08.21.07
A LOT to Watch Today
Well, normally I only post “3″ things to watch. Today I could stay home and post all day long as it is flying and the fan is not smelling so hot. The biggest thing to watch now is the 13 week Treasury Bill. With the yield at 2.95% and some very unusual activity going on behind the scenes, namely Bernanke calling the Financial institution leaders himself, not the other way around, there must be something very large looming like an ax over the head of our economy. So I say be concerned, don’t panic, but watch all of the Treasuries carefully. If the commercial paper can not be rolled over this week and the money market funds continue to get bombed with cash requests along with the seizing up of the credit markets, there is no possible way for the Fed to inject enough liquidity into the system.
With that being said, the warning signs are there. This is paralleling 1929 and 1987 way to neatly and Helicopter Ben is aware of this. I have the feeling if not today, then maybe tomorrow, we might see a surprise Fed Funds rate cut of .50% to 1.00%. This, of course, would be viewed as a panic move but a wise one. The result might well be an equity snap back rally to the mid-13,000 range but could also result in a total tanking of the U.S. Dollar Index into the mid to upper 70’s. Right now, I’m camping more into silver as it has the longest and most ground to make up and should skyrocket into the upper teens on such a move as big money moves rapidly into safer investments.
Wednesday is going to be a huge day. There is a very high percentage of some earning warnings and I can tell you now, one of the biggest warnings I am looking for is coming from two homebuilders who have huge outlays and liabilities in California and Florida. The whispers are that one of the big boys is no longer paying it’s bills down here (I deal with a lot of subcontractors) and that the cash squeeze is forcing them to slash home prices into a market where their homes can not get financing, even for qualified buyers. If this validates with a public warning, which I expect soon, they will not be long for the world. The one company only builds “luxury” homes which in Florida means an automatic jumbo mortgage which no one seems to able to get at this time. Perhaps if the phone lines ever clear up at a Countrywide office, someone can help these poor souls with 760 FICOs and the ability to put 30-40% down get some money.
There is a lot of fear and what we are witnessing is essentially a millionaire’s bank run. Think about that. The money markets, hedge funds and brokers are all getting pummeled with redemption requests for the uberwealthy to be moved into cash or safe positions.
What do they know, that we are not supposed to know, but all suspect? It doesn’t take a lot to follow what is happening. Read the posting below from Martin Weiss and look at the graph in the posting. Have fun and I shall return later today after my meetings to comment some more. If I get some time, perhaps I’ll visit and old friend (if they were not laid off) at the CFC Full Spectrum offices in Fort Myers. I’ll bet she’s been notified already of her future, but who knows……
Ernest Hemingway said,
August 22, 2007 at 1:21 am
For whom the bell TOLLS
tsk said,
August 22, 2007 at 4:10 am
Did Wells Fargo file for bankruptcy?
http://www.forbes.com/markets/feeds/afx/2007/08/21/afx4039427.html
Rumor in London of bank failure
WALL STREET OUTLOOK down on talk large US bank filed for Chapter 11 protection
Wells Fargo still down Tuesday evening…
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4563
Things that make ya go hmmm…
Pastor Dan said,
August 23, 2007 at 7:36 pm
Today, Thursday, August 23, The German News Service, DW (Deutsche Welle) News said that the world banking crisis appears to have been averted by The Fed, The Bank of Japan and The ECB but the crisis may not yet be over. They hinted that a total collapse of the entire world banking and financial system could still be on the horizon in the not too distant future.
Any student of history can plainly see that every fiat money system has failed in every age and in every culture. Whether it was the Great Kubla Khan in the 13th century in China and Mongolia, the French assignat-mandat inflation of 1789 - 1796 which resulted in the public burning in the Place Vendome of all paper money, the British paper pound of 1797 -1821, or the American Continental Bill of 1775 - 1779, resulting in the classic description “Not Worth a Continental.” This is the reason Article 1, Section 10 in the U.S. Constitution says only gold and silver were to be used for the U.S. Dollar.