Was that October First, or April Fool's Day?

The first of October marked the beginning of the federal fiscal year. Just for grins, let's consider the day's economic news as we begin this ominous fiscal challenge. Many ironies abound. Is it any wonder that the average person is confused?

• The market corrected significantly on the first day of October. Let's recall that Meredith Whitney said, "October will be a big month."
• You have the S&P down 39% this decade, even though it's up 56% since its March low.
• You have consumer loan delinquencies and credit card delinquencies at a record high.
• You have consumer spending up because of government carrots dangling in front of the already 125% leveraged American who is told it's best to start saving.
• You have Ken Lewis quitting because he's just been dancing on the graveyard.
• You have the banks coming up with yet another scheme -- the re-remic bundle which bundles accounting nightmares into bundles of dream investments, a nightmare for rating agencies and future TARP-esque bailouts of little baddest-bank re-bundles.
• You have a new bad unemployment report.
• You have manufacturing down, again.
• You have Alan Greenspan advising Ben Bernanke to tighten credit.
• You have 47% of American households owing no federal income tax when you know our debt requires increasing taxes, though politicians won't cut spending or increase taxes, because that's just what politicians don't do.
• You have plunging state tax revenues, with state income taxes down 28% from a year ago.
• You have a projected deficit as a percent of GDP for FY 2009 of 11.2%.
• You have the US Treasury missing its own deadlines for financial reform.
• And, last but not least, you have a pay package for the CEO of AIG set for approval by our pay czar at $$$ 10.5 million dollars.

Let's hope that October 1, 2010 brings us more sanity. What are the odds of that?


Disclosure: No stocks or ETFs owned.

Comments

[Tony Petroski:]

Very entertaining article Mr. Kalpa.

From the author:

"Let's hope that October 1, 2010 brings us more sanity. What are the odds of that?"

The CDSs are selling at 10-1.

Oct 02 11:38 AM

[Tony Petroski:]

Forgive me. I meant to write "Ms". Kalpa.

I'm so used to butting heads with men that I didn't conform to convention. Sorry.

Oct 02 11:43 AM

[AlphaKing:]

Here we are now 3% lower than where I gave a warning signal up at 9850. As suggested in my initial warning comment I believe we still have at least another 1-2% move lower in the short-term, and then there is some strong support. If we get a break below 9300-9350 level it should confirm an even stronger move lower, which is moderately likely due to the bearish pattern formation with which a solid break below 9300 would confirm. Confirmation of a trend line break should then bring at least another 5% drop, but I believe closer to 12-15% fall technically from there in the medium term.

Oct 03 12:49 AM

[Albertarocks:]

< Is it any wonder that the average person is confused?

* You have the S&P down 39% this decade, even though it's up 56% since its March low.<


Yes it is confusing. In all due respect, even stats shown above serve to add to the confusion.

More accurately, in March we "had" the S&P down 58%, not in a decade but in 18 months. And today, 7 months after the March lows, the S&P is still down 31%, even after the biggest and fastest bounce in the history of the markets.

I'm not a doom and gloomer necessarily, even though the world is even more on the precipice than it was 18 months ago... it's just my view that we had better not get too excited about the S&P being "up 56% off the March lows".


>Let's hope that October 1, 2010 brings us more sanity. What are the odds of that?<

Well after looking at the bullet points the author so nicely laid out for us, I'd have to share her hopes for more sanity. By the way, I'm wondering what she means by "more"? She asks "what are the odds of that?", to which I reply "about as good as the odds of a one-legged man winning an ass kicking contest".

Oct 03 12:07 PM