensure that a global crisis, such as this one, does not happen again," the statement said. ---  In order to attack the lack of faith in markets, the G20 leaders agreed on wide-ranging measures to shore-up the glaring weaknesses that have been exposed in the regulation of new financial products. --- For instance, hedge funds could be regulated for the first time and credit-rating agencies will get tougher oversight.  - MarketWatch

Oil/Soros
The hedge fund of billionaire investor George Soros increased its stake in Brazilian state-run oil company Petroleo Brasileiro  to 21.1 million American Depositary Receipts as of Sept. 30 from 11.5 million at June 30. ---  The Petrobras stake was by far the largest in the Soros fund's reported holdings, which totaled $3.8 billion at Sept. 30, up from $3.7 billion at June 30. --- The change in portfolio size could reflect the performance of the portfolio, a shift toward, or away from, investments that have to be reported to the Securities and Exchange Commission, or some combination of the two.  - MarketWatch

From the Same G20 story above!
Over the past year, global financial markets, once the crown jewel of the new century's economy, have frozen. Banks and financial market participants are hoarding cash, unwilling to take on the most basic investment risks. Investors are bringing home capital that had been invested in developing economies. As a result, economic conditions around the world have cratered. - MarketWatch

A comment from MarketWatch
Did anyone hear Bush's comment tonight when he said that if we do not fix things that we could see a depression that would be worse than the Great Depression? I was shocked to hear him say something like that when he and our Govt cannot even admit we are in a recession. - ranger, MarketWatch

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Depression Watch - Will be back on Monday

We are down for systems upgrades and maintenance.

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Depression Watch (Wednesday Nov 11, 2008)

Dow Close (Wed) 8,282.66 411.30 (-)
Dow Close (Tues) 8,693.96 176.58 (-)

As the economy sinks further, the The Democrat lead government's answer is to start nationalizing corporations. The free market is dead! The USA is dead, welcome to the USSA! This will echo globally!

Definition: Slave - A person legally bonded to another.

This is the current state of the average American citizen, until the $10 Trillion plus debt is paid. So American's say hello to Masa Obama! The first African American slave owner.

The economic obstacles mean the next U.S. president may have a tougher time getting through a much-anticipated climate change bill, whose higher costs for utilities would ultimately mean heftier electricity bills for consumers. Failure to pass a bill that would create a system to sell carbon credits would also dry up one key source of funding for Obama's $150 billion in promised alternative-energy investments. --- Obama is more likely to deal some blows to Big Oil -- the sector that helped drive stocks higher over the past four years -- whether through increased taxes or not allowing new drilling. With gasoline back under $2.50 a gallon, there's less political urgency to lower pump prices by expanding the nation's domestic oil supply. - MarketWatch

Drill less, spend more
What's ahead for the energy industry under Barack Obama? Big Oil may lose out while alternative energy producers could see the dollars flow in -- an investment the next administration says it hopes will create up to 5 million new jobs.- MarketWatch

Brazil welcoming Big Oil to its party
Oil and gas discoveries could alter international markets
By Jasmina Kelemen
Last update: 12:01 a.m. EST Nov. 13, 2008

Brazil's Petrobras has within the past year announced a stunning string of oil and gas discoveries that could alter international markets and prove a boon for both the national oil company and international operators that are involved in the action. --- And in a rare, heartening bit of news for the world's largest oil companies -- which are struggling to replace production as many nations shut them out of their fields -- Big Oil is welcome to join the party. - MarketWatch

Nationalization - Socialism! Obamaism!

Paulson refocuses rescue plan -- Treasury chief shelves government purchases of troubled mortgage assets, considers placing funds outside banking business.

Purchasing these so-called "toxic" assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the package was being debated before its enactment. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds. --- '[Paulson's] been flip-flopping on every plan and it doesn't look like he has a plan.' — Alex Merk, Merk Investments -- MarketWatch

The falls came as the US signalled a shift in policy on its $700bn bail-out. --- US Treasury Secretary Henry Paulson said he would focus on taking stakes in banks rather than buying up the banks' toxic mortgage debts. -- BBC

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Depression Watch (Nov. 11 2008)

Dow Close (Tues) 8,693.96 176.58 (-)
Dow Close (Mon) 8,870.54 75.27 (-)

As job losses mount, there is an estimation that the unemployment rate could double.

China retail sales expand 22% in October
By Chris Oliver, MarketWatch
Last update: 10:30 p.m. EST Nov. 11, 2008
Comments: 49
HONG KONG (MarketWatch) -- Growth in China's retail sales held near an 11-year high in October, rising 22% from a year earlier, and following from a 23.2% rise in September, according to data released Wednesday by the National Bureau of Statistics.
The growth in sales was in line with analysts' expectations. The pace of growth suggests dipping property prices and easing GDP growth has so far had little negative impact upon consumer spending.
Retail sales grew 22% in the January-to-October period from a year earlier. In 2007, retail sales grew 16.8%, the fastest annual expansion in 11 years.

China's trade surplus rose to $35.2bn (£22.48bn) in October, hitting a record for a third month in a row, data shows. --- The surplus, the difference between the value of exports and imports, rose 20% from September's $29.36bn high. --- Despite the rise, there were signs that foreign demand for Chinese goods was beginning to slow amid the downturn. --- BBC

China's consumer price inflation fell back to an annual rate of 7.7% in May, official figures show, as efforts to slow food price growth kicked in. --- The decline from April's 8.5% rate had been expected, but analysts warned that the surging price of crude oil posed a continued threat. --- BBC

The Looming Energy Crisis? (re: The ban on drilling for oil & The cost of Kyoto)

One of the world's leading authorities on energy supply says the era of cheap oil is over and prices could soon be back up to $100 a barrel. --- The International Energy Agency (IEA), in its World Energy Outlook for 2008, says prices could soar as high as $200 a barrel by 2030. --- The immediate risk to supply, it says, is not one of a lack of global resources. --- Instead, it points to a lack of investment where it is needed. - BBC

UK experts give blackouts warning

The possible energy gap is being created because of the impending closure before 2015 of nine of our major coal and oil-powered plants. --- This is due to an EU directive on acid rain. The issue is compounded by the closure of four ageing nuclear plants during the same period. - BBC

Blackouts after Sizewell shutdown
Homes and businesses in London, East Anglia, Cheshire and Merseyside were affected between 1100 BST and 1300 BST. --- The shutdown cut off supplies to the National Grid within minutes of another plant - the coal-fired Longannet power station in Fife - going offline. - BBC

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Depression Watch - Monday Nov 10th 2008

Dow Close (Mon) 8,870.54 75.27 (-)
Dow Close (Fri) 8,943.81 248.02

The news of China's stimulus package, that buoyed the market in Asia, pushed the Dow futures up Monday morning, but were muted by the economic outlook in the U.S..

Continued contraction forecast in 2009 for Japanese, U.S., British and eurozone economies. Blue Chip Economic Indicators predicts current recession will be deeper, longer than 2001 or 1990-91. - MarketWatch

Shares in US car group General Motors (GM) have closed at a 60-year low after the firm was hit by a broker downgrade. --- The 23% fall to $3.36 came after Barclays Capital said the stock may slump as low as $1 as GM continues to struggle to turnaround its fortunes. -- BBC

Starbucks has seen its fourth-quarter profit almost wiped out by the cost of closing under-performing outlets and falling customer numbers. --- Reporting its global results for the three months to 28 September, its net profits totalled $5.4m (£3.5m), down from $158.5m a year earlier. -- BBC

US mortgage finance firm Fannie Mae has reported a significant increase in third-quarter losses in the wake of the slowing housing sector. --- Losses hit $28.99bn (£18.3bn) in the three months to 30 September from a loss of $1.4bn a year earlier, largely due to a tax-related charge of $21.4bn. -- BBC

US electronics firm Circuit City has filed for bankruptcy protection, one week after saying it would close about 20% of its stores. --- The retailer filed for Chapter 11 protection from creditors at the US bankruptcy court in Richmond, Virginia, where it has its headquarters. -- BBC

note: (-) denotes a downward trend

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Depression Watch

Dow Close               8,943.81      248.02
Last Friday's close    9,325.01  
Fri-to-Fri change =    381.01 (-)
Week's Hi                9625
Week's Low             8,695.79
Hi - Low change =    929.21 (-)

While the week ended on an apparent positive note, but it's also to be expected after a near 1000 point loss. However, the week to week trend is still downward. The slope (steepness) of the trend will determine whether we are heading toward a recession or depression (the very bottom of the market). If you are, as Democrats stated before the election (and for the last 8 years), of the opinion that we are already in a recession, then we are heading (perspective wise) toward a depression.

note: (-) denotes a downward trend

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Depression Watch

Dow Close 8,695.79 -443.48

In this devastating market, "risk tolerance" is an oxymoron. It's clear now that many investors can't stomach 30%-40% declines in their fortunes, despite believing they had a high tolerance for the market's worst. --- Of course, no one knows if this really is the worst. That's why mutual-fund investors pulled record amounts of money out of stocks in October and kept heading for the exits in the first week of November. That's understandable, with the Dow Jones Industrial Average down almost 35% so far this year and close to retesting its October lows.  - MarketWatch

The European Central Bank lowers interest rates to 3.25% in an attempt to prevent a eurozone-wide recession. - BBC

Shares of Ambac Financial Group Inc. lost more than a fifth of their market value Thursday, amid concern about the bond insurer's capital position. The company on Wednesday reported a wider third-quarter loss and its debt rating was downgraded to junk by Moody's Investors Services. --- Ambac shares dropped 48 cents, or 24 percent, to $1.52. A year ago, shares traded at a 52-week high of $34.42. - Forbes

The shock vote brought interest rates down to 3pc for the first time since January 1955, when Winston Churchill was prime minister. Economists forecast that the cut could pave the way for further reductions – with some claiming that rates could hit a historic low of 1pc. --- Thursday's move was interpreted as a desperate attempt to protect the UK economy from a severe recession.  - London Telegraph

Forget JFK, Obama could be the next Jimmy Carter --- Barack Obama and his supporters have been drinking from a bottle of elixir labelled Hope. But the President-Elect knows as well as everyone else that there are gallons of bitter medicine to be swallowed if the economy is to be saved. --- he could create so much resentment that he will be booted out of the White House after just one term. Obama's supporters may imagine their man to be the next Roosevelt or Kennedy. But instead of BHO to follow FDR and JFK, he could end up being the next Jimmy Carter.  - London Telegraph

For those who don't know;

Ambac insures bonds from municipal to federal.

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