Monday, October 13, 2008

Might turn around

With pretty much every nation of relevance in the western world deciding to guarantee interbank loans, the market is probably going to boom today.

This should increase the survivability of those businesses that require rolling credit for their operations, and the price of stocks today makes them a bit of a value.

I'm probably a day late closing out "short positions" via EEV, EFU, FXP, and SZK.

That said, I'm still bearish on the economy. I expect to buy back into SZK and FXP after they get hammered today. The US consumer spent the past decade or so being the driver of the economy, and they're doing lousy. It seems to me that when the US buys less unnecessary junk, the economies that supply it will suffer.

2 comments:

allisean said...

My expectation is a short term run up on the current news. In a few months (January at the latest), things will be back down again. I think this holiday season will see the death of many retailers.

Scott Wimer said...

I would have to agree with that.

LIBOR rates were down a little bit today. If they don't fall a whole lot by Thanksgiving, I think it'll be extra brutal this holiday season.

Even if they do fall, the consumer sure looks tapped out. Short of banks just wiping out credit card and HELOC debt, I'm not sure there is much that can be done to change that.

I would expect the next administration to launch some sort of jobs program, either infrastructure or energy in an attempt to get people back to work.

The inflation pounding next year could also be a real bummer.