Tumultuous Times

So today the financials had another up day! In fact the Dow, S&P, and Nasdaq all finished strongly positive. This in spite of MER, EBAY, COF, MSFT, GOOG, and AMD missing earnings. Only IBM met expectations. I see the premarket futures trading is down for all of the indexes as I write this.

Normally, when bad news like MER's 9 billion in additional write downs, doesn't move the price down further, I would say that the bottom is near. The fact is however, that many of these companies reported after the close today so tomorrow we shall see the market reaction. Ebay reported yesterday and was severely punished today (-13%).

I still don't think the bottom of the markets are yet here. There is still a large housing overhang. Energy prices have yet to moderate. And credit is being drained from the system.

If the Fed and Treasury as well as Congress weren't so gung-ho to bailout the financials, the markets might have found the equilibrium faster. Instead we will continue with misallocation of capital via inflation and the taxpayer, and this will ultimately delay the recovery.

This is at a time when the US and Canada for that matter should be refocusing efforts on transitioning to a non-fossil fuel transportation/energy system. Even if peak oil is a decade away, the capital costs and time required to build out such infrastructure will be very large and long.