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<< Return to page 1 - Is Lehman Next?

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 (NYSE: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.

Source: Friday Outlook: Commodities, Emerging Markets