Which Way Wednesday?

Wednesday is usually our high of the week.

We’ve got just under 100 points to go to put in a high at 12,610 but I think we need to do quite a bit better than that as barely matching Monday’s highs would probably spell a very bad end to the week.  Last Thursday we fell 350 points from Wednesday’s high to Thursday’s low in a sell-off led by the energy sector, which dropped about 5% along with the price of crude after last week’s build in oil disappointed the bulls.  We have an inventory today at 10:30 so strap in for a wild ride.

Durable goods come out this morning and it will be interesting to see if the least confident consumers since the 1970s ran out and bought themselves a new washer and dryer.  The futures are less than enthusiastic so far (7:30) but that was to be expected after yesterday’s action and we are, on the whole, holding up pretty well against some fairly strong negative currents.  Sentiment trumps data and we’re hoping a change in sentiment can get us back over 13,000 but that seems unlikely after yesterday’s Consumer Confidence disaster, which is why we covered up again.

As it stands now, the markets have made no progress since 1999, a period of gloom that was only matched by economic downturns attributed to Hoover in the 30s and Nixon in the 70s so congratulations to Bush for taking his place among the epic economic disasters of modern history.  With 8 months left to his Presidency, we are just 1,000 points away from beating out the Great Depression as the worst decade in the history of our country to be an investor in US equities!

They said it couldn’t be done, they said our economy was too strong, they said no single man could stop a rally that had taken the market from 769 on July 1st of 1982 to 11,908 in January of 2000 but George W. Bush not only halted the market’s advance but is very close to posting the first negative 8-year period since the late, great Richard M. Nixon, who’s Vietnam war cost this country 84,000 lives before he finally admitted that the surge wasn’t working.

The surge was working in Asia this morning as the Nikkei rose 100 points in the last 30 minutes of trading, allowing them to close down just 38 points after trading off about a point all day.  The Hang Seng got their boost early on with a 300-point run out of the box and they held 152 points of it at the close.

8:30 update:  Durable goods are catastrophic, down 1.7% ex-transportation and that number is from February, before consumer confidence took a nosedive.  Non-defense durables were down 2.6% so thank goodness for that war right?  Speaking of our military, our top brass "mistakenly" sent detonator fuses for nuclear missiles to Taiwan but don’t worry, it happened in August 2006 and we’re only finding out about it now.  Taiwan is a big customer of ours, purchasing Billions of dollars of weaponry each year, something that already pisses China off (imagine how we’d feel if China shipped weapons to Cuba… oh yeah, Russia already did that and we DIDN’T like it).   Apparently, they ordered helicopter batteries but were sent nuclear missile components instead.  This is a little more serious than when your local news manages to sneak a gun onto an airplane to show you how poor airport security is but I’m willing to bet this gets swept under the rug.

Also in Asia, Ford is selling Jaguar and Land Rover to India’s Tata Mortors for $2.3Bn so that Ford can focus on making only really terrible cars in the US as they’ve already managed to destroy most of the $5.25Bn that they bought the two classic companies for after two decades of mismanagement.  Tata is the same company that is putting out the $2,500 Nano, so those promise to be some interesting showrooms!

The vast majority of Asia’s gains came from the banking sector as the Bank of China posted a 31% rise in profit but (and it’s hard to be sure) it looks to me like they offloaded a lot of bad debt on their government, as did ICBC, who posted a 65% gain so I’ll be taking these numbers with a grain of salt until we get a really good look at how all those bad loans were spun into gold.

DB, who ARE subject to SarBox, lowered their guidance for 2008 "if global economic conditions don’t improve."  Nonetheless, EU markets are off just half a point after a very strong day yesterday as German Business Confidence rose to 104.8, over 60% higher than the confidence of US consumers. "These results indicate that with the beginning of the year the German economy has gained strength," Ifo Institute President Hans-Werner Sinn said in a statement. "Despite the strong euro, firms are more optimistic regarding exports than they were in February."

The ECB tossed another $333Bn in "seven-day" funds into the pot, which was the main cause of yesterday’s rally and, as I said yesterday, we can’t go by what the markets do under the wings of the Central Banks, we have to be able to fly on our own at some point.  I heard Trichet say something conservative on the BBC but I can’t find a link so more on that later but the Iceland CB raised rates to 15% as inflation fighting is job one in the tundra.

So far this year, the euro has climbed by more than 20% against the krona. By contrast, the euro has gained less than 6% against the dollar in that period. "If that development is not reversed, a period of persistent inflation would be ahead with spiraling increases in prices, wages and the price of foreign exchange," the bank said in a statement. "It will only be more painful if inflation is allowed to get out of hand," the bank said. "Consequently, it will be necessary to continue to pursue a very tight monetary policy in order to bring inflation and inflation expectations under control and increase confidence in the krona."  Wow – replace krona with dollar and that’s the most honest assessment of the US economy you are likely to hear!

It doesn’t look like this Wednesday will be the high for the week and that bodes very ill for the week, let’s be careful out there!