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Monday, September 15, 2008

Black Monday(?)

Market tumbles over 500 points today. The Fed meets Tuesday, and it is possible the Fed could announce something surprising to staff off the fall. However, "rate cuts", "another bailout" and other types of stick-saves is played out, so it would have to be a new approach. Perhaps changing the short-selling limits for leveraging, etc.
We are "once again" on-board for a stock crash. 500 point is significant, but it isn't an out-of-control all out crash. Notice in the graph below we are about the same location of the recent low, but still a far cry from valuations back to 2003.

If there is a stick save, stocks may go up a day, week, but not a month. The cat is out of the bag finally, and there is systematic risk in the system including Lehman, AIG, WaMu, and weakness in other institutions.

This week is still anyone's guess. One thing I have had people ask is, are we about to see Inflation with the free credit by the government? I believe no in the near term. We will see massive deflation. See blogger Mish's explanation by clicking here.

Today's Events Highlights

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