Markets to tank Monday?

[blazespinnaker]

http://www.politico.com/news/stories/0110/31899.html

Trying to win the votes of fiscal moderates, President Barack Obama formally endorsed legislation Saturday creating an independent commission with the power to force Congress to vote on major deficit reduction steps this year, after the November elections.

Read more: http://www.politico.com/news/stories...#ixzz0dYzqttay

I'm going out on a big limb here .. I think markets will tank hard on Monday, possibly starting in Japan (after accounting for currency changes). I think gold may drop too.

I get a sense that the Administration is at sea after Massachusetts and the fiscal moderates are taking over. This sort of discipline has to be deflationary.

It's quite possible that we're on the verge of a big dip. My bet is gold will get hit as well, but the USD should firm up.

[LargoWinch]

Re: Markets to tank Monday?

Great, last chance to buy before all goes POOM! (in the inflation kinda way)

[Ruy DelSambuco]

Re: Markets to tank Monday?

I thinking the market remains mostly flat until Bernanke is confirmed, then it continues to rise. I thinking the recent small pit will fill quickly.

[jtabeb]

Re: Markets to tank Monday?

http://www.politico.com/news/stories/0110/31899.html



Read more: http://www.politico.com/news/stories...#ixzz0dYzqttay

I'm going out on a big limb here .. I think markets will tank hard on Monday, possibly starting in Japan (after accounting for currency changes). I think gold may drop too.

I get a sense that the Administration is at sea after Massachusetts and the fiscal moderates are taking over. This sort of discipline has to be deflationary.

It's quite possible that we're on the verge of a big dip. My bet is gold will get hit as well, but the USD should firm up.

Funny, didn't work out that way friday.

What happens to the US economy and the dollar when you pull life support and start honest to goodness austerity measures?

Sure you get a short term strengthening, till the currency gives out or goes down.

[Camtender]

Re: Markets to tank Monday?

Jesse is on top of it..........

http://jessescrossroadscafe.blogspot...-intactus.html

Right to the support lines.

Next week will be interesting.

[coolhand]

Re: Markets to tank Monday?

As you've probably seen in the bullish/bearish sentiment readings over the last month, Wall Street is very bullish, and it seems many professional investors are leaning heavily towards the "gov't stimulus &/or QE 2 will continue b/c it has to b/c the economy can't stand on its own yet". To the extent that events (the election in MA) or speeches call that into question (such as a call for reduction in Federal spending by Obama obviously would), my bet is that the markets will not respond favorably...

[Camtender]

Re: Markets to tank Monday?

On a side note,

I go back to Jim Rogers - who continues to say he "has no shorts in the market". Everyone knows that the government has set a thresehold for to big to fail. So with a floor in place, how far can the S&P 500 really fall?

I see it as one of the last (if not the last) opportunity to buy gold and silver on the cheap before inflation.

However, if Japan, UK or the PIIGS (Euro) have a sovereign debt crisis first (before the US), would that not cause the US dollar to go way up and gold way down? Always on the back of my mind.

[FRED]

Re: Markets to tank Monday?

http://www.politico.com/news/stories/0110/31899.html



Read more: http://www.politico.com/news/stories...#ixzz0dYzqttay

I'm going out on a big limb here .. I think markets will tank hard on Monday, possibly starting in Japan (after accounting for currency changes). I think gold may drop too.

I get a sense that the Administration is at sea after Massachusetts and the fiscal moderates are taking over. This sort of discipline has to be deflationary.

It's quite possible that we're on the verge of a big dip. My bet is gold will get hit as well, but the USD should firm up.

This is consistent with our analysis, to be published tomorrow. We expect that in year three of the U.S. debt deflation, U.S. markets will behave more or less like the Nikkei in year three but for the reasons that occurred in year six: an election that forced politicians to execute on fiscal reforms when the economy was still dependent on government spending. The economy went back into recession a year later, but the stock market saw it coming. It produced a decline from 22,500 at the end of 1991 to 16,800 at the end of 1992. An equivalent decline would bring the DJIA down to 7700.

[Master Shake]

Re: Markets to tank Monday?

This is consistent with our analysis, to be published tomorrow. We expect that in year three of the U.S. debt deflation, U.S. markets will behave more or less like the Nikkei in year three but for the reasons that occurred in year six: an election that forced politicians to execute on fiscal reforms when the economy was still dependent on government spending. The economy went back into recession a year later, but the stock market saw it coming. It produced a decline from 22,500 at the end of 1991 to 16,800 at the end of 1992. An equivalent decline would bring the DJIA down to 7700.

And what will happen to gold?

[FRED]

Re: Markets to tank Monday?

And what will happen to gold?

We review all asset classes, keying off research by everyone's favorite bank to hate.

Still on track with our bank closures forecast.

BTW, we don't hate Goldman Sacks but we do not think GS should be running the country. ;)

[jtabeb]

Re: Markets to tank Monday?

BTW, we don't hate Goldman Sacks but we do not think GS should be running the country. ;)

I think you mean "ruining" not "running" there FRED.

Or perhaps I'm wrong and you mean BOTH, That would be understandable.

[Dirk Diggler]

Re: Markets to tank Monday?

Or front-running the country. They seem to be doing all of these.

[dcarrigg]

Re: Markets to tank Monday?

I'm going out on a big limb here .. I think markets will tank hard on Monday, possibly starting in Japan (after accounting for currency changes). I think gold may drop too.

Looks like NIKKEI only lost .67% and was on the up-side at the end of the day. American index futures look up. Maybe escaped it today, although you'll likely see more climb in the VXO. + .31 change USD to JPY.

[dcarrigg]

Re: Markets to tank Monday?

Looks like NIKKEI only lost .67% and was on the up-side at the end of the day. American index futures look up. Maybe escaped it today, although you'll likely see more climb in the VXO. + .31 change USD to JPY.

Gold futures up almost 1% too...

[Raz]

Re: Markets to tank Monday?

The S&P 500 is overextended and ripe for a correction. BUT...there will likely be quite a few Would-be-Longs who are anxious to get onboard, so we might see a trading range develop between now and May. Two things are likely to happen by then:

(1) The Fed is set to end its Quantitative Easing by March 31st, but who is going to buy the more than $1 Trillion in Treasuries that Obama/Pelosi/Reid/Geithner want to sell? That's the portion that foreigners are most unlikely to take. If they do end their counterfeiting then long rates will rise; in that case we only think housing is in trouble - that should send it careening into another down-leg.
If they reconsider and continue their counterfeiting it would seem likely for the Bernanke Bonar to begin another leg down, breaking to new all-time lows; given that outcome it would seem that gold should begin another leg up just about the time that its seasonal turns bullish (late Summer); (2) All of this should coincide with the end of favorable stock market seasonality in May.

The "sugar high" of massive Fed counterfeiting should face a huge test very soon. As John Mauldin recently commented:
"As I wrote in my 2010 forecast, this year is a waiting game. There are so many choices we must make, and the paths we will take from those choices vary wildly. But make no mistake, we are coming close to the end game. Some countries and economies are closer to that point than others, but the entire developed world is lurching, in almost drunken fashion, towards our economic denouement".

So, FRED: how does this chart look to you?