Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
INVESTING IN HIGH RISK TECH STOCKS - ALL OR NOTHING - 16th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Bear Stearns Just The Tip of the Iceberg?

Stock-Markets / Financial Crash Jun 29, 2007 - 06:31 PM GMT

By: Anthony_Cherniawski

Stock-Markets The Chicago Trib's headline says it all. “ Hedge funds' mortgage woes could spread .” “Investors following the near-collapse of two hedge funds managed by Bear Stearns Cos. might be a little bit like a homeowner watching the house down the block catch fire: It's far enough away to think there's no immediate threat, but you still need to care about what the embers could do to your own roof.

The worry is the same on Wall Street, where bankers are anxiously watching to see if the hemorrhaging at Bear Stearns will spread elsewhere.”


The likelihood is high that it will. The reason is that the high credit ratings given the CDOs (collateralized debt obligations) was based on almost no historical performance data. In the period from 2000 to 2006, virtually anyone could get a mortgage with no money down. In addition, defaults were few because anyone on the verge of default could simply refinance away his/her problem debts, including credit cards and car loans. This practice has been halted by the rising interest rates that are causing the problems now. Many of the adjustable rate mortgages now resetting to payments as high as double the original cost. I have commented in earlier Updates that many families hit with higher payments have used their credit cards to make up the difference. But time and options are running out for many families who took the bait of a subprime loan without thought of the future.

Personal income is in decline…

…and no one is noticing. The Bureau of Economic Analysis news release today says that personal income went up .4% in May. But the fine print says that personal savings declined by 1.4% in May. That's a decline (in the average family savings) of 1% of household (annual) income in one month . Another way of putting it is that the average American family is spending 12% more per year than it earns.

The Nikkei's uptrend now in question.

The Nikkei rallied last night . However, it may just be what is called “window dressing.” Here is what the media suggests, “Predictions of a higher-than-expected profit growth in the July-September quarter at auto, steel and precision equipment makers could push the Nikkei to 19,000.” Notice that nothing is being said about this quarter.

 

 

While Shanghai is getting clobbered again.

“ SHANGHAI : Chinese stocks fell after regulators carried out a slew of market cooling measures amid expectations more were on the way. The benchmark Shanghai Composite Index slid 2.4 percent at 3,820.70 (not shown in the chart), following a 4 percent slump on Thursday.”

One reason for the decline may be the $2 billion in fraud and bad loans at two major banks uncovered by auditors.

 

The battle royal over the 50-day moving average!

For the past week the S&P 500 has been lingering below its 50-day moving average. Yesterday and today it has fought to regain the “high ground” above the 50-day. It failed again this afternoon. Why is this so important? For many traders, the 50-day moving average is the dividing line between a healthy market and an unhealthy one. This is so important that many hedge funds have programmed buy and sell signals when the line is crossed.

 

 

Another volatile week in bonds…

..but not a whole lot of progress. Bonds are looking a tad more bullish this week and it appears that this index will try to “fill the gap” left by the larger decline. Yesterday's Federal Reserve announcement to hold rates steady didn't help the cause for bonds. While keeping the benchmark lending rate at 5.25%, it announced that inflation is still the greatest risk facing the economy.

 

 

The housing market is searching for new lows again.

Bank regulators are finalizing mortgage rules for subprime borrowers. This is a bit like closing the barn door after the horses have escaped out of the barnyard. The fact is, the housing decline has been set in motion and there is a lot further to go. This has not stopped 92 mortgage lenders from going bust. Bear Stearns may just be the tip of the iceberg for hedge funds, as well. The collapse of the subprime market is taking a heavy toll on hedge funds.

 

The dollar is resting…

…on its 50-day moving average this week. The question is, will it hold? Bloomberg reported today that the dollar fell to a 3-week low . This point is critical. Should the dollar not hold at the 50-day moving average, the outlook becomes more bearish. If support is maintained, this could lead to a powerful rally. Stay tuned

 

 

Precious metals not well with higher dollar and higher bond yields.

The news media proclaims, Gold higher as oil continues rise. The fact is, gold has been in decline for two months now. This is the most compelling reason for not basing investment decisions on the media. They always seem to have it wrong. Or, worse yet, the turn molehills into mountains as they focus on daily activity rather than the larger trend.

 

 

Gasoline process are hovering near the highs, but due for a change.

The EIA's report on Wednesday that showed crude inventories are still climbing despite refinery production dropping to its lowest percentage utilization since 1991. They have a thoroughly reasoned explanation in their report entitled, This Week in Petroleum . Magic? Or is it just some crude tricks they have up their sleeve?

 

 

Lower heating bills ahead?

It appears that we can look forward to it this winter. Forecasting something like lower gas prices next winter has some risks. However, the chart shows natural gas prices breaking “hard” through the 200-day moving average. This indicated that a longer –trend move is taking place. Chances are good that the 200-day moving average will now act as a “ceiling” to natural gas prices as it did last August.

 

 

Back on the air again.

Tom Wood of www.cyclesman.com and I have had a running commentary on the markets again this week. You may listen to our comments by clicking here .

Have a safe and happy holiday.

I'll be gone next week on a family trip. That leaves the chance that I'll not be available to write another newsletter until July 13 th . In the meantime, enjoy your summer holiday!

The Practical Investor will be moving its business location at the end of July. Further updates on the move will follow.

Please make an appointment to discuss these strategies by calling me or Claire at (517) 324-8741, ext 19 or 20. Or e-mail us at tpi@thepracticalinvestor.com .

Regards,

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: It is not possible to invest directly into any index. The use of web-linked articles is meant to be informational in nature. It is not intended as an endorsement of their content and does not necessarily reflect the opinion of Anthony M. Cherniawski or The Practical Investor, LLC.

Anthony M. Cherniawski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in