Friday Outlook: Commodities, Emerging Markets

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As Friday is upon us, we should remember another weekend bailout is at hand perhaps. This a very hard market to deal with since you can’t seem to string together durable trends in US equity markets anyway. Why is that? Because this is the most manipulated market I’ve experienced in 35 years of trading.

Is it any wonder then we’re carrying 70-90% cash positions?

If the government backstops potential losses through a deal to save Lehman Bros. it shouldn’t shock anyone. It will lead to a knee jerk rally and then we’ll have reality to deal with once again, as in an ongoing credit squeeze continues to keep home prices falling. That’s because no one can qualify to buy a home even from the few willing to lend. And, lest we forget, there’s WaMu (WM) yet to contend with and an assortment of regional banks in trouble.

Let’s see how many smaller banks the FDIC seizes this weekend.

In the meantime, enjoy your weekend.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in: SDS, QID, SMN, SIJ, XLP, UGE, XLV, RXL, XLU, SDP, IEF, TLT, UUP, DRR, GLD, DZZ, DBC, DEE, EFA, EFU, EEM, EEV and FXI.

Comments

[guliamo:]

JPM will wait till the US government guarantees a loss limit and then buy LEH.. man will they be the investment bank of the future.
JPM is rewarded for not getting sucked into bad loans as much of the rest of the bunch

2008 Sep 12 05:47 AM

[Pipo:]

Regarding Gold, Jim Rogers said today it might correct to 500 USD to scare everybody.

jimrogers-investments....

2008 Sep 12 06:47 AM

[buyitcheap:]

New term for the recuring extensions of lquidity by the Fed - Federally Guaranteed Credit Repair and Payment facility (or "F'G CRAP" for short) (forgive the vulgarity -it is borne of frustration...)

2008 Sep 12 08:01 AM

[OldLimey:]

Strength in IYT probably has a lot to do with structural changes that were forced on airlines by the threat of $150 oil and will leave them looking good at $80-90. A lot of capacity has been taken out of the system which should be positive for yields and, because much of the retired lift was fairly old, should also benefit productivity and unit costs. The prospect of consolidation may also be helping - even more opportunity to screw consumers. Neither are they going to be in a hurry to give up fuel surcharges and other ancillary sources of revenue. Was it only two months ago the ATA was wandering around Washington pleading for a bailout? Wouldn't have got one......would they??

2008 Sep 12 12:57 PM

[Russ Abbott:]

Dave I'm confused about the breadth and the S&P. Since the S&P is supposed to represent the broader market more or less, how come it rose so much even though breadth was terrible?

2008 Sep 14 02:10 AM

[Roowns:]

Read carefully, it was terrible breadth all day and saved in the last half hour of trading... Professional traders know the true. Some kind of artificial correction.

2008 Sep 14 09:04 AM

[poorsucker:]

I'm glad I sold my POM 10 years ago...

2008 Sep 14 04:09 PM