Ander's Market Theories

[AnderL]

Heres what I see for the SPX this week

Pretty long drop over the last couple months. Markets got deeply oversold and the US government stepped to stop the bleeding. Threats abound. The Fed would buy up FNM FRE, and any other financial that implodes. Kill the shorts and "oil speculators", enact covered bonds so the big boys can get some liquidity, and wrap up a new debt ceiling in a little housing relief bill. Economy still sucks and we might be down here a little longer. The message I'm replying to has the econ rpts for the week. So my guess is W-T-F are goign to play out like this.

Next week Tues is the big "FOMC Policy Statement" so that will probably be an upside event and everything after that is inflation numbers. So the Fed will warn inflation again and we will probably see it in the PPI, and CPI. That means that we might get conditioned to expect a hike at any given moment. the reality will be we wont get one for 2-3 quarters. Commercial paper is falling but we are in a low rate environment and until the Fed lifts rates we CP does not go up. Business needs to speculate that cheap money will go away and start borrowing, but first banks need to have money to lend, so we need those covered bonds out their that they can leverage against. One step at a time I guess. So while the economy will recover next year, markets will try to anticipate the recovery.