A somber Wednesday good evening,
Since the Presidential election a little over two weeks ago, the S&P is down nearly 20%.
IF President-elect Obama doesn't enunciate his tax policies more clearly in the days ahead, the unwinding of old money could continue regardless of how strong balance sheets look or how oversold charts appear. These are unbelievable times that we are witnessing.
On the day of the election, Mr. Carl Icahn was on Fast Money and said, "If this Obam-er wins, the market will not like it." http://en.wikipedia.org/wiki/Carl_Icahn We now better understand the power of those words; larger government and higher taxes in the midst of a global recession is something smart money fears.
Even though this is the worst bear market since the Great Depression, we do not believe there'll be soup lines or runs on banks. There are safe guards like social security and massive bank liquidity injections, unlike the 1930's, so we know the reaction of panic today is way overdone.
Just like we predicted oil would implode from the $120/barrel - $140/barrel area after the Beijing Olympics; just like we disagreed with Fast Money's Joe Terranova about his call that oil will not break $120/barrel for long a couple months back, we now feel the overshoot in the stock market has the same parallels and psychology driving it ...
The market is dying to hear President-elect Obama say 8 words: "I will not repeal the Bush tax cuts,". The S&P would rally through 1,000 within a couple days. POTC stands behind the bear market rally call, but it would help IF Mr. Obama stepped up and delivered.
The majority of the people who voted for him (college - under 30) do not have much riding in the stock market, so he needs to reinforce to the older conservative money he will not raise taxes. IF he doesn't do that, the market will have another climactic sell off, perhaps S&P 720; that would be the death of an entire generation of investors.
Could Mr. Obama want the market to fall further before he takes his Presidential Oath this January 20th on the steps of Capitol Hill? We hope not. POTC gave him the benefit of the doubt, as we felt he would be pro-active and more Wall Street friendly than the Carl Icahn's believed. So far we were wrong and they were right.
Mr. Obama needs to clarify his fiscal policies very soon, or investors will continue to sell until there is absolutely no doubt regarding who and how much tax is paid.
Raising taxes on individuals and businesses making over $200K a year now would be ridiculously ignorant, as they are the growth engine for jobs and have the greatest amount swirling around in the financial markets. We continue to believe Mr. Obama will do the right thing and tell Wall Street nobody's taxes will go up. But time is running out.
The Psychology of the Call team is dumbfounded by the valuations, technicals, and battered sentiment. We believe the Bush tax cuts will remain in effect through 2010. That is the panacea this stubborn bear needs to hear in order to dig the claws in & climb through S&P 1,000 by Thanksgiving Day, otherwise POTC will be eating stuffed crow!
Thursday, November 20, 2008
Wednesday Night Market Update" (President-elect Obama needs to step up)
A somber Wednesday good evening,
Since the Presidential election a little over two weeks ago, the S&P is down nearly 20%.
IF President-elect Obama doesn't enunciate his tax policies more clearly in the days ahead, the unwinding of old money could continue regardless of how strong balance sheets look or how oversold charts appear. These are unbelievable times that we are witnessing.
On the day of the election, Mr. Carl Icahn was on Fast Money and said, "If this Obam-er wins, the market will not like it." http://en.wikipedia.org/wiki/Carl_Icahn We now better understand the power of those words; larger government and higher taxes in the midst of a global recession is something smart money fears.
Even though this is the worst bear market since the Great Depression, we do not believe there'll be soup lines or runs on banks. There are safe guards like social security and massive bank liquidity injections, unlike the 1930's, so we know the reaction of panic today is way overdone.
Just like we predicted oil would implode from the $120/barrel - $140/barrel area after the Beijing Olympics; just like we disagreed with Fast Money's Joe Terranova about his call that oil will not break $120/barrel for long a couple months back, we now feel the overshoot in the stock market has the same parallels and psychology driving it ...
The market is dying to hear President-elect Obama say 8 words: "I will not repeal the Bush tax cuts,". The S&P would rally through 1,000 within a couple days. POTC stands behind the bear market rally call, but it would help IF Mr. Obama stepped up and delivered.
The majority of the people who voted for him (college - under 30) do not have much riding in the stock market, so he needs to reinforce to the older conservative money he will not raise taxes. IF he doesn't do that, the market will have another climactic sell off, perhaps S&P 720; that would be the death of an entire generation of investors.
Could Mr. Obama want the market to fall further before he takes his Presidential Oath this January 20th on the steps of Capitol Hill? We hope not. POTC gave him the benefit of the doubt, as we felt he would be pro-active and more Wall Street friendly than the Carl Icahn's believed. So far we were wrong and they were right.
Mr. Obama needs to clarify his fiscal policies very soon, or investors will continue to sell until there is absolutely no doubt regarding who and how much tax is paid.
Raising taxes on individuals and businesses making over $200K a year now would be ridiculously ignorant, as they are the growth engine for jobs and have the greatest amount swirling around in the financial markets. We continue to believe Mr. Obama will do the right thing and tell Wall Street nobody's taxes will go up. But time is running out.
The Psychology of the Call team is dumbfounded by the valuations, technicals, and battered sentiment. We believe the Bush tax cuts will remain in effect through 2010. That is the panacea this stubborn bear needs to hear in order to dig the claws in & climb through S&P 1,000 by Thanksgiving Day, otherwise POTC will be eating stuffed crow!
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4 comments:
Sigh.... taxes HAVE to go up. It wouldn't matter if we had elected Paris Hilton; the huge debt that Republicans have forced upon America by increasing military spending for Iraq, and for a bogus "missile shield" with borrowing has to be paid.
I really try and take POTC seriously, but calls like "I will not repeal the Bush tax cuts" convinces me the authors are completely out of touch. I'm middle class, I DRIVE THE ECONOMY NOT THE RICH, and my taxes went up under Bush.
We are a consumer-based economy, if the consumers have no money, the economy has no money. Why is that so hard for trickle-down delusionals to understand?
POTC feels raising taxes on individuals and corporations and increased regulations is what Wall Street is reflecting. The middle class drives the economy because there is liquidity from the upper class who makes over $200 > per year. Whether it's the surgeon in San Diego who spends money on new cars and boats every year, and then services them; or the publicly traded company that hires more people as lower taxes (fiscal policy) allows their capital structure to lay out more on R&D, which leads to innovations and job creation.
You say "I drive the economy, not the rich"; can you please explain where you took the wrong turn? How many jobs have YOU created in the past year?
Unless you understand that lower taxes leads to the creation of jobs, you will continue to be irrational. Thanks for your comment Code Slinger, we fervently disagree.
What would help the economy would be to stop the pilferage in waging wars around the world and invest that money in creating jobs and creating new technology. The war in Iraq has more than offset any taxcuts on the average American. A war justified by showing cartoons of WMD in the UN security council made no sense then and makes no sense now.
GREAT call in what seemed like a dead market. Today is Nov 25 and 500pt Dow rally is attributed to Obama 'stepping up'. Def a contrarian call that panned.
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