Greetings and happy Tuesday. While I hope it is a happy Tuesday, it doesn’t look as cheery in the markets today (see pre-market chart below). I am getting the sense that we are going to retest 2008 and 2002 lows. The 2008 low on the S&P was 839.80. In 2002, the low was 768.63. You would have to go back to Jan 1997 for lower numbers. Interestingly, the major lows over the past 10 years — in 1998, 2002, and 2008 — all came in October. That should give us some reason for optimism that we will pass the test, as we have made it through October and are now into November.
(UPDATE 910AM: Louise Yamada is on Bloomberg Radio right now suggesting we are going to break down through 2002 lows because we are in a secular bear market where oversold conditins become more oversold for longer periods. Coupled with fund liquidation and she sees a lot of downside risk. I can’t argue with that. The question is whether we are headed down now or whether we will have a bit of a reprieve first).
As for what is causing all of this downside volatility, it’s the realization that the real economy is headed for a very hard landing. Yesterday’s industrial production numbers were ugly when you stripped away the hurricane restart impact. And the Citibank announcement to triple their layoffs by letting go another 50000 additional employees was not good news. I have already said my two sense on where we are headed so, I’ll call it a day there.
Instead, below I will link out to a number of posts and articles from my favorite blogs that I think you would enjoy.
Health Care goes electronic – Angry Bear
Should The Government Stop Dumping Money Into A Giant Hole? – the Onion via Calculated Risk. (Very funny)
“Industrial Production Screams Recession” – Mark Thoma
Paulson: Fighting the Financial Crisis – Mark Thoma (this is a must read op-ed from Hank Paulson and commentary from Mark Thoma. Needless to say, Hank is patting himself on the back for a job NOT well done.)
You Can’t Invest in an Average – EconomPic Data (This bears remembering. Sometimes, you can’t make it through the troughs and lose your shirt.)
Gaming The TARP “Pay $10m, get $3.4bn of funding?” – Immobilienblasen (I wrote about this too. Something’s wrong if this kind of thing works at getting one’s hands on bailout funds)
Senator Grassley Targets Goldman-Treasury Conflicts, Net Operating Loss Gimmie – Naked Capitalism (Why is everyone at Treasury from Goldmans?)
Quote du Jour: Lehman – Paul Kedrosky
This comes via Felix Salmon:
Jerry Yang’s Entire Memo to His Employees on Stepping Down as CEO: It’s filled with even more meaningless jargon than the memo he issued on taking the job. (Edward here: Can I say — Jerry Yang has been a terrible, terrible CEO and has run Yahoo down. Shambolic.