Weekly Commentary November 5 through 9

Last week was very topsy turvey. On Wednesday, the Feds cut the rate by 25 basis points, and the market soared by 137 points. The following day, Citicorp announced a major subprime hit and the Market plummeted 362 points.

Then came Friday. Out the gate, the Market was down until the end of the day, when the Market managed to eek out a small gain. Even the better unemployment number could not put the wind back into the sails from the Citicorp subprime hit and Chevron’s poor quarterly results.

Then comes Monday. Citicorp reveals its $11 billion dollar loss. And the market tanks once again.

We saw Merrill Lynch report an 8 billion dollar subprime hit to their bottom line, Bank of America said it was pulling out of the subprime recovery group.

As the race continues toward December 15, the Market has not been able to maintain 15,000. It continues to bounce off the double top. The bonuses for this year are definitely at risk

What is more, the news is now (more and more) using the “R” word in their discussions. If 2008 brings a recession, that all but nearly guarantees a Democratic victory. It has long been shown that the party in office is thrown out of office if the last year of a term of the Presidency is a recession.

The rest of the week will see news of lesser importance than last week. We have Consumer Credit (which comes out at 3:00pm so no one notices). We have Trade Balance, which has been the same for months, exports doing well, imports higher, trade balance with China out the roof. Careful trading the 8:30 news items on Thursday. Those are 3 different reports and could give 3 different results.

The interesting thing we want to watch now is the infrastructure of America being sold off. Bear Sterns is on the chopping block due to the subprime problem. And China is ready to move in for the kill. The actual exchanges, such as the Nasdaq, are up for sale. What will that mean to the trading in the USA when the infrastructure is sold out from under it? Only time will tell.

On Friday we have Michigan Sentiment at 10:00. ISM Services was better than projected so Michigan sentiment may be a little better as well.

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