Saturday, March 14, 2009

Saturday Potpourri

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So Friday came and there was no bank failure. That's the first friday of the year(excepting January 2nd) that a bank did not fail in the USA.

Coincidently Puerto Rico Financial Commissioner Alfredo Padilla admitted Friday that some 200 FDIC agents were in Puerto Rico to investigate several banks in the US territory. No Puerto Rico banks were closed.

Maybe after all the consecutive weekends of closing banks, the FDIC agents needed a holiday? Hawaian Banks may want to make sure their books are up to date in the coming months.

The End of the Great Bear Market of 2008/2009?

Received a number of emails questioning yesterdays claim that we may be at the end of the bear market.

All seemed to suggest that my 'optomism' is pre-mature. Their contention is that last week's four day rally was nothing more than a 'Bear Market Rally' and that we are not on the threshold of a bull run.

Comments were made that this is only a temporary rally because the corporate bond market is still frozen and spreads against government bonds are still too high.

We shall see.

My feeling is that there is a tremendous amount of pent up fear & concern by many investors about the central banks of so many countries jumping on the 'currency printing press bandwagon'. I suspect that this concern is manifesting itself in a flight of capital to safe haven stocks and commodities on the fear that we are on the cusp of the onslaught of inflation.

I believe this flight of capital is what was driving last weeks rally.

It seemed very odd that on all four days both gold/silver/oil & commodities stocks rose significantly.

We will see it the trend holds or not.

Canadian Economy

End of the bear market or not, the Canadian Economy in 2009 is in for a significant amount of pain.

The market may begin a rebound, but the after-affects of the crash are only just starting to slam fully into Canadians.

Evidence of that came in yesterday's release of the job statistics for February.

Surprising only the politicians (who have been living in public denial about what is coming), the statistics reveal Canada is losing jobs faster than the United States.

Statistics Canada said net job losses totaled 82,600 in the month, compared with forecasts for a decline of 52,500. It was the fourth straight month of declines.

The jobless rate climbed to 7.7 percent, the highest since a rate of 7.9 percent in September 2003 and above the market forecast of 7.4 percent.

"A U.S. style pace of labor market deterioration has landed on Canada's doorstep," said Derek Holt, economist at Scotia Capital.

The bleak data almost guarantees that the Bank of Canada will scramble to impliment numerous initiatives (including 'quantitative easing' aka printing tons of money). Recall that BoC govenor Carney is committed to doing what it takes to get to their growth number for next year. Carney has stated that he expects the economy to start growing again in the third quarter and he forecast 3.8 percent growth in 2010.

Most private sector economists think that is way too optomistic, but look for the BoC to go 'nuclear' in their attempts to stimulate the economy.

What does that mean for the markets? See comments in above topic regarding the end of the bear market.

What does that mean for Real Estate? More job losses, more unemployment, more missed mortgage payments, more people unable to buy houses and more people scared to buy houses because they may be next on the chopping block.

(And more R/E propoganda shrieking out 'what a great time it is to buy' and how 'everyone else is buying, you should be too')

Cramer vs. Stewart

Finally... if you tuned in last Friday you will have caught a classic clip from the Daily Show in which host Jon Stewart eviscerated CNBC on their role and coverage during the market meltdown.

It has produced quite the exchance between CNBC Mad Money host Jim Cramer and Jon Stewart... culminating to a stunning appeareance on the Daily Show by Cramer.

Below is the original Daily Show clip (which you cannot access anymore on youtube - I, however, saved a copy for faithful readers).

A second clip summarizing some of the exchange back and forth this week. Finally, on Thursday, Cramer was invited to appear on the Daily Show.

At the bottom is a link to the Comedy Network where you can watch the full segment between Cramer and Stewart. Viacom has been pulling the youtube versions of the segment so I can't post a version here for you. If you have the time, check it out. It is an excellent and intelligent commentary by Stewart on the crisis and he takes Cramer apart.

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White House Press Secretary Robert Gibbs on Stewart-Cramer 'discussion' from The Daily Show:



To see the full appearance by Cramer on The Daily Show click here.
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