Above this post you will find shots of the front page of Saturday's The New York Times and the latest cover of The Economist magazine.
The stock market's break finally made it to the headline position in the Times. The cover of The Economist advertises the supposed "credit crunch" and boldly suggests that this medicine will be good for what ails us.
Both stories emphasize the bearish state off the credit markets, which is a little surprising given that the bond market has been rallying for 2 months since its June lows and that the Fed has been on a "steady as she goes" course for quite some time now. This makes me think that most of this "credit crunch" story has arisen largely because of the meltdown of a couple of hedge funds sponsored by Bear Stearns. This makes the headlines a post hoc explanation of the stock market drop rather than a reliable prognosis of what lies ahead.
In any case I believe that the Main Stream Media is in the business of telling people what they want to hear. I take these headlines as evidence that the correction which began from the July highs in the averages is nearly over. New bull market highs lie ahead.
2 comments:
Carl:
Care to comment on the Housing markets please? .... when would a good time to BUYBACK in?
Pat
Carl,
It's not just the melt down of two BS hedge funds...BTW they are three now. But check below the commentary from Raymond James analyst on the international affect of the sub-prime mess.
"From Raymond James analyst
“Contained?” Try telling that to Sowood’s investors. Or how about Bear Stearns (BSC), or the German bank that imploded last week, exposing some $17 bln in subprime debt that it owned, or the Australian bank that announced that two of its hedge funds were down 25% due to subprime investments, or American Home Mortgage (AHM), whose shares traded at $36 in February but now change hands at $0.69 and was virtually forced to close its doors last week, or... well, you get the idea. In all fairness to the economists, they are referring to “contained” with regards to the banking system and I agree, the banking complex is in pretty good shape. But “contained” the subprime situation is not; it is perilously close to spilling over into the “real” economy."
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