Winston Smith of Oceania

Friday Outlook: Commodities, Emerging Markets

Might I also add from Lowry today: Our measures of the forces of Supply and Demand continue to suggest that any further rally in the days ahead will be a temporary pause in an ongoing decline toward the Nov. 20 bear market low.

Friday Outlook: Commodities, Emerging Markets

Ifi I recall what Nouriel Roubini said: there is a disconnect between the more and more aggressive policy actions of the government and the market direction. This indicates that the markets have lost confidence in the ability of congress or government in general to do the right thing. For instance, when the bailout of Bear Stearns occurred in March, there was a rally in the stock market that lasted about 8 weeks. Then when trouble started to occur in July with Fannie and Freddie, Hank Paulson went to Congress to get the power to stabilize Fannie and Freddie. The result was a rally that lasted about 4 weeks. Next, in early September, Paulson made trillions of dollars available to loosen up credit markets. The rally lasted 1 day. The next week when the collapse of AIG occurred, there was not even a rally, instead, panic. The market fell 5 percent. Then they went for the TARP legislation, and you would expect that that would have improved the markets. On the Thursday after the Senate passed it, and on the Friday when the House passed it, stock prices fell sharply. The government didn’t stop there. The following week they took more action to loosen credit. The market fell that week by 20 percent.

Don't expect too much. It won't last.