By MICHAEL GRAY
I am very leery of the recent market run up. With the Dow at 9,286 and the S&P at 1,000 and Nasdaq at 2,000, and the dollar index 77.66 these exchanges and indices have nowhere to go but down.
A bank beats analysts’ depressed earnings estimates by a penny with the help of extraordinary charges but the bank sees a top-line revenue drop of 60 percent year over year and the markets reach nine-month highs on this “beat.”
The dollar is cratering against euro and pound, which is not so easy to do given conditions over there. Dollar-denominated commodities: Crude, gold, silver and copper are off to the races on this weakness.
The US still has banks failing on a weekly basis – 63 institutions so far this year that we know of – which open on Mondays as a new bank. We also have many larger banking firms that need more than a long weekend to reorganize.
So although I am not a financial adviser, I would suggest anyone in equities to take the profits from this run up and wait out the late summer and fall in dollar-denominated commodities especially gold and silver.
If the dollar index drops to low 70’s level these commodities will have a nice 20 percent move up based on something more than smoke and mirror earnings.
Treasury Secretary Tim Geithner took financial regulators to the woodshed last week with an expletive-filled “discussion” over the administration’s push to regulate financial markets and its participants.
Geithner told SEC Chairman Mary Schapiro and FDIC Chairman Sheila Bair that the time for carping over giving the Federal chief Ben Bernanke additional power is over. It’s time for the administration to speak with one voice, despite the fact that neither woman is part of the White House team.
Geithner vented over the inaction on the re-regulation front, which was rolled on in June.
Both Bair and Shapiro have repeatedly put a stick in the eye of the Obama plan stating that there are no checks and balances with concentrating regulatory power within the privately owned Fed.
How can the Fed, which is owned by the large Wall St. firms, be granted regulatory power over these firms and the markets these banks perform in?
A tale involving a fox and henhouse comes to mind.
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