Jack Welch, the former CEO of General Electric, blasted the Obama administration and Congressman Barney Frank telling a banking audience that the Democrats’ actions to restructure the entire economy are “insane.”
He said, “I hope that the New Jersey and Virginia governor’s race will put some realism into this administration,” Welch told an enthusiastic crowd at the Bank Administration Institute convention at Boston’s Convention and Exhibition Center. “I hope it will cause them to pause and not just jump into anything they encounter.”
Welch was referring to the races on Tuesday where two incumbent Democrats thrown out of office, a sign that Americans are fed up with President Barack Obama’s socialist policies.
“I desperately want more thought so we don’t throw out some of the great things we have in this country,” Welch said to more than 1,000 bankers. “Right now, Barney Frank has the floor. He can send us down paths that might be bad for us. That’s frightening. I hope the elections in those two states will slow the speed at which we are attacking climate change, financial regulations and health care. We can’t just pile up deficits and restructure the entire economy in 12-18 months. It’s not doable. It’s insane.”
Market Outlook
The Congress took two weeks beyond the expiration of the last unemployment extension to once again extend the unemployment compensation period. That means that many of the unemployed were no longer listed as unemployed when they exceeded the first extension. That could make the unemployment statistics optimistic and then pessimistic again as the unemployed are de-listed and then re-listed. Therefore if the figures become very good in the next week we would accelerate getting out of the market and into cash because they will only get worse again.
This week
The Group of 20 nations agreed to maintain stimulus efforts and metals prices rallied.
FED released Nov 9 2009 quarterly loan officer survey results on Bank Lending Practices
The survey also included three sets of special questions: The first asked banks about the reasons for the decline in commercial and industrial (C&I) loans over the first eight months of 2009, the second asked banks about the status of commercial real estate (CRE) loans on their books that were scheduled to mature by September of this year, and the third asked banks about potential changes in credit card lending due to implementation of the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act.
The banks indicated that they continued to tighten standards and terms over the past three months on all major types of loans to businesses and households. In response to a special question on the sources of the decline in C&I lending this year, the two sources domestic banks cited most often as being "very" important were decreased originations of term loans and decreased draws on revolving credit lines. In response to a second special question, banks indicated that, of the CRE loans on their books that were scheduled to mature by September of this year, more loans had been extended than refinanced. In response to special questions concerning the Credit CARD legislation passed in May 2009, a majority of banks reported that they had yet to fully comply with the new law. Banks indicated that they expected to tighten many of the terms and conditions of credit card loans as a result of the legislation, with the notable exception of penalty fees and the length of the grace period for payments. These tighter bank lending standards reinforce the FED's decision to keep rates low.
Tuesday, Nov 10
October small business optimism index
Wednesday, Nov 11
Veterans Day
Thursday, Nov 12:
Unemployment Claims for last week
FED reveals monthly budget deficit
Friday, Nov. 13:
U.S. Trade Gap, import prices expected to rise.
Consumer Sentiment expected to improve
Market forces November 10
The market rally is under way but if a new high is not established at least 1.9 % higher than the last one we expect a few months of declines will follow. The new high must be higher because transaction volume is lower than normal indicating a weakness in this rally. We are prepared to diversify out of stocks or into fixed rates as this market rallies.
Asian markets were slightly higher last night; China up 0.1%, Hong Kong up 0.3%, India down -0.4%, Japan up 0.6%, Seoul up 0.4%and Taiwan up 0.8%.
European markets are flat with the average in a range from 0.2% to -0.1% this morning about half way through their day.
US pre-market futures are down -0.2% today at 8:00 AM EST with the DOW above 10,200 again. The U.S. stock-index futures decline indicates the market six-day run may be broken today just when all the GE/MSNBC/Pravda/socialist bears turned bullish again last night.
This new market will be treacherous for weak stocks that had advanced sharply with previous optimism. Now those weak stocks could drop very sharply if they do not improve earnings. It is important to get out of weak stocks quickly and possibly all stocks within two weeks when this rally should be topping out.
Our indicators say we are near the top of the market for perhaps the next six months. That is to say that although the averages may not show it, our cash flow index indicates that cash has been leaving the market for almost two months and that puts a spin on things. For instance, even if we slightly exceed the markets previous high of the last month it will still be a head and shoulders sell formation for us. The market now has to surpass the previous high by about 1.8% (at this time and still increasing) to maintain a bull market. For that reason we will be prepared to go into cash gradually now by just taking profits and not re-investing in the market over the next three weeks and by then we will know if this rally still has legs.
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