futures down 64pts, page-3

War uncertainty has been used by the media as an excuse for the rapidly deteriorating US economy. The similar scenario was put to the public during late 2000 when it took 6 weeks for the president to be decided. They said the market would rally. In fact it fell 15% in the 3 weeks after Bush became President.

Any rally that may occur in the US market will merely be another selling opportunity even though it may be a rally of over 10%. It could also start off a much lower base then 7500 we are at tonight.

US economic facts are;
~ job ads lowest in 40 years. Rapidly rising layoffs.
~ debt levels at a record, total debt 300% of GDP.
~ Muni Bonds, state bonds have signifcant default risk. California which is equivalent in people to Aust. has a deficit of 34BILLION USD. They will have to raise taxes.
~ Corporates have no pricing power.
~ as much as the FED is trying to reflate, liquidity will dry up as finance coys realise the risk they are running. Same as Japan.
~ record bankrupties at corporate and personal level.
~ record mortgage defaults. Even with low rates.
~ a Dow component example, JP Morgan, has 1 trillion in loan Assets and has only made provisions for $16 billion.

In my view the best hope is for the Fed to stop making excuses, step back and let market forces correct the imbalances quickly instead of encouring people to spend what they cannot afford. This will create extreme short term pain for the economy (1-2 years) but hopefully avoid the protracted Japan scenario.

Sorry to be so depressing. Have a look at Conquer the Crash by Prechter - I think it is compulsory reading at the moment.

noip