AGORACOM Blog

This is the big question of the day.

As you know, the US Fed today established a target range for the federal funds rate of 0 to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%.

This is the kind of event that history books (ebooks) will be writing about 100 years from now. I’m not going to bother reporting on it, as you can find a great write-up here and here.

Rather, I’d like to provide some meaningful insight from some of the world’s brightest financial minds. Apart from my own I’ll continue to update this post throughout the next 24 hours as I scan great bloggers and writers, so make sure to keep checking back.

Mohamed El-Erian, Co-CEO & Co-CIO of PIMCO

Mohamed El-Erian, Co-CEO & Co-CIO of PIMCO was on CNBC today (Fast Money) and, amongst other things, he stated as follows:

Why is this different from Japan? The Fed is acting earlier and more aggressive than Japan’s central bank. In addition, US banks have taken write-downs far earlier than Japanese banks. Nonetheless, he says we still have to be careful about unintended consequences.

….more to come

I couldn’t line up these charts but you will note that from 10:30 AM to 3:30 PM, the VIX traded higher than oil.  Who would have ever predicted this, especially over the last 12 months?  The VIX has generally traded between 15 – 45 over the last 12 months, while oil has has generally traded $75 – $140 over the last 12 months.

Oil trading around $75 wasn’t that far of a stretch as the likes of Boon Pickens predicted that price a while ago.

However, what really blows the mind is that:

A]  The VIX shot over 50, 60, 70, 80!

AND

B]  The VIX did this while oil was falling from 120, 100, 90, 80, 70!

One would have thought (pre-crisis) that falling oil prices would have been bullish for the markets, thereby driving the VIX lower.

We are truly investing in uncharted territory.

Regards,
George

Good evening to you all. As many of you know, we highly respect Barry Ritholtz for his firm’s ability to call this market correctly for well over a year now. It doesn’t mean he is infallible but it does mean we listen when he has something to say .. and think you should too.

This is especially true in this completely whacked out, neck-snapping, whipsawing market in which even the most seasoned Wall Street managers are at a loss for advice.

If you feel just as dazed and confused (though you shouldn’t if you’ve been reading this blog for the past year), please invest 4 minutes of your life and watch the following:

Regards,
George

On Friday afternoon at 3:42 PM EST, I wrote “I have never seen this kind of whipsaw trading in my life.” With Canada enjoying Thanksgiving today, I took a few minutes to tally up just how much of a whipsaw, roller coaster, break neck day it actually was … 3,374 Points.

Here is the graphical version, followed by the actual math.  Keep in mind, these are only tracking moves greater than 400 points, there are plenty more 200 – 300 point moves.

MOVE #1 (9:38 AM) 8,579 DOWN TO 7,882 =  697 Points

MOVE #2 (10:08 AM) 7,882 UP TO 8,646 = 764 Points

MOVE #3 (1:50 PM) 8,646 DOWN TO 7,996 = 650 Points

MOVE #4 (3:36 PM) 7,996 UP TO 8,855 = 859 Points

MOVE #5 (CLOSE) 8,855 DOWN TO 8,451 = 404 Points

In addition to my last post, I’m also watching North American Futures via Bloomberg.  US is looking good and Canada is not so good.  Mind you, a lot can over the next 34 hours, when NA stock markets open again after today’s respective holidays.  In the meantime, here is the snapshot.  Click on it anytime to be taken to the most updated numbers.

If you are looking for news to support the US Green, then have a look at the following Bloomberg story.

On the other side of the aisle, Paul Kedrosky is hearing a lot of rumors but refuses to give them too much weight -  but I’ll give them a little weight after a personal Senior VP contact at a Tier-1 US bank advised on Friday that he stored $50,000 cash and another $50,000 gold in his home in the event of “anything”.

Regards,
George

We recently announced the acquisition of www.Grandich.com and the merger of Peter Grandich into AGORACOM as Chief Commentator. I personally made this decision after interviewing Peter over the last 3 years and watching his uncanny ability to call tops and bottoms in markets and commodities.

For example, back in October of 2007, when markets were sitting at all-time highs, Peter went on the record several times and advised he was shorting US markets.

Today, via this post on his blog, Peter stated:

“While I do believe the worse is not yet over, especially for the economy,
I think it’s time to lock in tremendous profits and stand aside. I’m seeing
classic signs of a capitulation bottom.”

When Peter speaks, I listen and would suggest all of you have a read of his post.

Regards,
George