Tuesday, March 10, 2009

Well, I expected a little pop, but not all in one day...

Everyone with two nickels in the market was expecting a bear market rally (a sharp violent move upward in the midst of a bear market) and today's move might be the first step in that rally. Sharp moves were seen across the board in almost every sector. I anticipated a "close the books" sell-off at the end of the day that never came.

This rally has carried over into Asia tonight, but I'll leave with just a couple of quick questions if you get lulled into thinking Citigroup's comments mean we've turned the corner -

1) If Citigroup is truly experiencing a great resurgence in their business, maybe they might want to return some of the $45 billion that we've given them. Hmm, what do you say? I bet the Federal Government would take a payback in small unmarked bills.

2) On the same day as the rally occurred - The Wall Street Journal ran a piece saying, Barely a week after the third rescue of Citigroup Inc., U.S. officials are examining what fresh steps they might need to take to stabilize Citigroup if its problems mount.”

But this seems to fly in the face of the CEO's comments. Hmmm, maybe when the CEO talked about operating profits he conveniently forgot to mention pending write-offs and toxic assets. Oooopsie......My bad.........

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Affluenza - This term has been out for sometime but I just stumbled upon it in Tom Friedman's "Hot, Flat and Crowded". I've never seen a term that so perfectly encompasses the excesses over the past 25 years.

Per wikipedia - Affluenza, n. a painful, contagious, socially transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.

affluenza, n. 1. The bloated, sluggish and unfulfilled feeling that results from efforts to keep up with the Joneses.

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On a day when the markets soar this seems like a strange time to discuss this Metlife study but the findings are stunning.

Half of Americans now say they are only one month or less away from not being able to meet their financial obligations if they were to lose their job — just two paychecks or less.

And of these, more than half — 28 percent of all Americans — say they could not survive financially for more than two weeks without their current job.

One additional reason why the banking crisis has not likely abated is that this survey showed that following a job loss, 59 percent of survey respondents said they’d be somewhat or very concerned about having to file for bankruptcy, and 64 percent would be concerned about losing their home.


Even the “mass affluent” — those making $100,000+ in income per year, according to the MetLife study — haven’t been saving enough, with more than one-quarter (29 percent) saying that they couldn’t meet their financial obligations for more than one month following a job loss.

In an economy that is shedding 600-700k jobs a month these statistics should keep everyone up at night.

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