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Grizzly's
Growlings Back Issues
Monday Morning Market Musings 11/23/98
Five Questions for ThanksgivingBullish sentiment continues to surge with the markets, to the levels last seen at the tip in mid July. ‘[T]he secular bull market is still alive and the cyclical bear market is over," pronounced Prudential Securities’ Ralph Acampora to a meeting of 300 mostly bullish market pros in Denver last week.
Notice that Acampora’s call comes as the DJIA has already run up 1700 points, or 23%, to a recovery high, to back above 9100. Ralphie boy, where were you at the market low on October 8th? It would have been a great call then.
Our outlook remains unchanged. We continue with our call of the market as being in a massive bull trap rally that is merely setting the stage for an inevitable and historic market crash. See the back issues index for a refresher.
US stocks remain on FULL CRASH ALERT!
Not much happening overnight going into Monday morning trading on Wall Street. At 1:00am EST, the Asian markets are narrowly mixed and S&P 500 futures trading on Globex are up a couple of points from Friday’s strong close.
Just how bad is the crisis in Russia? It grows deeper and darker day by day. Last Friday Galina Starovoitova, a candidate for president, was gunned down in classic Chicago-style as she entered her apartment building in St. Petersburg. Brutal attacks on bankers and businessmen, legitimate and otherwise, have become commonplace. Personal security must be the only part of the moribund Russian economy actually growing.
The fall harvest is next to non-existent. The US, Europe, and Japan are preparing huge relief efforts to avert a truly disastrous winter for the Russian people. It may be too little, too late.
Just how worried about the global crisis are the powers that be in Washington DC? Just ask the US Federal Reserve, which cut official interest rates for the third time in seven weeks. The markets reacted to the latest rate cut as expected, with a sigh of relief and not much more.
This tepid reaction is understandable. Historically, interest rate cuts have actually preceded and accompanied at least two of the worst market meltdowns ever. As Steven Hockberg, editor of the Elliott Wave International’s Short Term Update points out, the Fed’s continuous cut rates in 1929 and 1930 could not stem the tide of the market crash. [The market finally bottomed after the Fed raised rates in 1931.]
Japan’s central bank also desperately and continuously cut interest rates from 1991 to 1996. In that time span, the Nikkei 225 Average plunged from 39,000 to 14,000, near where it languishes today.
Just how much confidence was restored to the world financial system by Japan’s latest and much ballyhooed bailout package? Just ask bond-rating authority Moody’s, which promptly downgraded Japan’s sovereign debt rating.
Just how fragile is the entire geo-economic system? Just ask the US Controller of the Currency, which reported that US commercial banks hold an astonishing $28 trillion in derivative instruments. Add to this untold trillions more held by hedge funds, offshore pools, and private funds.
Just how much confidence was restored to the fragile geopolitical system by the US last week? Just ask the Malaysians, who were insulted and outraged by US Vice President Al Gore’s remarks supporting the opposition movement in that country.
Meanwhile US President Bill Clinton lectured to the Japanese about how they must open their markets and revive their economy in order to save the world. Perhaps Clinton will next lecture to the US Congress about how they must open their minds and revive the American tradition of forgive and forget to save his presidency. Neither Japan nor the US can truly "feel his pain."
To bulls and bears alike, Happy Thanksgiving Day!
"The presidency is the finest jail in the world" -- Harry S Truman
Grizzly
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