Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (38696)	3/21/2008 8:08:37 PM
From: Donald Wennerstrom	Respond to of 95574

An interesting article in today's IBD. <<Are Those Robins INVESTOR'S BUSINESS DAILY Posted 3/20/2008 Economy: We're hard-pressed to recall a week when so much changed so fast in the markets. It was truly mind-boggling. And how appropriate that it all came to pass as winter turned to spring. To be sure, the challenges facing the U.S. economy are still daunting. But only a few days ago, they were nothing less than harrowing. Indeed, it really did seem like our financial system was "melting down," as many reports put it, with Fed and administration officials in full rescue mode. Eighty-five-year-old Bear Stearns — one of Wall Street's most storied investment firms, and one that only a couple days earlier pronounced itself fit — was in the blink of an eye found to be essentially bankrupt and nearly worthless. This in turn raised questions — no, fears — about Bear's even-more-prestigious rivals, all of which were about to report first-quarter results. "Collapse of Bear Stearns Heralds Worse to Come," warned one headline from London. Those in the U.S. weren't much more sanguine. In fact, doubts spread — or at least were sowed — about an entire capitalist system that some thought had become so fragile and infected by the subprime mortgage virus it might soon collapse, leaving our global free-market system in ruins. Alan Greenspan, ever-helpful since retiring as Fed chairman, declared the financial crisis the worst since the Great Depression. Understandably, investors held their collective breath as trading opened last Monday. And little wonder the Dow quickly plunged 200 points, the S&P knifed through previous support, the Nasdaq hit an 18-month low and brokerage stocks, already 38% off their '07 high, gapped down another 19%. The averages righted themselves, however, as the Fed's misnamed "bailout" plan for Bear became better understood and the other investment banks posted better-than-expected results. By week's end, the crisis seemed to have passed, with Fed Chairman Ben Bernanke winning praise for decisiveness and creativity in addressing the crisis without printing money. The stock market, meanwhile, was being led higher by none other than the investment banks. Then there were the commodities, action in which had continued to scream "Inflation!" Granted, tops looked firmly in place for high-flying grains. But gold had shot past $1,000 an ounce, and oil was not only holding above $100 a barrel but moving steadily higher. Motorists were told to expect $4 for a gallon of gas by summer. But they, too, blew off, and suddenly the talk was of a commodities "bubble" that everyone should have seen but somehow didn't. In short, we went in a mere day or two from a grinding bear market in stocks and a robust bull market in commodities to, well, something quite different. This is not to say a new bull has begun in equities or that commodities won't turn back up. But as the Dow ended the week with a 464-point gain, and with gold and oil down hard, the picture looks a lot less worrisome coming out of the Easter break. These changes probably wouldn't be so noteworthy if not for the fact they came amid some classic signs of a turn. The week before last, for example, saw a dramatic capitulation of investment advisers, with the ratio of bullish to bearish newsletter writers crashing to its lowest level since the 2002 bottom. And as for the economy, Business Week, which has been known to be reliably wrong at crucial points, came through last week with a cover story titled "Waking Up To The Recession." As economists often note, we usually don't know if a recession has begun or ended until months after the fact. And as market pros like to say, they never ring a bell at the top or the bottom. There's something about the week just passed, however, that makes us hope a question posed in a headline on this page two weeks ago — "Economic Weakness Before The Dawn?" — is being answered sooner rather than later.>>