Friday, November 09, 2007

Recession-Risk Denial Friday

  • The market is visiting the dominatrix again today and being punished and tortured. Thank you, Mistress.  The reason du jour from Yahoo's market update?  "Recession-risk denial."  Reuters reports that Lehman Brothers'  Chief Global Bond Strategist sees the "deepest correction" ever in structured finance and the current market is in "recession-risk denial". The Chief Bond Strategist also expressed the opinion that the U.S. credit crisis is now worse than the one caused by Long-Term Capital Management.
  • Barry Ritholtz notes the dramatic decline in consumer sentiment.  And who can blame folks for being so gloomy?  With the writer's strike, Fox has announced the cancellation of this season's 24.  I'm a little melancholy myself.
  • Yesterday's early selling was countered with some dramatic buying late in the day.  Friday's tend to move opposite of the weekly trend as traders book profits ahead of the weekend.  My guess is that a lot of shorts may want to cover and book their gains before they go home.  Lets watch the last hour again today to see if the bears can push it down and keep it down, or whether the market bounces back.
  • Doomsayers Dead Wrong About the Dollar's Decline.  An interesting opinion from Mark Dow.  It isn't all bad; there is some upside.  Excerpt:

This kind of market action has encouraged familiar warnings from those "bunker monkeys" who link the dollar's decline to dark visions of a disorderly global collapse.

But the U.S. dollar has been depreciating for about five years in pretty much linear fashion and is primarily a structural phenomenon, not a cyclical one. Moreover, even though the U.S. economy is clearly facing headwinds that are, if anything, likely to intensify, the greenback's decline, in and of itself, is not a symptom of U.S. weakness.

Instead, it reflects other countries finding confidence in their own currencies, and weaning themselves of excessive dependence on the dollar as the only international currency for their savings and transactions. In short, across the globe, individuals, companies, central banks and investors are de-dollarizing.

  • "Bunker monkeys!" LOL.
  • Dr. Jeff also has a blog entry up on Understanding the Dollar.  You are reading Dr. Jeff daily, aren't you?

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