As a father of three daughters, I cannot avoid “American Idol.”  Every Tuesday and Wednesday nights during the first five months of the year, our flat screen in our family room is tuned to Fox as we watch the birth of this country’s next big star.  During the five years of our devoted viewing, no contestant has commanded as much of our attention as Sanjaya Malakar, arguably the worst singer ever to grace the Idol stage as part of the competition’s Top 24.  The reason he grabbed such a focus from the show’s audience was his resiliency to survive no matter how negative the criticism he received from the judges, most notably the highly influential Simon Cowell.  In the end, an exasperated Mr. Cowell threw up his arms and bellowed sarcastically toward the tone deaf singer after another dreadful performance, “it really doesn’t matter what I say to you, so maybe this will get you sent home.  You were terrific!”

Sure enough, America voted Sanjaya off with the aforementioned caustic commentary dooming him to a career of cruise ship crooning.  I by no means claim that my analysis of the markets compares to the talent Mr. Cowell has in finding the next recording superstar.  However, after being dreadfully and embarrassingly wrong in predicting the path of equities for the past six trading days, I throw up my arms in bewilderment in wondering what it will take stocks deservedly to bottom and claw back some of the massive losses sustained in the past few weeks.

I easily could make mention how my most reliable bearish sentiment indicators Continue reading »

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So I guess the S&P analyst responsible for assigning the credit rating to U.S. sovereign debt ended his seventy year vacation on the golf course to issue a controversial downgrade to AA+.  Given the clumsiness of the report upon its release, I suspect the researcher constructed his note on the “19th green” inside the clubhouse after one too many beers on the back nine.  While my wife blasts me when I fail to balance the checkbook by $1.29, the ratings agency, while owning up to the $2 trillion calculation error the Administration accused it of, still proceeded with the move away from AAA.  S&P also leaned on a much diminished likelihood to the end of the Bush era tax cuts in 2013 as a major assumption to its conclusion Continue reading »

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John Nash is smiling somewhere right now.  While the entire financial universe debated and prepared for doomsday scenarios to precipitate a near 4% drop in the S&P 500 last week, a simple analysis of game theory similar to the one I outlined in last Monday’s commentary would have yielded a conclusion that predicted ultimate cooperation among the various factions would construct a palatable deal that avoided default and arguably put deficit reduction on a path that precludes a credit downgrade from the ratings agencies.  Credit Speaker Boehner for recognizing his weaker hand and allowing Obama to keep the decisions pertaining to the debt ceiling and the budget bundled together which was necessary in reaching this ultimate resolution.

Although Mr. Boehner was rewarded with an agreement that does not include revenue enhancements enacted via new tax legislation, Continue reading »

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