Monday, March 10, 2008

Dow Jones Falls Another 150

Dow Jones Falls Another 150

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Once again as we go into the last hour of trading the Dow is off another 100+ points as I write this issue.

Even solid main stream stocks like Apple and Google are getting pounded, while even with Oil hitting a new record high Oil Shares like COP, DVN, APA are also down.

A few stories of interest in the news worth reading:

Billionaire Investor Predicts Bank Failures The first bank failures will be small regional banks. If you're running a business you might consider taking another look at your bank's solvency and long-term viability. With regard to your investment portfolio please keep in mind that any serious rumor(s) much less bank failures and we'll see the Dow Jones TANK!

Any bank failures will stoke the paranoia fire and we'll hear the big banks will be next.

If you think $108 a barrel for oil is bad considering this story Is Oil really going to $378 a barrel?

Donald H. Rowe of "The Wall Street Digest" made an interesting observation over the weekend...

"The Federal Reserve has already pushed over $300 billion of new M3 money into the banking system since this past December. When you take the ten percent fractional reserve banking system into consideration this $300 billion will expand to over $3 trillion in the coming year. That is a powerful explosion of new money that will produce faster economic growth and higher stock prices by year-end.

"The Fed will probably continue to create new money every week until the financial markets stabilize. I continue to hear that a big government "bailout" will unfold.

"The Fed has made it very clear that it intends to continue lowering rates to deal with recessionary trends. A 50- to 75-basis point cut in the Fed Funds rate on or before the March 18th FOMC meeting is certain given the Fed's effort to brace the falling housing market and address the ongoing credit crisis."

So far the additional liquidity is doing little to calm the financial markets. I have to assume based on the negative days the market has already discounted a half to three quarter point rate cut. Worse, the bond market seems no stronger and between the interest rate cuts and added liquidity the U.S. Dollar continues to slide to new lows."

My biggest fear of a bond market meltdown still remains an imminent threat. A banking crisis could be the catalyst. With all the banking danger, inflationary monetary expansions and negative real interest rates, if you're not buying gold, platinum and silver — you're doing yourself a great disservice in my opinion. The table is being set for $2,500 an ounce gold.

Best Wishes,

James DiGeorgia

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