Morning Update

Posted: November 30, 2007 at 1:19 pm by Chuck

After a huge gap up, there was a very decent pullback. Now the markets are simply hovering. No way to tell how the afternoon trading will go, let alone how it will close. Remember that the frenzy on the buy side is just as dramatic as the frenzy on the sell side.

The news of freezing subprime loan rates is interesting. However, it should not be something orchestrated through the White House. If ARM resets are going to cause foreclosures of epic porportions, leaving banks with a huge inventory of unwanted real estate and no incoming payments, then it is the banks and borrowers who need to hash out a deal. It’s all right if the financial institutions say, “Ok, we messed up loaning you money even though you could barely afford the teaser rate, so let’s work out a fixed-rate mortgage to keep you in your home, and keep us in business”. The government just needs to stay the heck out of it. Stop lowering interests. Stop killing the dollar. And how dare anyone in the Federal Reserve say they understand consumers will face “headwinds” because of inflation (while they continue to cut rates), but they must save the financial markets. The financial markets can save themselves, it may be painful and there will be losses, but they can do it. And, this can be done without throwing the rest of us into a recession. The more the Fed’s intervene, the worse it gets.

I highly recommend the following article about the dollar, oil prices, and why what the Saudi’s do about them is important.

http://www.financialsense.com/Market/wrapup.htm

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Comments

4 Responses to “Morning Update”

Dave on November 30th, 2007 2:45 pm

Lisa - Our minds are becoming as one. I also agree that the government should stay the heck out of it. It’s a private transaction that needs to be worked out between borrower and lender. Good call.

Things are starting to come around. Just for Chuck to admit that there is even a “possibility” that stocks may go up in the near term is something that warms my heart. Yes, I know he said “short term”. This could be the first sign of “short term capitulation”. When the short term bears start to give up…..well, you know.
The financials are stabilizing and some of the retailers are doing better. Check out ANF. It cracked through previous resistance and is just 3% off all-time highs now.

I am glad you guys have some fresh longs out there. Watching from the sidelines as this market goes up 600 points in a week is killing me.
tab321 on November 30th, 2007 3:28 pm

Lisa

I must say that you put the financial news in terms that we can understand. Thanks for the little gems of the news. I usually ignored the news since it was way over my head. It is great to have you explainify this stuff to us. I can sure see why the banks and the borrowers would do better to hash out this stuff on their own.

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tab321 on November 30th, 2007 3:29 pm

Lisa

I must say that you put the financial news in terms that we can understand. Thanks for the little gems of the news. I usually ignored the news since it was way over my head. It is great to have you explainify this stuff to us. I can sure see why the banks and the borrowers would do better to hash out this stuff on their own.

……If ARM resets are going to cause foreclosures of epic porportions, leaving banks with a huge inventory of unwanted real estate and no incoming payments, then it is the banks and borrowers who need to hash out a deal….
Lisa on November 30th, 2007 6:47 pm

Thanks tab, I’m glad I’m making some sense!

Dave, the chart of AFN is a bit scary at this point with that V shape. But, I’ve got my eye on it. I’m a staunch supporter of laizze-faire capitalism, so I get really steamed that the government won’t get out of the way of business!