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Daily Review  

Posted Apr 03 2008, 09:05 AM
by Richard Schwartz

Thursday, April 3rd, 2008:  6:30 am:  Got Lucy to play 9 holes last Sunday.  Cajoled her by saying she’d get a tan, flatten her stomach with golf then a swim, that she hit some great 8 iron bump & runs last fall, I’d pay, and she could brag on Monday.  She went for it & played well.  What got to her the most?  Bragging at school. UPDATE ON THE STOCK MARKET.  Stocks weakened a bit yesterday morning when Federal Reserve Chairman Ben Bernanke acknowledged for the first time that a U.S. recession was possible yesterday about 10 am.  But then stocks steadied up and headed slightly higher as Dr. Bernanke continued his testimony.  A bit later when the questioning got around to the details of the Bear Stearns deal and the assets which the Fed is using to keep Bear in business, Bernanke got a little more fuzzy.  In fact his voice quivered a little when the question was posed about BlackRock’s (BLK) introduction into the equation.  BlackRock was essentially hired by the Fed to value, manage and liquidate if needed Bear Stearn’s assets.  This is the same BlackRock company whose manager Bob Doll has been the biggest proponent that an important stock market low was put in back on March 10th.  I’m just starting to wonder about this whole process.  As the police say there is always a story behind the story behind the story.  Just like behind former New York Governor Elliott Spitzer’s quick departure from office; turns out someone ratted him out from the other party and also that the NYS Police may have their own agenda.  So now I’m wondering if there’s some big collusion story among BlackRock, the US Treasury, the President’s Working Group, a.k.a the Plunge Protection Tem, the Federal Reserve Bank and even the recent decline in the price of gold.  But, hey, no use me speculating about all that.  What is, is.  As to the bullish Double Bottom in place, I see where renowned investor George Soros weighed in about that yesterday saying:  “We had a good bottom.”  And predicting a bounce will last six weeks to three months.  But also predicting that the US economy keeps edging closer to a recession, that this financial crisis is the worst since the Great Depression and thus, that this bottom won’t be the final bottom, that “markets will fall more this year after this brief rebound.”  Schwartz View:  All the above sounds pretty accurate to me.  I also don’t think we’ve seen a final bottom, that we seem to be on the way to recession but its progressing very slowly, probably because businesses never really hired a lot of workers over the last few years of this artificially-stimulated economic rebound and that normally intermediate corrections, in this case upward, do last from three weeks to three months, three months being about the maximum duration.  Since the decline lows came about January 22nd, I’m targeting a rebound to run for another three weeks, probably not as long as most would think and possibly not all that much further upside progress from here.  We’ll soon see.  By the way, further buttressing Mr. Soros’ views is his past history of being the trader, which showed up in my studies of his ex-partner Jim Rogers.  (Rogers was the analyst in their two man super successful Quantum Hedge Fund in the 1970s.)

 



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