Crash Market Stocks - Financial Tips On Making Money In The Stock Market

It's hard to go a week now without reading something in the news with the worry about inflation. Even guru Warren Buffett said in last week's interview that he believes inflation is a big concern at some point. Everyone seems to recognize it's a problem out there, but that it is distant enough to not have to worry about it, as of now. However, if indeed this villain takes us by surprise, as many believe, we are in for a lot more hurt.

Right now, most of the goods of the economy relate to the extreme low cost of borrowing for those that can still borrow. Record low mortgage rates are allowing our housing markets to hold on by a thread, as well as new business owners to take out a loan. However, as is always the case, it will not last forever.

Many, including myself, believe that inflation is a year or less out. What really shows me just how damaged the housing market is, is how poorly home sales remain, despite the extremely low financing. If rates of this caliber would have been available a few years ago, we would have seen an explosion of buying in the housing market. Even with the extremely large amount of bank owned houses on the market, the sales remain sluggish.

Inflation will also have a big effect on our currency. During our last big inflated time in our economy, we were not nearly as dependent on foreign imports. Our economy has become such a big global economy, that a falling dollar will cause new problems for the government. This will effect the selling of government debt, as well as imports and exports.

At some point, the severe risk of inflation will be upon us, and the Fed will have no other choice but to jack those rates up. At this point, I believe we will see a very rapid jump in borrowing interest rates, which will put a whole new weight on this already beat up economy. It is because of this risk, why I feel very cautious about saying that the worst is over. I believe we will see many different stages to this recession, and inflation is that's a big worry for me.

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PS - I will talk more today about consumer confidence, as well as upcoming economic numbers to look out for this week on tonight's premium podcast (subscribe here)

Markets responded to a very disappointing consumer confidence report on Monday. After a very optimistic number of 54 last month, the market was hoping for a two month consecutive 50+ number to help confirm the belief of a stabling economy. However, June's number came in at 49, which was well below the expected 55.3 number. The results sent markets down from the opening, which the Dow eventually closed at 8447, down 82 for the day.

Today's number shows that we can definitely wobble in data from time to time and that an increasing number does not always mean that it is sustainable. I will not be surprised to see if much of the data throughout the rest of the year continues to tail off, especially if we cannot sustain the type of government spending and bailouts we have issued thus far. It is no wonder why economic data looked much better this past quarter. Trillions of dollars of new money helps a bit.

SRS showed weakness today, as I expected, considering the Treasury is expected to unveil their new PPIP plan tomorrow. As a hedge, I went in today and pulled the trigger on some Kimco and Simon. If the plan indeed is unveiled, many investors could falsely see the plan as the solution to the big commercial real estate problem. I would not be surprised to see a healthy bounce from the bunch tomorrow and/or Thursday. Happy Trading.

News hit today of the Treasury's plan to unveil their newest PPIP program that many investors have been waiting for. On Wednesday, the Treasury plans to announce details of their long awaited Public-Private Investment Program. This is the new entity established by the government to help in disposing of toxic commercial debt. Much like the RTC program from the 90's, the PPIP will aim to find private investors who are well capitalized to partner with in taking over toxic, bank owned properties.

Unfortunately, the plan sounds too good to be true, which is probably why there are very few rumored players. Two confirmed players in the program are GE Capital and Wilbur Ross Distressed Real Estate Fund. The hopes of the program is for the PPIP to partner with the private institutions to help absorb future losses the properties may have. The program looks to be structured with high favor towards the private institutions, however, there are many factors that could turn the deal sour.

First off, much like how the CMBS debt was bonded together, so will much of these "distressed properties." Most likely, these parties will not get to pick and choose from a list of distressed assets, but will be given a portfolio to look at. With the several good and promising assets that are in the portfolio, will be the many bad useless assets. Not only that, but they will most likely differ in product type, which could cause for many of these institutions to stretch outside of their comfort zone.

I know it seems that buying distressed properties, in the way the PPIP has outlined it, seems like a steal, but there are still plenty of downside risk for these groups to consider. First, how much worse will property values get. Many feel that commercial real estate is just beginning its problems. Is this the first of many bottoms? How long can these groups absorb losses. Sure, there is essentially no bottom to the Treasury's pockets, but there indeed is for GE Capital. I believe the only way we're going to see a quick recovery from commercial real estate values, is to offer up the properties to the entire market. Sure, prices would come down much more dramatically, but nature would take its course.

In preparations, I may go in and play a few of these institutions long, as I expect a good possibility for a very short term bounce for some of these players. Much of the perception will be that these groups will receive great deals for an extreme discount, however, we will soon see just how well it works out. After much of the settling down, I expect to load up pretty heavily on SRS.

Today's rally was mostly fueled by a good day with oil. Volume was very light today, as we're heading into vacation season. Tomorrow we have the consumer confidence report, which will probably come in rather positive, however, I would expect that number to begin to tail off again the next few months. Also, we finish off the week with unemployment numbers, which could be quite the eye opener for investors. Stay in touch with more news through TradingSolutions: Financial analysis and investment software that combines technical analysis with neural network and genetic algorithms. Happy Trading.

As expected, we saw the belated rebound rally occur today, which was sparked by not only more profit taking, but also by some favorable earnings reports. Bed, Bath and Beyond reported a rather strong earnings report, which shot their stock up near 10% today. Also, home builders got some love from buyers, as Lennar reported less "cancellations", however, their earnings report still remained rather dismal. It is important on the earnings reports to pay attention to their NET income and not just their revenues. Retailers are still having record slash to prices for their goods, that many of them are selling much more of their inventory, however, their margins have shrunk dramatically.

The 172 point rally for the Dow was sorely needed after several consecutive days of down trading for the index. Like I've said in prior posts, I still believe the momentum remains on the downside, but we can of course expect sporadic up days like today. In fact, I found it a good opportunity to pick up some more SRS and FAZ shares today, as I continue to feel that there will be weakness in the financial and commercial real estate sector.

Yesterday, Warren Buffett was interviewed on CNBC, and definitely had more discouraging things to say than encouraging, regarding the economy. Being a CEO himself, as well as having one of the most prestige stock symbols on the exchange with Berkshire Hathaway, sometimes Buffett is forced to play into politics. However, he did not hold back much yesterday, when he explained his concerns about this troubled economy.

When being questioned about the state of the economy and if we've seen some growth, Buffett gave this response:

Well, it's been pretty flat. I get figures on 70-odd businesses, a lot of them daily. Everything that I see about the economy is that we've had no bounce. The financial system was really where the crisis was last September and October, and that's been surmounted and that's enormously important. But in terms of the economy coming back, it takes a while. There were a lot of excesses to be wrung out and that process is still underway and it looks to me like it will be underway for quite a while. In the (Berkshire Hathaway) annual report I said the economy would be in a shambles this year and probably well beyond. I'm afraid that's true.

No bounce, he said. Buffett's biggest resource are his vast array of companies he manages and is privileged to know the state of their balance sheets. Such knowledge definitely gives the old man a bit of an advantage to be able to see the early seeds of a turn around.

In response to being asked whether he's personally seen these so called "green shoots", he said:

(Laughs.) I looked. I wasn't seeing anything. I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots. We're not seeing them. Whether it's retailing, manufacturing, wherever. We have a big utility operation. Industrial demand is down like we've never seen it for a simple thing like electricity. So it hasn't happened yet. It will happen. I want to emphasize that. But it hasn't happened yet.

In times past, Buffett has always tried to paint as optimistic of a picture as he could, with also stating true facts. However, much throughout his interview, he continues to stress his belief that it will be a very long road back to economic health. Sure, he does feel that some sectors have already endured the worst and that the economy will get back on track, but he feels that the road is long, and probably not ending this year.

Much is still to come in our economic crisis, in my mind. This is why I continue to hedge myself on the short side, especially as more opportunities arise. I discuss some concerns I have in the residential real estate market in tonight's premium podcast (subscribe here) as well as some more S&P data that is showing new trends. My Zecco.com account has performed quite well this past week and I will be looking forward to some more green. Happy Trading.

Stocks were all over the board today as all indexes opened up in the green today as the Fed announced their plans to keep things "status quo." However, by the end of the day, markets closed with mixed feelings, having the Dow down almost 30 points, but both the S&P and NASDAQ up. The red closing for the Dow was very surprising, considering that it was up over 100 points at one point. More negative data, and and a rather "depressing" interview with Warren Buffett (I'll talk about later) brought down investor's confidence in the afternoon.

Today's economic data was also mixed. Durable orders came in much better than analysts expected and is now two consecutive months of positive growth. However, this can be very easily skewed by government spending as there is a lot of weight on aircraft and defense spending. However, new homes sales data came in far worse than many analysts expected. A reported 342K new homes sales were reported (360K expected), this will also most likely be revised to an even smaller number. Also, the number is less than last months number, which causes concerns for home owners.

So indeed the data is not sufficient to support a notion of a "recovering economy." The Fed discussed this fact in their report of their FOMC meeting. They still enjoy harping the tune "the worst is over", but are very careful to say that indeed we are bottoming. They agree that data confirms that we still show severe weakness in the economy and that there is still a lot of recovering to do before we see growth again. This is the "watered down" version, coming from our Federal Reserve, so I expect actual activity to be even worse.

The Fed also announced their plan to leave interest rates at essentially zero for the time being. To help fight climbing yields, they will also continue to purchase government notes and bonds, which they have now spent over $2 trillion already. To keep mortgage rates low, they will also continue to buy mortgage backed securities. Such continual Fed buying, mixed with government debt spending is creating an elixir of destruction, and is something that will need to be dealt with at some point, but they aren't concerned about that now.

Financials were rather strong today, but I feel they still should remain weak. I would have pulled the trigger on some FAZ shares today, if I were not out of the office. Even after several days of down trading, the markets are still showing weakness. This could be just the beginning of a rather strong downturn. Morningstar has some great valuation tools for equities that you can try free, Morningstar - Valuable insights and innovative portfolio tools. Get the Morningstar advantage with a FREE 14-day trial membership!. I expect some serious downward momentum to kick into the next gear shortly. Happy Trading.