Dusty

Scary Numbers

On Friday night I got an E-mail from my son. He commented that on the commuter train "you can see the fear in their faces," and at work, "you can hear it (fear) in the voices on the phone."

This is from the the Market reaction to the next bump on the trail; there is a bigger one due in the fall. The real mountain crossing starts with calendar 2010 and will take more than two years (30 months). The first trek across the peaks (2007-2008) took 18 months.

If this week is the anticipation of the mortgage resets for March, the Dow Jones and the S&P 500 may hold for awhile. A slight recovery and a lot of volatility until the leaves begin to turn to their autumn hues.

Beyond that, maybe we all need to research how our parents, grandparents, nation really endured through the 1930's.

Double Bottom Forming or Just a Pit Stop on the Way Down?

The Genie in my Bottle of Smoke says this is end of quarter, end of first half. Some big money funds must move around a little bit, breathe(?). Last day or two of June, first few market days of July. Keep your seat belt tight. Then we decend to a late summer crash (Ref: Royal bank of Scotland, others). That will carry us into Alt-A housing and credit mess Part 2 (Ref: Credit Suisse Mortgage Resets chart) and more. We are really not even half way down the first big drop on the roller coaster.

What is scary is that the Genie may have it together. I am holding what cash I can.

Preparing for the Fall, Part II

During most of the First Quarter, Credit Suisse had a graph about mortgage resets easily accessible on the internet. The US economy/market has followed that graph like a champ; the market has been a negative mirror image. Subprime is largely ending now, June '08. The market is bouncing around because it does not know which way to go. In September through January the name of the game should be "Alt-A." The Alt-A loans will be riding on top of "Agency Resets." Fall will be a replay of the 5 or 6 months now ending. Then it gets better, but not much. This summer might be a good time to be sure your parachute and seat belt straps are tight. We can look forward to real improvement, according to that Credit Suisse chart, in June of 2012.