This rally is a reaction to a state-of-market (oversold) and not to any fundamental change in the environment. Folks – putting a 5 foot wall up on the shore is not going to prevent a tsunami from flooding your house. It will only delay the inevitable. The sheer size of the issues at hand require more respect than is being given. These are extremely slow-moving areas of trouble and they take months to permeate the economic system, especially now that the system is a truly global one. We are in the eye of the hurricane – make no mistake. The second wind of it may cause less damage but it will be severe nonetheless.

Retail sales will be horrendous, I repeat, horrendous, this Christmas season. Home heating bills are going to cause immense sticker shock and Santa’s bag will be light (stingy old bastard). Corporate earnings expectations have yet to take into account the following things:

1- Home heating costs
2- Massive economic loss of high-income jobs from finance
3- Continued inaccessibility and/or tightening of credit
4- Global economic slowdown

Prepare to view the following have their heads chopped off after this 5-10% unsustainable rally fails: Retail (Fall  – Winter 2008), Commercial RE (more so in 2009), and Tech.
You don’t have to like the negative but you must respect it.

-ISYN