Depression Watch (Dec. 5 2008)

Dow Close (Fri)       8,637.09    260.85
Last Friday's close      8829          102.50
Fri-to-Fri Change =    191.91 (-)
previous FFC  =         450.89 (-)
Oil (Fri)              $40.81 
Oil (Last Fri)             $52.00     
Oil (FFC)            $11.19 (-)

Last Friday's "spectacular" close up was credited, by popular media, as a positive outlook on Obama's announcement that he would announce his White House economic position choices on Monday. However, if you looked at the week to week trend - it was still a downward trend.

This week, a market bottom was sited as being in view [1]. However, the moves of Goldman Sachs and Morgan Stanley, tell a different story [2,3]. This is not just a flight to quality, but a fundamental market shift. It's perhaps, the clearest signal as to what is coming - and it's not good.

Take a look at [4], look for the time frame, 1970 to about 1985. Next look at the time frame from 1985 to the present. For this recession to be like the 70's decade long recession, the Dow and the 10 year Treasury lines will have to converge. The real anticipation of this occurring could explain the moves of Goldman Sachs and Morgan Stanley. In other words, the economic situation is far worse then being talked about by media economists.

Supporting Quotes

[1]
"Unemployment tends to be a lagging indicator. I do think we're probably getting to the point where we're hitting a bottom," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank. - MarketWatch

[2]
Goldman Sachs and Morgan Stanley mark the end of an era this month when they post their first earnings since becoming commercial banks, and investors resigned to the dismal results on tap are restless for any indications about the companies' plan to grow with the less risky business model. - MarketWatch



[3]
As Goldman and Morgan Stanley brace for loses, investors look to firms' future as regulated banks.... - MarketWatch

[4]

Powered by ScribeFire.