Wednesday's Econ & Earnings Data; All Electrical Currents will be Focused on Paychex Inc. (PAYX); Earnings & Outlook Released After Mkt Close

Wednesday, March 25th at 8:30ET brings Durable Goods Orders for February:

http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/durord.htm Prior reading was minus (5.2%), now consensus calls for minus (2.0%). For many quarters durable goods orders held up well, but lately that has changed. Last quarter's strength in the U.S. dollar probably hurt sales of U.S. goods, yet the recent dollar weakness could see traders looking forward after this report and buy the dip. POTC does not see a favorable open Wednesday, so traders looking for a market/S&P trend take note. We are also bearish Wednesday due to our belief GS shares will sell-off and drag mud through most of the financial sector. 10ET brings the New Home Sales data: http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/newhom.htm Prior new home sales were 309K, now the economists are calling for 300K. Not much positive can be said here either, except for the fact we feel that number could be beat due to weather related/cyclical reasons alone. Please open the link provided and understand detailed commentary on this falling knife of new home sales would be pointless. The only intelligence we can provide is this: whenever an asset is in such free-fall, it is irresponsible to ever use the word "bottom". Because forward-thinkers know, bottoms never do 180's, and IF they do, they usually retest at least once before eventually going sideways. Sideways movement is when smarter long-term type money begins to build positions. So we urge you to respect the fact shattered psychology takes longer to cure than fundamental capital damage. POTC believes consumers and investors will only begin to heal after the talking heads stop debating whether the market has bottomed. Please trust us here, the market has NOT bottomed, and that S&P 666 mark will be tested fairly soon. Before market earnings from Petrochina Ltd.. (PTR), Q4 '08, revenue estimates of $44.45B, no eps estimates as only 1 analyst offers coverage. With crude crawling back from the low $30/barrel to the $50/barrel level, PTR does look tempting. Although as forward-thinking traders, we understand everyone is aware of that fact, so perhaps we would only establish part of a long position in PTR if it were to sell-off 5%+ after earnings. After all, the entire world is in such bad economic and psychological shape, China's human rights issues related to slave labor have been given a pass. Therefore if you are optimistic of an eventual recovery by 2011, the Exxon Mobile of China must be monitored closely. POTC considers PTR a general, and generals are good leading indicators of the market. In the U.S., POTC considers CME, GOOG, and XOM as generals. After market earnings from Citi Trends Inc. (CTRN) Q4 '09, revenues pegged at $146.6M and a fat $.53 in eps. Since we're so bearish on commercial real estate, it's difficult to make an argument to buy a retailer, yet you must do extra due diligence and you may find some are decent buys and will survive. What has us semi-excited about CTRN is the estimates for revenues look to be up year over year (y/y) in this quarterly report. IF we had to guess, CTRN will probably pop higher after the report, yet it could be short lived. A VERY important report comes from Paychex Inc. (PAYX), Q3 '09, revenues estimated at $536.9M, and that would be up y/y from $532.17M, and $.36 of eps, which is slightly below last year's $.39. PAYX is a VERY important earnings report that will be highlighted on Dylan Ratigan's Fast Money as well as the Kudlow Report. Paychex provides payroll, human resource, as well as employee benefit programs, thus it is regarded as a leading indicator of employment. And employment, or lack there of is the single most important element to monitor as related to economic growth and or contraction. If PAYX's revenues do come in above $537M, we believe the market will blip higher Thursday. Yet the opposite is true if PAYX's revenues come in light (under $525M). We recommend more aggressive traders position long late Wednesday, as we feel PAYX will offer a rosier outlook than most today believe.

Thursday's weekly unemployment report should come in tamer simply based on cyclical reasons. Lastly, the massive spending bills will have a short-term effect that smooths the employment number, and bear markets have a way of rallying on any hopeful news. We call for a retest of S&P 823 on Thursday, after Tuesday's and Wednesday's sell-offs.

IF any of the above analysis helped you even a little bit, please spread our blog email address to family and friends: Psychologyofthecall@gmail.com. Our team puts in approximately 18 hours a day to bring a more scientific approach to investment finance.

Tuesday's Fade to Black Reality

The Psychology of the Call team is sticking our necks out in predicting the S/P has topped out yesterday at 823. We believe smart money is taking profits here, and aggressive money is shorting/buying puts as this bear rally fades... Although strength in the broad market this Tuesday is impressive considering Monday's monstrous move, the resiliency is softly rooted in lower volume, fewer sellers, and growing hope in an effective bank plan. Although both involve positive technical and fundamental elements, we remind of the huge foundational crack the economy may fall into IF the bank plan were to fail or its success post dated a 9.5%+ unemployment rate. Two variables forward-thinkers must consider before jumping long into any asset class today. Goldman Sachs argues a 9.5% or > unemployment rate would cause great tension in commercial real estate (CRE) and all connected assets. With most ears and eyes on the Bernanke - Geithner's AIG testimony, it's evident that these two men are well meaning. Yet we feel they have very little influence on righting the rusting Ship of Unemployment. The employment problem along with falling residential and CRE

prices remains extremely troubling for making a bullish case for stocks. We would like nothing more than to witness toxic bank assets brokered to buyers and then experience some sort of expansion of credit/loans, leading to more jobs and a needed turn in real estate. Wow, do you think all those events will occur by year end, not us. We look to 2011 for a meaningful economic turn and late 2010 for a fundamental stock market bull run. Until then, it'll remain a treacherous trader's market. Only until employment turns coupled with favorable real estate sales do we feel a new bull market grow horns. Even IF bad bank assets find buyers, the sentiment of most consumers push toward downsizing/getting smaller. Whether fewer family cars or smaller homes, we feel it's only the first inning of consumer downsizing. Most talking heads say deleveraging is over, but we feel they are only referring to corporations. We view the consumer as walking around with a blackened eye for the past several years, and it may not heal even after the banks are cleaned up. Yet the Dow rose 500 points Monday due to talk that one piece of a gigantic puzzle may fit. Banks are flushed with more cash today than ever in history, yet not writing loans due to the uncertainty of the upper-limit unemployment and year it will occur. Most economists say end of 2009, we disagree. Considering the tremendous net worth deterioration of most Americans, spending behaviors going forward may shift down to a lower gear. We know the rosey statements from government officials have vested interests in their outlooks, and herein lies the future economic conundrum. IF the Obama economic team's peak unemployment estimates of 8.1% are wrong (Peter Orszag), and we're at that percentage today, then their enormous spending bills will be viewed as irresponsible. A problem 10X greater than today's may be ahead of us on this fade to black bear market path.

The Psychology of the Call team reminds forward-thinkers of the power gained from positioning your account in cash at the end of the trading day, but especially after Monday's huge bear bounce. We wish you a profitable trend setting Tuesday.

Porn Abandoning Office Space in New York is Clear Sign of the Times; POTC likes SRS April $80 Call Options

NEW YORK (AFP) -- Focusing on boardroom, not bedroom needs, famed men's magazine Playboy is pulling out of its New York offices, a spokeswoman said Monday. "We are closing our New York offices to integrate our online and printed publishing," Martha Lindeman told AFP. She said that about 100 jobs were affected and that although some employees would transfer to offices in Chicago, or be given other options, the "majority" would leave the company. Only a "small editorial and sales presence" will remain in New York, where the racy magazine has leased 5th Avenue premises since the early 1990s. The move will take place May 1. Playboy Enterprises (PLA) explained in an earlier statement that it intends to "streamline operations across the company, which will include the elimination of additional positions and reduction of other expenses." New York is not the only place where Playboy founder Hugh Hefner is feeling blue. The Los Angeles Times reported this month that Hefner is selling his family home in California for nearly $28 million. Hefner's Playboy Mansion appears safe for now: the 83-year-old continues to live there with three models. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=opwgYsaCMSZ0RM8N0TznMw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 23, 2009 15:40 ET (19:40 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 40 PM EDT 03-23-09

Psychology of the Upcoming Week's Earnings & Economic Data

The entire Psychology of the Call (POTC) team is excited and happy to bring back the weekend piece we call Psychology of the Upcoming Week's Earnings & Economic Data. We thank the loyal readers who found it useful enough to request that we bring it back to life. Here we go...

Monday, March 23rd at 10ET brings Existing Home Sales for February: http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/exist.htm

Prior amount sold was 4.49M units and now the consensus forecast is 4.45M. Home sales continue to plague the capital markets. No other bubble has ever had such devastating effects as this ongoing U.S. housing asset and credit crisis. Falling long-term interest rates as the Treasury buys bonds should help sales, yet we do not believe this positive fundamental change of cheaper money (lower interest rates) will impact behavior this year. The pendulum of psychology will not swing quickly. Even as more favorable raw data starts coming in, be alert to the smoothing effects caused by foreclosures, otherwise known as distressed sales. POTC does not see a meaningful turn in existing home sales until the employment numbers recover, and that may not happen until mid 2011 by our guesstimates. Before market earnings from Tiffany & Co. (TIF), Q4 '09, revenue and earnings per share (eps) estimates are $838M and $.80. Walgreen Company (WAG), Q2 '09, revenue and earnings per share estimates are $16.42B and $.66.

After market earnings from Focus Media Ltd. (FMCN), Q4 '08, $193M in revenues and $.38 in eps (bottom line). Sonic Corp. (SONC), Q2 '09, $170.2M in revenues and $.09 eps expected.

For several reasons, POTC believes shares of SONC should be... ---------------------------

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Trade Update

Congratulations to readers who acted on our March 7th recommendation regarding CRA. The shares closed up 25% Friday and are up more than 50% since our mention. With respect for the 11 Commandments we advise to take profits on half the position and hold the other half. CRA is in a space that could enjoy more favorable momentum as President Obama's administration is very open-minded regarding stem cell research.

Glimmer of Hope for the Political Element of the PFF ratio; Spending May be Stymied

WASHINGTON (Dow Jones)--The Congressional Budget office Friday substantially downgraded its forecast for the federal government's fiscal position, spelling gloomy news for President Barack Obama as he tries to win support for his $3.55 trillion budget request for fiscal year 2010. The non-partisan congressional number cruncher said that it now expects the federal government's budget deficit to hit $1.8 trillion in the current fiscal year, which ends in September, down from $1.2 trillion it estimated two months ago. Looking ahead to fiscal year 2010, the CBO said the federal government budget deficit will double to $1.4 trillion from the $700 billion it forecast in January. As for the president's budget request, the CBO said it would add $4.8 trillion to the baseline deficit forecast over the next decade. With Republicans and even some Democrats in Congress already questioning Obama's ambitious spending plans, the CBO revision could make the president's job of selling the budget to lawmakers that much more difficult. Congress is set to begin working in earnest next week on its budget resolution where it sets its top line spending figure that allows individual appropriation committees to start working on detailed spending plans. According to a senior administration official, the bleaker numbers from the CBO won't lead to a scaling back of the president's ambitions. The official said the administration was confident that Congress would adopt a budget resolution that closely followed the model set out by Obama's request. The centerpiece of the president's budget is universal health care for all, a plan that the administration said would initially cost a down payment of $634 billion over the next decade. Critics have suggested this figure could double over the longer term. One positive note to come out of the CBO revised forecast is that it expects the recession to end by the autumn due to the impact of the economic stimulus plan and the aggressive efforts by the Treasury and the Federal Reserve to stabilize the financial markets. It said U.S. gross domestic product would drop by 1.5% in fiscal year 2009, before bouncing back sharply by 4.1% in each of 2010 and 2011. The unemployment rate, which has been escalating sharply over the last year, will peak at 9.4% in late 2009 or early next year, the CBO said. It will remain above 7% through 2011. The rate is currently at 8.1%. -By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=HXabjEsEuAEnxPI6dc%2BULw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 20, 2009 14:28 ET (18:28 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 28 PM EDT 03-20-09

BACK BY POPULAR DEMAND: The Psychology of the Upcoming Week's Earnings & Economic Data; Late Saturday Night

Our Greatest President Looks on with a Saddened Eye; Latest Monetary Policies Troubling

NEW YORK (Dow Jones)--The dollar got beaten down Thursday by continued worries that the Federal Reserve's announced bond-buying spree could spark troublesome U.S. inflation and weaken the U.S. currency's value. The euro, which was under $1.30 less than a week ago, rose to a 10-week high of $1.3739 during the New York session Thursday, while the dollar fell against the yen to a nearly one-month trough of Y93.55. Those moves helped send the dollar index, which measures the U.S. currency against a basket of currencies, down about 4% from where it was Wednesday afternoon when the Fed announced its latest non-conventional easing program, designed to kick-start the economy. The plan calls for pumping up to $1.15 trillion into the system so as to lower borrowing costs. The injections would occur through the purchase of $300 billion in long-term Treasury bonds during the next six months, and other measures. "It's been a one-way street in the foreign-exchange market since the Fed announced the buying of U.S. Treasurys," said Vassili Serebriakov, currency strategist at Wells Fargo Bank. "The U.S. dollar is under considerable pressure across the board." Thursday afternoon in New York, the euro was at $1.3678 from $1.3480 late Wednesday, and the dollar was at Y94.41 from Y96.21, according to EBS. The euro was at Y129.14 from Y129.70. The U.K. pound was at $1.4518 from $1.4288. The dollar was at CHF1.1228 from CHF1.1432 Wednesday. But while the dollar got hammered by its main rivals Thursday, it staged a modest comeback against some less-frequently traded currencies, such as the Mexican peso. The dollar had fallen to a 10-week low under MXN14 after the Fed announcement Wednesday, but on Thursday it rebounded to MXN14.24. Analysts said investors are concerned that continued problems with the U.S. economy would likely spell even more trouble for emerging markets, and their currencies. While the near-term course for the dollar appears grim due to the Fed announcement, Wells Fargo's Serebriakov said, the longer-term outlook might not be quite so bad if other central banks mimic the Fed's liquidity moves. "Other central banks are also likely to move further on the non-conventional easing path, while the dollar could benefit if the Fed's actions bring forward the day of the eventual recovery," he said. On Friday, currency traders are likely to keep an eye on a few pieces of U.S. economic data, including the latest reading on fourth-quarter economic growth, and a University of Michigan/Reuters consumer-sentiment survey for February. -By Dan Molinski, Dow Jones Newswires; 201-938-2245; dan.molinski@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=9wJyqpDVRkP1dIKEQFegyw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 19, 2009 15:55 ET (19:55 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 55 PM EDT 03-19-09

Treasury Secretary Timothy Geithner = No Change

Is Treasury Secretary Timothy Geithner able to offer the true change mechanic the banking system and American consumer so desperately desires? POTC feels Geithner would be more successful and trustworthy IF he admitted policy mistakes under the elephant regime he was a part of. Perhaps he should take a more independent (I) path instead of becoming lost in the herd mentality stinkin'-thinkin' animalistic type behavior. It's clear the scare tactics of printing money which began on the ousted elephants' watch are being exacerbated by the change donkeys; this cannot be effective in building positive consumer and bank lending sentiment dear Mr. Geithner. POTC sees acceleration of the same old same old, NOT the promised change. Real change would be stopping the problems that got us into this sink hole in the first place, not throwing good money after bad dear sir Mr. Treasury Timothy Geithner. Spending trillions of virgin greenbacks in such a short time is asinine, and AIG is but one example you have failed us. POTC would much rather put the so-called systematic risk failure scenario to the test at this point, instead of accepting the inevitable fade to black, dark death by dollars fate. Perhaps the so-called systematic risks are merely scare tactics in order for the two party animal system to maintain control? Anyone who voted for Obama or McCain and takes the time to reread Senator Ron Paul's politics has to feel disturbed. Here's why we feel the way we do about Treasury Secretary Timothy Geithner, you decide where the change lies: http://news.yahoo.com/s/ap/20090318/ap_on_go_ca_st_pe/whither_geithner_analysis

Stiffer German Bank Capital Requirements/Regulations Will Soon Darken the Growth Outlook; Deutsche Bank in the Crosshairs

FRANKFURT (Dow Jones)--Germany's finance ministry has drafted a bill that would give regulators more power to supervise banks and insurance firms, a ministry spokeswoman said Wednesday. If passed, the new law would boost regulators' rights to obtain company-specific information and set stiffer capital requirements, and would also allow them to intervene in a timely fashion on risks of rapidly deteriorating balance sheets, according to a document seen by Dow Jones Newswires. "It's all about regulators' right to intervene," said Jeanette Schwamberger, a spokeswoman at the finance ministry. "That's what the coalition committee has agreed on," she said. According to the document, which forms the basis of the draft bill, financial watchdog BaFin could force banks to raise their capital ratios, or the capital they hold against risky assets. Despite some improvements following the launch of the government's EUR500 billion SoFFin financial markets stabilization fund, the capitalization of German banks has often been behind that of their U.K. and U.S. peers. The German cabinet is expected to approve the draft bill March 25, and legislation could be implemented before the parliament's summer break, the spokeswoman said. -By Nina Koeppen and Andreas Kissler, Dow Jones Newswires; +49 69 2972 5509; nina.koeppen@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=YP4aEomnnr3fVmx9HToUdQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 18, 2009 10:07 ET (14:07 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 10 07 AM EDT 03-18-09

Ah-Chu! Although we are all for a clean environment Mr. Chu, we are staunchly opposed to Cap & Trade Rule

WASHINGTON (Dow Jones)--A day after one of China's top climate envoys warned of a trade war if developed countries imposed tariffs on carbon-intensive imports, U.S. Energy Secretary Steven Chu advocated adjusting trade duties as a "weapon" to protect U.S. manufacturing. Chu, speaking before a House of Representatives science panel, said establishing a carbon tariff would help "level the playing field" if other countries haven't imposed greenhouse gas reduction mandates similar to the one U.S. President Barack Obama plans to implement over the next couple of years. It is the first time Obama's administration has made public its view on the issue. "If other countries don't impose a cost on carbon, then we will be at a disadvantage...[and] we would look at considering perhaps duties that would offset that cost," Chu said. A preponderance of U.S. federal lawmakers who are crafting climate legislation say they won't sign greenhouse gas legislation into law unless it has a time-table for countries such as China and India to establish binding reductions and a tariff to protect U.S. business. Those measures were fundamental in getting labor union support last year for a Senate proposal that ultimately failed. Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, told Dow Jones Newswires Monday that such a tariff would be a "disaster," would prompt a trade war and wasn't legal under World Trade Organization agreements. His boss, Xie Zhenhua, a vice chairman of the NRDC and China's top climate envoy, Monday met with his counterpart, Department of State's Todd Stern. The delegation will also be meeting with Obama's climate czar, Chu and other senior administration officials. "It does not abide by the rule of [World trade Organization] and secondly, it's not fair," Li said, adding that his delegation would relate China's concerns to U.S. officials. Domestic industries, such as energy-intensive paper, cement, fertilizer, steel and glass manufacturers, are worried the increased cost burdens imposed by climate change laws will put them at a severe competitive disadvantage to their international peers whoaren't bound by similar requirements. The issue has become controversial in international negotiations as European Union officials are considering a similar tariff, but many developing nations caution that trade restrictions run the risk of retaliatory action. In the U.S., although there's disagreement about the schedule for phasing in a carbon tariff - with proposals ranging from 2012 to 2020 - the policy has strong support from industry. Some of the country's largest and strongest unions, including the AFL-CIO and the International Brotherhood of Electrical Workers, support what is for them a competition-protection clause. Officials from American Electric Power Co. Inc. (AEP), which helped to write the language in the Senate climate proposals, have said the tariff requirement would only apply as a measure of last resort, and the U.S. would make good-faith efforts in the meantime to encourage other countries to cut greenhouse gases. But China is instead seeking to require importers of carbon-intensive goods to bear the emission costs, concerned that targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation, arguing for a more lenient approach as it develops. Although with 1.32 billion people and developing demand forcing the country to build a new coal-fired plant every week, China points to the fact that its carbon dioxide emissions per capita is around 20% that of the U.S. In his 2010 budget, Obama late last month targeted a reduction of 14% of greenhouse gas emissions from 2005 levels by 2020 and 83% below 2005 levels by 2050. The U.S. does agree with China that an international agreement should be based on a principle of "common but differentiated responsibilities" that allows a less stringent and longer-term flexibility for developing countries. Obama's officials also agree that developed countries need to help finance the technology transfer for low carbon energy and efficiency measures. -By Ian Talley, Dow Jones Newswires; 202-862-9285; ian.talley@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=u8iDMvqaGGE59ulN8%2FBABQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 17, 2009 15:29 ET (19:29 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 29 PM EDT 03-17-09

Bernanke Reminds of the Unemployment Reality; Equity Market Retreats from Intraday Highs

U.S. retail shares traded lower Monday, moving in the opposite direction from rising broader markets after U.S. Federal Reserve Chairman Ben Bernanke said the 8.1% unemployment rate will rise. The S&P Retail Index (RLX) fell 1.5% to 258.89 in late afternoon trading. Bernanke said in a rare televised interview that while the U.S. recession will come to an end "probably this year," he warned the unemployment rate will rise. The jobless rate, at its highest in over a quarter century, has been one of the key factors hurting consumer demand and sentiment. In other economic news that signaled weakness in the economy, industrial production fell for the fourth straight month with the decline worse than expected by economists surveyed by MarketWatch. Meanwhile, U.S. home builders remained discouraged about their business in March, according to a monthly survey by industry trade group the National Association of Home Builders. Wal-Mart Stores Inc. (WMT) shares fell 0.2% to $49.10. Wal-Mart, a Dow Jones Industrial Average member and the world's largest retailer, plans to convert two of its Neighborhood Market stores to supermarkets specifically targeting the Hispanic population. Shares of Sears Holdings Corp. (SHLD), owner of Kmart and its namesake department store chain, declined 3.5% to $38.53. Sears said late Friday it's unifying its multichannel services under ShopYourWay, which includes services and features such as Web to store pick-ups and comparison shopping of the top eight appliance brands. -Andria Cheng; 415-439-6400; AskNewswires@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=StXlfP8AHGRffk1%2FkrsLOA%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 16, 2009 15:38 ET (19:38 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 38 PM EDT 03-16-09

After U.S.A just legislated over $1.2 Trillion in spending, Summers urges other nations to dilute their currencies; backs EFCA too!

Even though the market is performing a technical head fake today, we'd be remiss not to remind of the eery Friday the 13th news. POTC doesn't mind a little govt spending in times of great crisis, yet we believe the recent amounts reveal more weakness than strength. And when met with anti-growth fiscal/tax policies, perhaps Larry needs to revisit his Econ 101 studies before asking world leaders, who have already chosen to walk down more socialistic paths, to grow their govt even more? We see this development as the first step in a process of rising doubt about the mammoth growth in governemnt & greenbacks under Obama. 60% of respondents in our poll felt Obama is failing capitalism, the free market system that did more good than ANY other model ever. Thank you for participating in our poll. Also, please notice Summers back EFCA towards the end of piece. WASHINGTON (Dow Jones)--Lawrence Summers, a top adviser to U.S. President Barack Obama, said Friday that countries accounting for a "very substantial majority of the world economy" probably have room for fiscal stimulus. "As a general matter, I think there is, looking around the world, significant scope for fiscal expansion," the director of the White House National Economic Council said in answering questions after a speech at the Brookings Institution. Summers declined to name the countries, but Treasury Secretary Timothy Geithner is expected to urge his counterparts at the Group of 20 meeting this weekend to increase their efforts to spur demand. That push has been met with resistance, especially among European governments that have signaled they don't plan to come up with more stimulus measures. In his speech, Summers said the administration will be pushing the G20 to adopt pro-growth measures in addition to fixing the regulatory system. "Priorities will include spurring demand around the world and assuring the adequacy of funding for emerging markets," he said. The former Treasury secretary downplayed concerns about the increase in the U.S. debt load to finance its policies to restore growth and financial stability. When asked about comments by Chinese Premier Wen Jiabao about the outlook for U.S. government debt, Summers said Obama's budget proposal shows a commitment to returning to a "sustainable" fiscal policy once the economic expansion starts. But he said it's necessary to "prime the pump" to get out of the "vicious cycle." While acknowledging that there is a danger if deficits continue to rise after the crisis, Summers argued that the current policy is ultimately more fiscally responsible than austerity measures. With the current market sentiment, he said, the central variable is restoring confidence and generating a sustainable recovery. "If we were to put that at risk in the name of some generalized concern about austerity, I think we would be doing the wrong thing by the economy, and ironically, we would even be doing the wrong thing by markets," he said. Summers touted what he called "the boldest economic program to promote recovery and expansion in two generations." While expressing confidence that the administration's three-pronged plan to boost growth, revive financial markets and help homeowners will work, he acknowledged that the timing of a turnaround is unclear. "No one can know just when its positive effects will be fully felt. No one can predict when this crisis will be resolved," he said. "But in resolution, I am confident there is enormous opportunity for both Americans and for the United States of America." He pointed to improved consumer spending and narrowing credit spreads as signs that the policies are already bearing fruit. The economy is suffering from a "rarer kind of recession" caused by the "spontaneous correction of financial excesses," said Summers, warning that the crisis won't be solved quickly. But he also said the correction presents an opportunity to restore the economy to its potential, noting that, adjusted for inflation, the Dow Jones Industrial Average has fallen to a level last seen in 1966. "For policy makers, it suggests the magnitude of the gains from restoring sustained economic growth," he said, saying the market could be regarded as "the sale of the century." Answering a question after the speech, Summers said it's a good time to invest for businesses with sound long-term strategies "because in a real sense, there are a very large number of things that are on sale today," citing a lower cost of construction as one example. But he said that other engines of growth are needed to ensure long-term growth in the absence of the asset bubbles of the past, requiring efforts to boost exports and invest in health care, energy and education. Summers also signaled support for passing a bill that would make it easier for unions to organize - the Employee Free Choice Act that was introduced in the Senate this week. When asked whether a union-organizing bill is a good idea during a recession, Summers said a sound economic expansion requires that benefits are broadly shared, and a healthy trade union movement is part of that. Arguing that labor laws have tilted against unions for many years, he said "an attempt to redress that balance seems to me something that is appropriate at such a time." Summers also defended Geithner, saying he has handled the crisis in a "difficult and courageous way" by creating a plan that recognizes the complexity of the problem. Taking a swipe at the Bush Administration, he said the easy route would be to issue plans that have the "illusion of specificity and sense of certainty about what the future would bring." He said the wisdom of Geithner's approach will be clear once the bank stress tests are completed and the measures to restart credit markets start producing results. On overhauling the global financial system, Summers said the U.S. "must lead a leveling up of regulatory standards, not as has happened all too often in the recent past, trying to win a race to the bottom." Geithner plans to lay out more detailed regulatory proposals in coming weeks, but Summers mentioned some broad principles, including that "no substantially interconnected institution or market on which the system depends should be free from rigorous public scrutiny." In addition, capital and liquidity requirements should focus on protecting the system during crises, improper risk-taking should be discouraged, and regulatory agencies shouldn't compete, he said. -By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ng1w6r1HE0kclAhDCqibiA%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 13, 2009 14:46 ET (18:46 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 46 PM EDT 03-13-09

Mark to market change after S/P lost 50%+ of value? You too lost your chance to be invited to Rick Santelli's Tea Party in early '08!

WASHINGTON (Dow Jones)--In a surprising reversal, House Financial Services Subcommittee Chairman Paul Kanjorski, D-Pa., said Thursday that Congress will have no choice but to intervene if regulators and the U.S. accounting standards board don't act soon to improve mark-to-market accounting rules. He made his remarks at the start of a hearing Thursday on the controversial accounting rule, which has forced banks to write down billions of dollars worth of assets on their books because of the deteriorating market conditions. Mark-to-market rules requires them to list their assets at current market value. "Previously, I have taken the position that the Congress should not interfere through legislation in the area of establishing specific accounting rules. It seemed best that such technical work be left to the regulators, standard setters and financial experts," Kanjorski said. "We can, however, no longer deny the reality of the pro-cyclical nature of mark-to-market accounting," he added. "It has produced numerous unintended consequences, and it has exacerbated the ongoing crisis. If the regulators and standard setters do not act now to improve the standards, then the Congress will have no other option than to act itself." Kanjorski was careful to say that a Congressional intervention shouldn't imply support for an all-out suspension of mark-to-market rules, as many banks and some lawmakers have called for in the past. The lawmaker said he isn't in favor of doing away with the standard because it would "revert to the very kind of subjectivity and sleight-of-hand that made mark-to-market necessary in the first place." "The standard does provide transparency for investors, but its strict application in the current environment is, in too many instances, distorting rather than clarifying, the picture," he said. His comments came ahead of testimony in which representatives from the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Financial Accounting Standards Board are expected to say they oppose suspending the rule. Following a study the SEC submitted to Congress late last year, FASB has said it is working to provide additional guidance on the issue and hopes to present its findings by the end of the second quarter of the year. Critics of the rule and its application, including the American Bankers Association and the U.S. Chamber of Commerce, have called on FASB to pick up the pace on providing guidance, saying the matter is urgent. Those concerned about mark-to-market accounting have also said the rule has hurt the ability of banks to maintain regulatory capital requirements. On Thursday, Kanjorski urged the OCC to liberalize regulatory capital requirements and grant "reasonable forbearance in the current economic environment." One idea he said is worth consideration would be to separate an asset's losses due to credit risk from its losses due to liquidity risk when applying mark-to-market accounting rules. -By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=F9bOn6dSKEDD%2Fhvv3LCENQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 12, 2009 10:22 ET (14:22 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 10 22 AM EDT 03-12-09

JPM's Sparkling Capitalist Dimon using word "PROFIT"; a War of Words Against President Obama Perhaps? Profit is a Good Thing dear sir Mr. President

JPMorgan Chase & Co. (JPM) Chief Executive Jamie Dimon said the bank was profitable in January and February, CNBC's Dennis Kneale reported Wednesday after speaking with Dimon over the phone. Dimon's statement follows a similar one made by Citigroup (C) CEO Vikram Pandit, who sparked a rally Tuesday by saying his company also turned a profit in the first two months of the year. Web site: http://www.cnbc.com/ (END) Dow Jones Newswires March 11, 2009 14:47 ET (18:47 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 47 PM EDT 03-11-09

President Obama's Dangerous Control Agenda, Tying Up the Free Market System Due to Bad Al Gore Science

WASHINGTON (Dow Jones)--Democratic leaders - including U.S. President Barack Obama's top budget official - are considering a procedural tactic that could give them the power to ram a controversial climate change and energy bill through Congress. The administration and Democrats such as Senate Majority Leader Harry Reid, D-Nev., hope to avoid obstruction by the Republicans and centrist Democrats who fear the potential economic impact of legislation to ax greenhouse gas emissions. The tactic is being discussed because of the dramatic impact of the bill: collection of "climate revenues" from a proposed cap-and-trade system could represent a major source of future revenue for the federal government. Democratic leaders are considering a process in the Senate known as "budget reconciliation," meant to fine-tune the government's expenditures and revenues later in the year, which needs only 51 votes compared to the standard 60 needed for contentious legislation. Some leaders see the alternative as an option of last-resort. Yet even having this option under consideration is raising the ire of many lawmakers and reveals how serious Obama is about passing a bill that axes greenhouse gas emissions. "Reconciliation is not the first place we would go, but we're at the beginning of the discussion and aren't going to take anything off the table at this point," Office of Management and Budget Director Peter Orszag told Dow Jones Newswires Tuesday after a budget hearing in the Capitol. An aide with a senior Democrat said lawmakers are considering the option simply because "we want to get it passed, that's our strategy." Obama will face more than a handful of Democrats who've already voiced objections to the president's stringent climate change proposal. In Obama's fiscal year 2010 budget outlined earlier this month, the administration said it expected to start collecting "climate revenues" from a cap-and-trade system in 2012. Based on a very conservative price estimate of $20 a ton, Obama hopes to glean at least $646 billion by 2020 from the program, which would represent a significant future source of revenue for the federal government. Those revenues would be raised by a 100% auction of carbon credits - the right to emit greenhouse gases - but only around $15 billion a year would go towards funding low-carbon energy technologies, according to the Obama plan. A raft of senators from Rust Belt and coal-producing states last year said they couldn't support a climate proposal introduced onto the chamber floor, a bill less stringent than the president's proposal. They warned such a bill needed "great care" in crafting due to potential impacts on the economy, energy prices and industry competition. Those same senators, including Debbie Stabenow, D-Mich., Sen. Ben Nelson, D-Neb., and Byron Dorgan, D-N.D., have again joined forces this year and are drafting a set of principles they say should guide climate bill legislation. The Environment and Public Works Committee chairman, Sen. Barbara Boxer, D-Calif., said slipping the climate bill into the budget reconciliation process may be the easiest route. The procedure also could be used for other controversial energy provisions that could mandate renewable energy production and give greater federal authority to site electricity transmission. Surveying the legislative landscape, the administration is using a multi-pronged approach to cutting greenhouse gases. The president has also directed the Environmental Protection Agency to draft new regulations for greenhouse gas emissions through the existing Clean Air Act. Forcibly creating new climate laws, either through the Clean Air Act or budget reconciliation, is highly controversial. When Obama's predecessor George W. Bush used the budget reconciliation process to push through his tax cuts in 2001, some Democrats were outraged, accusing the administration of by-passing the Democratic process. Leaders in Obama's own party are warning about the tactic. Sen. Max Baucus, a Democrat from coal-state Montana and the chairman of the Finance Committee, said "it's not a good idea," and the partisan nature of such a strategy would cause the administration trouble. "It's possible 51 votes could be found, but at what cost?" he said on the sidelines of party lunches. "There's lots of ways to throw sand into the Senate's gears.. even with reconciliation, there are ways to slow things down," he cautioned. Sen. Nelson said he was opposed to reconciliation, "because I don't think it's the appropriate way to deal with climate change. That needs to go through the regular order." Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, said Congress needed more debate on climate change before passing legislation. Bingaman, who has supported a less onerous climate bill, suggested using reconciliation for climate change or including energy provisions would hinder passage. "It gets difficult to pass the bigger and more complex any legislation gets," he told reporters. Republicans are more blunt. "It's a horrible idea, would be seen as a vast power grab and would be wildly unpopular," said Sen. John Cornyn, R-Texas, a member of the Senate GOP's leadership team. One way the administration could build support would be to give emission credits to some sectors such as utilities most exposed to a cap-and-trade program. "This is going to be extraordinarily difficult to accomplish," said Senate Budget Committee Chairman Kent Conrad. D-N.D., at a panel hearing Tuesday. It is "unlikely the bill will pass if it doesn't have money set aside for industries that will be especially hard hit." -By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com; (END) Dow Jones Newswires March 11, 2009 12:19 ET (16:19 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 19 PM EDT 03-11-09

Regulation Drumbeat Gets Louder, Dodd Has No Quick Fix as Uncertainty Grows

WASHINGTON (DOW JONES) -- Senate Banking Committee Chairman Chris Dodd, D-Conn., said Wednesday he supports the idea of a federal systemic risk regulator. "You need a systemic risk regulator," Dodd said, taking questions from reporters after a speech at the U.S. Chamber of Commerce. "The question is who is going to perform that function?" The Federal Reserve already has many responsibilities and creating a new entity to act as a systemic risk regulator would be a daunting task, Dodd said. By Meena Thiruvengadam, Dow Jones Newswires; 202-329-0693; meena.thiruvengadam@dowjones.com (END) Dow Jones Newswires March 11, 2009 11:47 ET (15:47 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 47 AM EDT 03-11-09

Hey Mr. Frank, don't you think it's too little too late for uptick rule even today? And you say one more month? You definitely Blew Off Psych 101:

U.S. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, told reporters Tuesday he expects the "uptick rule" - used to require investors to wait until a company's stock rises before it could be sold short - to be restored within about one month, Reuters reported. Frank also said the current standard of mark-to-market accounting - intended to value assets at the price they could fetch at present - must be improved and made more flexible. Reuters also reported Tuesday that the Securities and Exchange Commission is not planning to suspend the mark-to-market rule, citing a person familiar with the matter. http://www.reuters.com/ -Dow Jones Newswires; 201-938-5500 (END) Dow Jones Newswires March 10, 2009 12:29 ET (16:29 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 29 PM EDT 03-10-09

Thomas Jefferson's Legacy Remembered

POTC received this super email from a very forward-looking couple, and we felt it must be archived/posted forever:

President John F. Kennedy had this to say about Thomas Jefferson in 1962, when welcoming 49 Nobel Prize winners: "I think this is the most extraordinary collection of talent and of human knowledge that has ever been gathered together at the White House - with the possible exception of when Thomas Jefferson dined alone." The quotes below prove his point:

"My reading of history convinces me that most bad government results from too much government." "When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe." "The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world." "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." "No free man shall ever be debarred the use of arms. The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government." "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

In light of the present financial crisis, it's interesting to read what Thomas Jefferson said in 1802. The Psychology of the Call team thanks Joanna & Jim for this brilliant reminder of the reason for elected officials; are you listening dear sir Mr. President Obama?

Grim Reality of Donkey Politics is Calling, Will You Stand Up & Fight for Capitalism?

WASHINGTON (Dow Jones)--House and Senate Democrats are set to introduce a controversial bill Tuesday that is shaping up to launch a major battle between labor and business groups this year. The Employee Free Choice Act, which Democrats say will make it easier for workers to organize into a union, will be introduced jointly by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., on Tuesday, said a spokeswoman for Miller. The bill is just as fiercely opposed by business groups such as the U.S. Chamber of Commerce as it is defended by labor organizations. It would compel business owners to recognize unions once more than 50% of workers agree to form one. Currently, owners have the right to demand a secret ballot election is held before a union is recognized. The legislation would also require owners and unions to submit to binding arbitration if, 120 days after a union is formed, the two sides can't agree on an initial contract. A third part of the bill would strengthen penalties against employers seen to be trying to intimidate workers who are trying to organize a union. Labor unions have long advocated for Congress to act to bring forward the legislation, but Republicans have opposed the measure and refused to do so. Now, with the Democrats in control of both chambers of Congress and the White House, labor groups believe this is an ideal time to try to pass the legislation. The Chamber plans to mobilize a substantial grass-roots movement to aggressively lobby lawmakers against the bill. It is flying around 180 of its members to Washington D.C. Tuesday to meet with lawmakers on the subject. Similarly, labor groups are getting set to substantially ramp up their lobbying efforts in favor of the proposal. The Senate Health Committee is scheduled to have a hearing into the bill Tuesday morning, after which Harkin and Miller are slated to hold a press conference formally introducing the legislation. Harkin is a senior Democratic member of the Senate health panel, while Miller is the chairman of the House Education and Labor Committee, which will lead the charge on the measure in the House. -By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=uhZWDuT8N%2Fh45Ys7RP60FQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 09, 2009 16:30 ET (20:30 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 04 30 PM EDT 03-09-09

As much as The Psychology of the Call team respects the office of the presidency of the Unites States, we revere capitalism more. President Obama's eloquence is first rate, but his unfriendly entrepreneurial fiscal policies & partisan push for larger government is troubling. We hope he does a 180 & we'll support him hand over fist, but if he chooses to use his rare combination of intellect and eloquence to rip a larger hole in our free market system, we will continue to vent.

Even Jim Cramer proclaimed on Mad Money that every sector is fair game for this administration's red tape; banking, coal, oil & gas, healthcare, transportation, hotels, entertainment/casinos, alcohol & tobacco, and every company pretty much that makes a profit. Profit has suddenly become a four word! The elitist jerks who have money in the stock market or a job on Wall Street... how dare they profit & support capitalism?

This change cabinet refuses to reward success at a time of ECONOMIC EMERGENCY, choosing instead to reward laziness and failure. Rewarding failure will never raise a capitalistic society out of an economic spiral, Mr. President. On the contrary, only through massive tax cuts will corporations be able to increase cash flows, net margins, and most importantly increase hiring/payroll. Without increasing employment, it won't matter if the combined S/P earns $40 or $70 in '09, since valuations (p/e's) only stabilize when consumer sentiment is high and said consumer is gainfully employed. And that's not some mediocre government type job that is prevalent in western European societies Mr. President, where they drive 2 cylinder cars and/or walk everywhere. Is this the type of system/society this change drum is beating? Europeans envy the lifestyles of Americans. We urge our elected officials to stop the kowtowing and focus on the American businessman's spirit, because it's the steadfast American spirit that will be KEY to bringing us out of this paradoxical nightmare.

The policies of change dear Sir Mr. President Obama are undermining dreams for every patriotic entrepreneur and venture capitalist, while rewarding the weakened mass of losers that, regardless of predicaments and economic cycles, choose to drag, procreate, and collect welfare checks. Benefits for these people actually increased in your stimulus bill! Does that make sense in what is a Darwinian system? POTC is not surprised though, as you went from Harvard to precinct captain for the most crooked Mayor in the history of the world, "the Daley Machine" in Chicago.

Ironically less than two months into your term, your credibility conundrum has started to unfold as unemployment shot up to 8.1%. Peter Orszag stated that the Obama spending budget/buffet was based on unemployment peaking at 8.1% for 2009! Word to this economic team: your forecasts for peak unemployment has been met while the stock market plunges. Any response?

We expect the administration will publicly admit their financial forecasts were too rosy and wrong, as the campaign mantra was greater accountability and transparency. We trust those principles are still important to you just two months after your triumph.

We blogged in January about the creation of more government type jobs, and Friday's numbers began to reveal this unfortunate smoothing development. Even though the market is technically oversold, we believe the underlying fundamentals related to banks/credit, residential real estate, commercial real estate and insurers trumps all. The psyche of investors and traders has now been broken with Dow and S/P trading at 6 handles. Although we will never count out the American entrepreneur over the long-run, there are now clear reasons to be concerned in the short-run.

The Psychology of the Call team prefers to witness weak companies go under and new ones emerge, regardless of so-called systematic risks. Maybe these so-called systematic risks pose a greater risk to the two party system than we now understand. This is a topic that will be fiercely debated as the patriotic types like Rush Limbaugh realize that a third party takeover is guaranteed in three short years, regardless of how right and loud their elephant voices reverberate. Even so...

Americans have had much worse odds against them in the past and synthetically propping up corporations like Shakespearian puppets is Un-American to the core. We stand for less government involvement and urge government officials to stop the public charades, step aside and focus on protecting the country, dammit! Stymieing our free market system will guarantee you a one-term failed legacy. We want anti-capitalistic ideas to fail, and we fully understand and support the rising tide of voices against this 'regulate capitalism cabinet'. The 1st amendment seems to be the only saving grace we can hang our country hats on during these botched times. Please vote in our poll in the left margin.

Welcome back(Sunday 9:41ET). As promised, here are our long & short recommendations with the 11 Commandments in mind. The 2 long ideas to consider are CRA & DRRX, & the 2 short ideas are FSLR & WMT. ================================================================== We blogged back in 2008 about talking heads espousing their conviction in a market bottom, yet we reminded you that a bottom only comes after boredom sets in and headline news turns its gaze away from the market. The global economic problems are front and center 24/7, therefore there could be no imminent bottom even IF the indexes were to rally 10%+ from these bloodless levels. Every bear market rallies and then retests previous lows, or trends sideways for several quarters. With that knowledge in mind you will not miss any major moves and actually attain greater leverage by exhibiting patience.

We are in the ugliest bottoming process ever witnessed. We urge forward-thinkers to follow the 11 Commandments and use no margin regardless of the temptation from the bottom callers. We remind you to not turn day trades into long-term positions, as that merely creates false hope & widening losses. The Psychology of the Call team invites you back Sunday night for our four special position trades, 2 long, & 2 short.

Friday's Wretched Sentiment

Somber Friday greetings,

We are frustrated.

Investor confusion couldn't be at higher levels. The talking heads are screaming oversold, oversold, oversold, convincing even us to step into this big govt mess. Lucid analysis exposes the clear paradigm shift upon us: help the losers at the expense of the winners.

We must not be ashamed to highlight the pitfalls of a big govt. President Sir Obama, please, please, please, step aside from your dangerous ideology: you are heading down a dead end Street. You will not defeat capitalism in one-term.

POTC bought puts on First Solar (FSLR) this morning, as we do not believe any sector is immune to Obama's reach or regulation. Whether right or wrong on individual stock picks, we have big respect for often-bashed Jim Cramer of late. He has in fact spoken out colorfully against what he believes is an attack on capitalism from this change administration.

The Psychology of the Call team wishes all forward-thinkers a nice weekend. Take care of yourselves, friends, and loved ones as difficult as it may be in all this confusion.

Investors' respite from sinking stock prices ended Thursday as major U.S. stock market indexes slid back under their recent bear-market closing lows amid more hemorrhaging in the financial sector. At about 11:50 a.m., the Dow Jones Industrial Average was down 194 points, falling below the benchmark's recent bear-market closing low of 6726.02, reached Tuesday. Citigroup shares were down more than 12%, falling to less than $1. Bank of America was down 11%. J.P. Morgan Chase, thought to be the healthiest of the big three Dow banks, was down 9%. Investors also pushed shares of General Motors down more than 16% to less than $2 after it said in a securities filing that its auditors raised substantial doubt about the auto maker's ability to continue operating. General Electric, which has fallen in recent weeks to multiyear lows amid fear that the conglomerate could lose its AAA credit rating, was up 2.7% in recent trade. Its chief financial officer said on CNBC, a television network GE owns, that a cut in its credit rating seems possible but would have no operational impact on the company. The S&P 500 was recently down 3.2%, falling below 700 and its bear-market low of 696.33, amid declines in all of its sectors. The financial sector was once again its weakest, tumbling by nearly 9%. Wells Fargo shares were down 17% after Moody's said it is considering downgrading the bank's credit rating. Markets had snapped a five-day losing skid on Wednesday amid hopes that an economic stimulus plan from China would help jolt the global economy back to life. Commodities and industrials shares surged. But those gains evaporated on Thursday after China's premier tamped down expectations for more stimulus. The S&P's industrial sector was recently down 4.5%, while utilities were down almost 4%. Basic materials and energy were also big losers, declining 3% each. Investors seem to be bracing for a prolonged period of daily market swings that are wide but don't necessarily add up to any clear trend, said Paul Britton, chief executive of the trading firm Capstone Holdings Group. The Chicago Board Option's Exchange Volatility Index, which uses options prices to gauge investors' fear of an upcoming market swing, fell nearly 10% over the past two trading sessions. It rebounded about 4% in recent action but is still hovering well below its peaks of last autumn. "In an environment like this, you have to make smaller-sized trades because you don't know if you're going to be able to get out," if the market moves adversely and there's no stampede of other participants trying to unwind positions, said Britton. Wal-Mart Stores was one of the market's few bright spots after it posted a 5.1% jump in February same-store sales and said it would increase its dividend 15%. Its shares rose 3.3%. Other chains reported generally better-than-expected sales for last month, though many relied on deep discounting that may pressure profit margins. The consumer-discretionary sector of the S&P 500 fell 4%. The Nasdaq Composite Index was down 2.6%. In Europe, the European Central Bank cut its primary lending rate to a record low of 1.5%, from 2%. The Bank of England became the first European central bank to implement quantitative easing policy, saying that it would purchase up to $106.28 billion in mostly medium and long-term U.K. government debt. The central bank also cut its key interest rate by a half point to 0.5%. The FTSE 100 was down more than 2% and European markets more broadly were weaker. The dollar advanced against the euro. Treasury prices were higher after falling Wednesday amid concern about incoming supplies of new debt. Oil prices sank as worry about demand reasserted itself. Gold prices were modestly higher. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=xP2LmMEqaiBl33znOMNeUw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires March 05, 2009 11:54 ET (16:54 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 54 AM EST 03-05-09

Ignore the Negative Talking Heads, S/P 800+ Expected as Pendulum Swings Green ...

Greetings to all free market capitalists,

The unfriendly fiscal (tax) policies out of Washington couldn't come at a worse time, yet the Psychology of the Call team(POTC) is certain our new President does NOT want to be a one-term failure. Although the pendulum of psychology has swung hard against free market capitalism in the last 40 days, at such improbable depths, nothing can send stocks lower in the week ahead.

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We recommend positioning for an explosive equity rally that'll leave tea party participants, gold bugs, and bashing elephants with jaws agape.

With the S/P and Dow both on the edge of flashing 6 handles (S/P 735, Dow 7063) this administration must be conscious of what a further meltdown of capital would mean to their optimistic economic forecasts (unemployment peaking at 8.1% and GDP reversing by 4%+ in 2010). POTC believes the D.C. donkeys will do everything in their politrickle power to not see the indexes collapse in the first week of March.

Monday will be the most dangerous day of the week in our opinion, yet IF the markets hold the 7's on close, forward-thinkers should be overweight S/P for the remainder of the week, but especially the unwanted financials. BAC and JPM could return 50%+ and 30%+ respectively, and even orphaned C will rally. “Why?” you ask... read on.

With current psychology at bloodless levels, the classic conditions of oversold will be at work. IF any cordial banking policy news comes, then a jet-fuel type rally will occur. Is it possible this left-handed administration reveals BAC will not be nationalized, or a smidgen of optimism regarding bank stress tests? Of course it is, & it won't take both of those shocks for the explosive rally to begin. One alone would be enough, therefore maximum pain in the week ahead lies squarely on short accounts.

Any good news regarding bank stress tests would create the ultimate fire-starter/bear rally scenario. If you're short, you will learn how humbling trading can be. We realize a lot of seasoned/professional investors are considering buying gold now and expect the markets to collapse. We'll take the other side of that trade, but especially in the short-term. By applying Psychological Financial Fusion, forward-thinkers must not get swayed into selling this week, as fundamentals, technicals, psychology, & policy could not be any darker.

On Tuesday Treasury Secretary Geithner may yield more substance than most believe. He will reveal the 2010 budget proposal to the House Ways and Means Committee. The President will address the Committee Thursday as well.

The pendulum of last week's putrid psychology must bob a bit closer to equilibrium, and that's all it'll take for a bear rally of staggering proportions; S/P 10%+. Friday's Employment report will come like a dying female mosquito, not the bloody hammer-fist most talking heads now expect.

We hope you appreciated and found the Psychology of this Call useful. Now for some music video relief with dreams of a fun-filled Spring ahead: http://www.youtube.com/watch?v=57sfRo26fAc