Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Ganging Up on the Stock Market!

Stock-Markets / Stock Markets 2010 Jan 22, 2010 - 01:47 PM GMT

By: Sy_Harding

Stock-Markets

Best Financial Markets Analysis ArticleI wrote in last week’s column that “the next few weeks could be a testing time for both bulls and bears”.

To my way of thinking too many influential participants decided to take part in that testing this week for comfort.


Early in the week the National Association of Home Builders (NAHB) reported that its Housing Market Index, which measures the confidence of home builders, declined to 15 in January, its lowest level since June, indicating that only 15% of builders have confidence in the housing industry going forward. The NAHB’s chief economist said the housing market recovery is tenuous as foreclosures continue to rise, the jobs recovery is slow, and builders are having trouble getting construction loans.

That was followed the next day by the report that new home starts unexpectedly fell 4% in December.

Banks got into the testing of the market by reporting fourth quarter earnings that were again produced mostly from their investment trading departments and investment-related fees from customers, while their credit-card and loan losses continued to pile up.

The World Bank then got into the act, releasing a report on Thursday saying that global economic recoveries will be tepid at best in 2010, and may even stall if consumer and commercial demand doesn’t pick up sufficiently to replace government stimulus efforts as they are withdrawn.

The report and remarks by the World Bank’s Arthur Burns also added weight to recent monetary policy announcements in China, one of the world’s most important and most stimulated economies, that it has begun preliminary moves to reverse its stimulus efforts. Burns said, “We can already see signs of bubbles and tension in the Chinese economy.”

As if there was not already enough pressure in China to cool off its blistering economy or face potential runaway inflation, China reported on Thursday that its economy (GDP) spiked up 10.7% in the 4th quarter.

To add to the confusion and uncertainty, Warren Buffett chimed in with well-publicized remarks that he still doesn’t know when the economy will recover, and seemed to express the need for more stimulus efforts from the government, saying, “The government came through, and overall I give them high marks for what they did  . . . . . . But we need to get money in people’s pockets, and the first stimulus plan did not do that very well.”

So we had the World Bank saying the global economic recovery will be tepid and may even stall, but that China, so important to global economic recovery, may be in a bubble and needs to take more steps to cool off its economy, with China agreeing, while Buffett is saying the economic recovery in the U.S. is still questionable and needs more government stimulus.

Meanwhile, one of the bright spots in the U.S. economy has been the fast recovery of the major banks, their return to significant profitability, and repayment of the TARP bailout money earlier than was expected.

However, as I noted above, their earnings are coming from their investment activities, while their losses from credit-card and commercial loan losses continue to pile up.

But what the heck, earnings are earnings, and their investment and trading activities have certainly been a prime support for the stock market. As I noted in last week’s column “The absence of public investors has not prevented a strong new bull market, rising on very low volume, the participants primarily being professional traders, and professional investors at hedge funds, banks and other institutions. In fact, banks have been reporting large profits due primarily to their trading and investments, even as their loan losses pile up.”

With those factors already testing the market mightily, President Obama then piled it on, giving a very tough televised speech spelling out proposed measures to reign in the power of banks, including banning them from numerous forms of investment trading, from having hedge funds of their own or providing financing to or investing in hedge funds of others, and so on. Probably good intentions, aimed at preventing the kind of risk-taking and greed that caused the recent problems in the banking system.

A good idea for later. But for now, investment activity by the banks has been a major support of the stock market, and the new bull market has been a major support for the economic recovery.

I didn’t have quite this degree of piling on in mind when I said last weekend that the market would likely be in for testing of its staying power.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2010 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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

6 Critical Money Making Rules