Benito Camela

Closing Update for Tuesday, August 4

A few ideas:

-- Personal Income goes down then lets buy stocks
-- Consumer sentiment goes down, then lets buy stocks
-- MSFT has its first quarter with lower revenues, then lets buy stocks
-- Mortgage defaults go up, then lets buy stocks
-- Corporate revenues go down, then lets buy stock
-- States have a deficit of $160 billion and are cutting expenditures, then lets buy stocks
-- Commercial real state is plunging, then lets buy stocks

GDP Report Offers Positive Headline, But Negative Details

Momentum players have the upper hand, but fundamentals will prevail -- not sure when.

With income going down, how can the consumer pull this? It is nonsense to believe that we will go back to normal anytimes soon after an abnormal crisis...

The Stock Market Is Not a Leading Indicator

Dear Prince of Persia, You need to study basic economics to realize that so far the souces of growth are temporary and once it wears off, then you have a crash.

Invest at your own risk.

S&P 500 Target Reached

The insanity of the bulls is the same we saw at the end of 2007.

The consumer will continue retrenching with lower income. Furthermore, savings should continue to rise getting closer to the 10% mark in order to rebalance household wealth.

The process will take several years. Anyone believing otherwise should study historical precedents.

Morning Briefing: Testing the Highs

The market is surprisingly drifting slightly lower which opens the posibility of a key reversal day. The conditions are set for such price actions given still deteriorating fundamentals and overbought conditions.

Stay tuned and flat waiting to short this madness.

Q2 Earnings Growth vs. Estimates

The expectations game is a short term one, then reality sets in.

Reality is screaming macro problems due to lower revenues. Lower earnings should follow down the road.

Withouth s sustainalbe source of demand, expect another economic dip. Stay healthy and away from stocks.

Seeking the Fix That Will Finally Work

Paulson needs to shut up and act. He announces things that he will do in a few weeks which adds uncertainty (which the market hates).

He needs to just do it. Period. Then the market wil respect him.

Him and Bernanke started the crisis of confidence the day they failed to protect Lehman creditors.

Something will work at some point or people will see no point in selling. All I know is that today we are closer than yesterday to that point

Three Good Reasons to Mistrust Thursday's Rally (SPY)

Enzio,

I think you are basically right but the timing may take several weeks/couple of months to develop.

I have a rather cinical view of Bernanke and Co:
a) He spoke his mond and it spooked the markets
b) He was a little lost and then Japan one night went down 4% -- the Japanese got nervous, call the Europeans and together called Benanke. They agreed on a more bening tone to calm the markets.
c) Then he gave a speech that was a turning point for the markets and calmed things down -- that set the tone for the next rate move. Now the added bonus was the press release -- which led the stock market believe that things are rosy again.
d) He will realize that he was wrong in the next few weeks, maybe two months and you will hear the Fed with a hawkish tone again -- followed by 25 bps increases at thext two to three meetings. When the stock market realizes that, it will sell off again.

In the meantime, be long and enjoy the ride.

Best

JP