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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (91106)2/1/2008 9:31:19 AM
From: Rarebird  Read Replies (2) of 110194
 
<<The market works from assumptions, data and hubris.>>

The major assumption is that the Fed will save the banks, the stock market and economy. The data says that the housing and subprime meltdowns continue to bleed into the greater economy. We are not near the end of this bleeding, but closer to the beginning. The hubris is the Hope that many market participants possess that the bleeding is almost over. The statement "the market has bottomed" is a statement of hubris with no rational foundation whatsoever. But Bear Markets fall on the "slippery slope of hope." The Fed’s panic lowering of interest rate was a mere band-aid on a wound, and I therefore expect the bleeding to continue. Moreover, the short-term relief the Fed has provided has limited initial impact on an economy as debt-laden as the USA.

Are you suggesting a V-shaped recovery here? I severely doubt that. What I see is a corrective retracement of the first leg down in a bear market. I expect the economic data to become much worse moving forward. Has the stock market priced this in? Not yet. Just watch the hopelessness of hope ("the slippery slope of hope") emerge and push these markets lower.
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