Hoping for rally? I dont think so

Certainly a herculean challenge for our new administration. Frankly I don't think a quick fix exists just as there is no quick fix for certain diseases. You incubate and wait, as only time itself will heal the wound or illness.

On Friday, Goldman called for the biggest rise in joblessness since WW ll. Here is a blip from their piece:

The unemployment rate is expected to rise to 8.5% by the end of next year and inch even higher in early 2010, economists for Goldman Sachs wrote Friday. The cumulative trough-to-peak increase of more than 4 percentage points in the jobless rate would be the most since World War II, they said. Goldman analysts lowered growth forecasts for the next three quarters, and said they now expect the Federal Reserve to cut its interest rate target to 0.50% by December. "The main reason for these changes is the accumulation of evidence that U.S. domestic demand and production are dropping sharply," they wrote. "We do not see a resumption of anything close to trend growth before 2010."

And retail should see more pressure. Analysts are looking for a fourth consecutive monthly drop. The last time that happened was 1974. Here is what CIBC is saying:

"October will prove to be a disaster for retail sales, with only the discounters having anything to cheer about," wrote Avery Shenfeld, an economist for CIBC World Markets. "Note that the ex-autos number will partly reflect the drop in nominal gas-station sales on falling pump prices, and will therefore exaggerate the decline in real terms."

Credit Suisse is saying this:

"The forces of tighter credit, a slackening labor market, falling household wealth and the deluge of negative news headlines are intersecting to create one of the worst backdrops for consumer demand," according to a Credit Suisse note. "As a consequence, vehicle sales collapsed in October and chain-store reports were softer than already scaled-back expectations."

I THINK ALL RALLIES SHOULD BE SHORTED HERE. I posted a new trade call on the blog so take a look. Also as of yesterday 19 banks have failed since the start of the year.

For all those people who are listening to their advisers (people who take a self test exams in 4 weeks and want to advise people on their hard work monies) be my guest. These are the same people will told people to stay with GM when it was $100, same that said stay with microsost@ $60 or stay with Enron. Time to wise up and take your finances in your own hands.
While doing my PHD one of my professors told me that the financial markets is a big scam for the smart people to take from the less knowledgeable among us, I wonder if we should call the markets some redistribution of wealth :) I think so! Just dont be on the wrong side.

MARKETJEDI

TRADE CALL: GS

YES - A trade call on SUNDAY!! How crazy am I. This is not for the weak or inexperienced traders but experience traders among us.
I am going to play this one very very unusual but here it the play.

BUY $80 Puts for NOV. (GS WP) at open $8.30 area
BUY $70 Puts for DEC (GS XN) at open $9.00 area


Yep I have a gut felling about this one like I had about Fannie Mae and Wachovia. Let's see how this one turns out.



MARKETJEDI