Saturday, February 14, 2009

Triangle ending soon...

Its the weekend and I find myself with time sitting here waiting for my car to be lets take a look at what happened this week and where we might be going. Thursday we had that surprise turn around towards the end of the day with the announcement that Geithner would be giving details of his housing plan some time in the next couple of days/week. If this super secret plan is as good as his overall economic plan that he announced...well the markets are pretty much toast.
I have laid out the two scenerios that I believe we will face. The Blue Scenerio is that we are in a wave 3 down and are finishing wave 2 of 3 of 5. Basically we might get some choppiness but we will continue down STRONG after that. In the Red Scenerio we have not finished the larger wave 2 and can expect a bounce up to 86-87 range before a plunge down.
SRS has show good relative strength....and I expect CRE to continue to have problems as the quarter progresses. SRS has the potential to be in the $150+ range after next quarters earnings report.
While we concentrate on our own economy, the world at large is in serious trouble. Lloyds lost a huge amount in the UK and will potentially need more Government money. Germany's Hyper Real Estate is about to go under and is VERY close to German Nationalization. Japan's economy shrunk 10% and China's "growth" is down to single digits.
China also wants guarantees on the debt its holding as the American government has been doing some "reckless" spending. Its clear that China and other countries are going to trim back their Treasury bill purchases to minimize risk. So what now? The fed will have to continue to "buy" the T-Bills and at some point, they will have to increase the interest to get anyone else buy. This will lead to higher interest rates and put a severe dampening effect on the economy. Basically we are debting up future generations. While America maybe the greatest country in the world today, we are likely to become a second rate debtor nation in the future.
12% of the stimulus will be spent by the end of stimulating is that? 57% will be spent from 2011 onward.