Good Morning All,
The following thoughts may not be music to your ears but bear with the story for a moment because like all past market tales, it has a happy ending. Friday did not prove to be, as we opined, "the mother of all capitulations day" but to be fair we did give it until this week to occur, so let's compare the last two months of market devestation to the first movements of a Mannheim school symphony and today's worldwide declines to the fourth and final crescendo. Or even more heart rendering, how about an old Roy Orbison love song that begins in tears and builds to an echoing throb of victory "as the market turned and walked away with me". Okay so that wasn't quite the line but some literary license is surely allowable during times such as these.
On the positive side Bill Gross, reputedly the smartest bond guy around, said this morning that intervention is working and that he expects 3 month LIBOR to drop below 3% very soon. This is important news because recession or not, it must be seen that the solutions being put in place are having such an effect thereby limiting the potential of the coming economic horror show to something manageable.
As the calendar moves toward November 4th we can look forward to a pre election rally that will front run an Obama victory. It is also possible that markets can turn higher without an American capitulation day but it would be easier for all if such an event, no market how intimidating it looks at the time, would occur. This water drip torture is worse than a final shake out. The process continues.
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