NYSE Euronext (NYX)

[Not_Bill_Oneil]

Tomorrow's plunge and a note on...

the consistency of Bernanke to date.

If you have been following this chairman for any length of time, he has been described as creative, etc. when people discuss his handling of the ongoing situation.

As the closes from around the world are studied tonight by the Fed, one could possibly expect an announcement sometime tomorrow of another inneffectual creative solution, but, even that I would guess may not come. Not yet. It wouldn't be consistent.

For whatever else this Fed has been distracted on, it seems it has been more focused on only certain aspects of the credit markets and other economic indicators and fundamentals, and seemingly hardly noticing at all any signals from Wall Street and our equity markets.

So, I would guess, after a steep sell-off tomorrow and oversold bounce, we could get another consistent reactionary announcement from the Fed similar to what we got on December 12 after their screw-up-FOMC-decision on the 11th. Possibly of another inneffectual short-term, inadequate consistent creative fix (which have turned out so far to be not really any fixes at all).

And, regardless of any creative fix, unless there is news sometime later this week of an inter-meeting rate cut of something more than 50 bps - and at this point it will have to be more than that for a sustained move up, then expect any bump up on any creative fix news to be followed by some more selling and volatility.

If one of these creative fixes comes out early tomorrow morning, that wouldn't be as consistent, and we could start out flat or only slightly lower than Friday. Then, this whoosh down might be pushed out - possibly even until Wednesday - depending on how creative and substantial it appears at first. But, the markets won't buy any more creative fixes for long. So, just wait for the selling.

On the other hand, if we start out low and plunge before any news comes out from the Fed, then we could put a low in tomorrow. I hope for this scenario - as we have already been on our own for quite awhile. Let the markets ride it out now and wait for the Fed to react on Wednesday with some follow-up consistent creative ineffectual fix.

And just beware, if that happens, then it's quite likely we get more bad news in the next couple of days or weeks from an ABK, etc. and then it could really get ugly. We will definitely roil some more on a scenario like that until at that point in time there is very real and concrete and adequate emergency action from the Fed (like a necessary full point emergency cut in the Fed funds rate) and other emergency announcements from DC. That's what it will take with problems with the monoline insurers.

http://www.afgi.org/whoweare.htm

Good luck!