Daily Stock Picks: NVTL, PALM, ABX, PSS, SXE

The market traded sharply lower today as the stock market got some very sobering news, at least for people who are long banks and the stock market, from President Obama. In his press conference today he made it clear that any bank the government has to help will not be making profits, and while this may be good for the taxpayer (or very bad as the banks have the government run them into the ground) it isn't very good for the stock market, confidence, and it is especially bad for the bank stocks.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	NVTL	0.87	12
#2	(#2 --)	PALM	0.73	5
#3	(NR)	ABX	0.71	1
#4	(NR)	PSS	0.68	1
#5	(#3 -2)	SXE	0.66	12

The market is now trading back within the range that I set forth in my weekly update and the GDP report tomorrow will dictate trading tomorrow. My prediction is for a slightly stronger than expected report, in the area of down 4%, that will get revised lower in three months. The market will do little on any number of 5% of less, and the market could go down a lot should the number top 7%. In reality, the number doesn't matter except in terms of physiology. The fourth quarter is behind us, and what the market cares about now is the third quarter of this year. If you listen to what the market is telling us right now, it is that there won't be recovery six to nine months from now.

Daily Stock Picks: NVTL, PALM, SXE, TRE, TSO

Market is behaving as expected. Look for a pause tomorrow, followed by another major move higher on Friday or Monday, pending plan details, with a a new sell off starting on Tuesday or Wednesday.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	NVTL	0.88	11
#2	(#2 --)	PALM	0.76	4
#3	(#3 --)	SXE	0.69	11
#4	(NR)	TRE	0.63	1
#5	(NR)	TRO	0.62	1

Daily Stock Picks: NVTL, PALM, SXE, APOL, IOC

The market continues in the very narrow trading range, but the news about the potential establishment of a "bad bank" is going to have people buying the rumor tomorrow and with that markets will likely trade up to the upper end of the triangle pattern. The devil is always in the details and there will likely be selling pressure on the news even if the details are all good. The real question will be what happens when we do reach that upper resistance of the triangle, provided we get there.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	NVTL	0.89	10
#2	(#2 --)	PALM	0.80	3
#3	(#3 ---)	SXE	0.73	10
#4	(#5 +1)	APOL	0.65	10
#5	(#4 -1)	IOC	0.63	5

A market rally will not be sustainable until the financial sector is stabilized and there trust begins to restore itself. Market physiology is a strange thing however, and that trust could be restored quickly and with little fan fair. If the market rally does continue through the rest of the week the sector ranks are going to be very interesting to behold.

Daily Stock Picks: NVTL, PALM, SXE, IOC, APOL

The Housing Report, showing that more homes sold than expected, boosted the market today. However, the market poked out of the range I thought we would trade in, baring any shocking GDP or other news/data, and quickly came back to trade into that range. The market is very much playing the waiting game right now, and it is not just about the GDP. The bets on the GDP have long since been made and it will take a shocking number to move these markets. What will move them is more information on TARP 2, stimulus and earnings guidance.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	NVTL	0.84	9
#2	(#5 +3)	PALM	0.77	2
#3	(#2 -1)	SXE	0.76	9
#4	(#3 -1)	IOC	0.70	4
#5	(#5 -1)	APOL	0.67	9

Even with clarity on those issues the market is still going to be waiting. Waiting to see if the stimulus works, waiting to see if the expected recovery in the second half actually materializes, waiting to see how high unemployment is going to rise. Those are the factors that the market is really trying to grab hold of here, so while the GDP report is important, it is far less important than you may think (unless there is a real shocker of a report, which is rare for GDP). However, the fact that we are now one month into the year and with the market still waiting does speak to something: The market is losing confidence in a early third quarter recovery.

Weekly Update: Why the Obama Stimulus Will Fail

Market Remains Little Changed

There was nothing really new of not in the market this week with the exception of the further weakness in the financial sector. LIBOR Overnight rates more than doubled this week, ending just shy of 0.24% after starting the week just above 0.1%. While this is nothing compared to the rates back in September, the signal that is being sent by LIBOR is that banks are once again in danger. This showed up in the weekly sector trends, showing that Financials are getting weaker while Energy and Industrial Materials are getting stronger.


This market is now fully on Stimulus, TARP, and Obama watch. The second part of this update will be about the stimulus package, and why it is going to fail regardless of the plans or ideology used in the proposals. The market is now setup in a very tight trading range, 8150 to 7950 on the Dow, and it will likely stay stuck in that range next week, likely closing at the higher end of the range. A break out of breakdown is possible, especially with fourth quarter GDP numbers being released. A surprise with that number to the up or downside will likely give the market direction, however an inline number will keep us stuck in the very narrow range.

Why the Stimulus Will Fail

I know a lot of people will take this section as Democrat bashing or me wishing that Obama will fail. It is nothing of the sort, neither the typical Democrat bottom up approach or the Republican top down approach will actually be able to stimulate the economy in large enough scale to out weigh the cost of the plan. Here is why...

Top Down Approach:

Regan coined the top down approach "Trickle Down Economics" and the general approach is that you reduce the cost on corporations and small business through tax breaks, tax credits for investments and employment, and other such business favorable treatment. The theory is that under such conditions businesses will hire more people, produce more good and services, which eventually gets into the hands of consumers which spend money on those good and services.

However, in the current economic conditions any stimulus pushed into the top down approach will not reach the required money velocity in order to overcome the debt created by the stimulus. The reason for this is simple, businesses have limited visibility in terms of future economic conditions and while some businesses will take the leap of faith into the unknown and attempt to expand, most businesses are currently highly adverse to risk right now. Just like the banks, businesses will horde cash in the current economy creating no flow of money, resulting in no stimulus at the cost of future debt and growth.

A Top Down plan could come with stipulations that any money received from the government would have to be invested and not horded. The problem with this, as it will be with the banks being required to lend the money as part of TARP 2, is that such stipulations will create an environment where only the weak hand will access the money. Putting more and more money into weaker and weaker hands will only result in the money getting lost in a black hole, totally unaware as to where it actually ended up. Think of the AIG where Billions and Billions are just lost, or GM where Billions and Billions are needed to just keep the company afloat.

Bottom Up Approach:

A plan normally favored by Democrats, the theory behind it is simple, put more money in the hands of the consumer (the little guy) and they will go out, spend money on goods and services, this will intern get businesses to spend money to offer these consumers those goods and services. The problem with this approach is that consumers have no incentive to spend in the current economy, and with every dollar they save becoming worth more (an Issue Japan has been dealing with for a long time). The $500 tax credit will amount to $10 extra a week, which most consumers will either save or use to pay down debt. People are not going to spend anymore than they have to. Even the people that spend their $10 a week will most likely be on Gas or another product that is not produced in this country, serving to send much of the stimulus to another country. As with the Top Down Approach, the money velocity is not great enough to cover the long term cost of any money dumped into this approach.

Infrastructure:

Investment in infrastructure will also fail to meet the required money velocity in order for the short term stimulus to outweigh the longer term cost. The stated goal of the administration was to spend 50% of the infrastructure investment by the end of 2010. That is just too little money to slowly to actually have a stimulative effect. In fact the plan would be better served to slowly spend the money, giving those that do get a job building this infrastructure the assurance and confidence that they will have a job for many years. Not just a three or six month contract to repave a road. Investment in infrastructure is the most worthwhile goal of the stimulus package, but the effects will not be the short term stimulus that the plan desires.

The Problem: Service Economy

The root of our economy problem is a simple one, and that is the US is a service based economy. Such economies work great when everyone is buying goods and services and money is flowing freely and being created. However, problems arise when services (such as eating out, getting pedicures, etc) stop being used. When you do not produce many of the goods that are bought much of the money velocity that needs to stay in the economy gets shipped off to the countries that do produce those goods. This is why the US has record deficits and countries like China have record surpluses. Service based economies are financed by debt, but that bubble is now gone. However, we are not facing that reality and the US Government is trying to keep the debt bubble going by financing growth with debt, just as consumers have done for many years now.

So What Needs to Happen?

Simple: Time. The economy needs to be given time to reach its point of equilibrium. Yes, this point will likely have unemployment north of 12-15%. Yes, reaching this point will be highly deflationary. Yes, reaching this point would be a highly painful and long process. The economy will reach this point of equilibrium by itself, with our without government stimulus. The debt bubble is bursting, and the government needs to wake up to that fact. Just as Americans everywhere have been forced to stop living on borrowed funds, so too must the US Government at some point. Failure to do so will only delay and lengthen the painful process.

Daily Stock Picks: NVTL, SXE, IOC, APOL, PALM

Only the daily listing today, weekly market commentary will be posted on Sunday.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#2 +1)	NVTL	0.91	8
#2	(#3 +1)	SXE	0.79	8
#3	(#4 +1)	IOC	0.74	3
#4	(#5 +1)	APOL	0.71	8
#5	(#6 +1)	PALM	0.71	1

Daily Stock Picks: RYAAY, NVTL, SXE, IOC, APOL [Linked?]

Something very, very interesting showed up in the markets today and it had nothing to do with the markets ability to rally from the lows set on Tuesday. The treasury market and the stock marked begin to show signs of trading together. Normally when stocks go up, treasury bonds will be down, and vice versa. Today however the stock market was down, and treasury's were down as you can see from this chart of the TLT vs the S&P500 below.



While one day does not make a new trend, it is something to watch out for. If the stock market and treasury market continue to move in relative lockstep with each other it points to the treasury market being linked to the economic recovery, and the general faith that the US economy will recovery. It is important to remember that most of US debt is financed by Japan and China and if they begin to believe that the economic recovery is going to fail they will be a seller of treasuries and the stock market. This is very much something to watch and worry about moving forward.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#16 +15)	RYAAY	0.91	1
#2	(#1 -1)	NVTL	0.91	7
#3	(#2 -1)	SXE	0.83	7
#4	(#4 --)	IOC	0.75	2
#5	(#3 -2)	APOL	0.72	7

Also, don't look now but LIBOR is really back on the rise. Two weeks ago LIBOR overnight was sitting around 0.12%, today it is up to 0.21%. Not nearly as bad as it was back when the credit crisis first showed its ugly head, but it is on the rise again. Just another thing to watch out and worry for.

Pick Update: RYAAY

RYAAY spent 5 days in the Top 5, here is a chart of RYAAY vs. the S&P 500 over that period. Under Performance, not exactly what one would like to see from a stock pick. (Hourly Candle Stick Chart, 1/13/2009 to 1/21/2009)

Daily Stock Picks: NVTL, SXE, APOL, IOC, DISCA [Already Double Talk?]

The stock markets today experienced a nice sharp rally off of very oversold conditions. Chart wise the market would have been much better served opening lower, trading way down, near the November lows, and then rallying with a slight close on the day. However that didn't happen and all I see here is a short term bounce. Don't look now but LIBOR (bank to bank loan rates) is on the rise again as the question of the health in the banking sector is once again brought into question.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#3 +2)	NVTL	0.88	6
#2	(#2 --)	SXE	0.86	6
#3	(#5 +2)	APOL	0.74	6
#4	(#7 +3)	IOC	0.72	1
#5	(#6 +1)	DISCA	0.67	1

The market now must try and buy time as it awaits the comprehensive plan that continues to be hinted at in a couple of weeks. The secrecy of this, as of right now, pie in the sky plan stands in stark contrast to the goals Obama himself stated today about being as transparent as possible. If you want to gain people's confidence why not come out and tell us about this plan, how you're coming to the tough decisions, and allow people to comment on it even if that plan is still being worked on? Why is the transparency in keeping it secret? Where is the benefit of doing so? I hate being so critical so early, but his press conference today was about transparency, and yet the most important thing he can be doing right now is kept behind closed doors: Why?

Daily Stock Picks: RYAAY, SXE, NVTL, MCCC, APOL [No Leadership]

Today saw the leader of the free world, now Barack Obama, give a speech that sounded like he was more on a campaign stump than being ushered into office. He did what he did throughout the entire election, he stood up and allowed you to project onto him what you wished to see. Some people are saying he failed only because the expectations for the speech were so high, but that is not the reason why he failed. He failed simply because he failed to show leadership, something that this country will need in the coming months and years. Don't believe me? Then I implore you to watch the speech again, but this time don't project your hopes or fears onto him; just sit back and allow his words to wash over you. Doing that and you'll begin to understand the true disappointment with the speech, there just wasn't anything there.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	RYAAY	1.02	5
#2	(#2 --)	SXE	0.90	5
#3	(#3 --)	NVTL	0.88	5
#4	(#4 --)	MCCC	0.77	3
#5	(#5 --)	APOL	0.76	5

The financial sector got crushed today and lead all the markets down with it. The bears are once again pushing on the string trying to bring the entire financial sector to its knees and it is working. However the entire market sent a strong signal to Obama today, and that was answers are needed quickly. Today Obama had a chance to stand up before America today and be the leader this great country needs. Instead he stood up and continued to try an be the screen he was on the campaign trail and allowed you to project onto him what you wanted. Obama is our president now and he deserves the support of every American right now, but he is going to have to be a leader. I hope for this country's sake that he can become one.

Weekly Update: Weakness of Strength?

The average ranks of the sectors are showing a market in a potential state of flux. Consumer Good, Consumer Services, and Financial Services are short term ranks are all much weaker than their long term ranks. However, both Energy and Industrial Materials are much strong in the short term than their long term rankings. Of course the energy and commodity boom and bust, as the global economy went into recession, is what triggered the sharp declines in the market in the first place.



The question becomes, is the strengthening of those sectors a sign of strong demand moving forward or just a short term bounce from depressed levels? The data alone isn't going to answer that question, and certainly a single data point won't be able to. The important question to ask yourself is: If the market truly felt that the economy was getting strong, why would consumer based stocks be getting weaker?

My view on the question is rather simple; the horses are out of the barn. While this recession may have been triggered by the global financial crisis it has sparked a massive change in the behavior of the consumer, and that isn't something that you can fix not matter how much money you throw at it. Just as the banks leveraged up their risk, so too did the average person as they lived beyond their means through even increasing debt. That pattern is now changing and no matter what the government, or anyone else, tries to do, it is a trend that will continue.

If the average consumer was living at 100% of their means (an effective zero savings rate) and the new consumer will be living at 90% of their means (10% savings rate), you can expect a 7% drop in GDP. If the savings rate goes up to 20%, as I feel it will the GDP will contract by 14%! Those numbers are much worse than people are forecasting, and it is going to take at least a couple of years for the numbers to play out. Unfortunately the "pain is no fun" mentality of this country will have the government spending like crazy to make up for the shortfall, which will only serve to lengthen the downturn and dampen any recovery.

Daily Stock Picks: RYAAY, SXE, NVTL, MCCC, APOL

The market continued through on yesterdays rally as it digested the news from Citigroup, BoA, and Circuit City; that in itself was no small task. The market does still however remain under the lower range of the triangle and the markets feel poised to test that lower bound and begin the sell off. Monday is a holiday for the market, and without even knowing about the news from over the weekend I feel that the market will continue this brief rally on Tuesday with Wendsday setting up for a high volume inflection day. Sunday I will be posting a full weekly update with current sector ranks and trends, so for now I leave you with the Daily Five.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	RYAAY	1.05	4
#2	(#2 --)	SXE	0.95	4
#3	(#3 --)	NVTL	0.89	4
#4	(#5 +1)	MCCC	0.82	2
#5	(#4 -1)	APOL	0.81	4

Daily Stock Picks: RYAAY, SXE, NVTL, APOL, MCCC [A Look At Day Trading]

As I called for yesterday, and even Intraday today, the market moved slightly higher in an attempt to reenter the triangle formation that the markets have been in for awhile. While the markets are still below the lower line of the triangle, I believe that tomorrows up will will have us approaching that lower line of the triangle. This, in my opinions, will setup us up nicely for the sharp sell off coming on Tuesday or Wednesday of next week (in the ultimate show of buy the optimism and sell the event of the Obama Inauguration). Which way this market breaks is on the shoulders of the government in general, and Obama in particular. I've seen nothing to indicate a recovery in economic activity in the second half of this year which is what a long term market rally here would require. All the market is likely to get is a recovery back into the trading range, whose window is quickly closing anyway.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	RYAAY	1.08	3
#2	(#2 --)	SXE	0.98	3
#3	(#5 +2)	NVTL	0.84	3
#4	(#3 -1)	APOL	0.83	3
#5	(#7 +2)	MCCC	0.74	1

Following is a chart of today's action with the Dow vs. the XLF and it clearly shows how nimble, quick, and how closely that you have to watch this market. The middle of the day, starting a little before one in the afternoon the Dow started to bump up against the 8050 area on increasing volume, which was enough to grab my attention. You will also notice the the XLF was strengthening over this same period. Both broke out at the same time and both traded back to the resistance becomes support lines and rallied sharply, which confirmed the breakout and the buy. Later in the day as the market shot up you can see the the break of the trend and how the XLF reversed the relative strength from earlier, that was your exit point. A quick 5-6% gain in the UYG with little risk if you were watching and paying attention. In all likely hood both the Dow and the XLF will rally tomorrow up to these now resistance lines, at which point they will have a chance to breakout or fail at.

Market Watch Alert

Volume in the Dow is picking up as the fight to break above 8050 continues throughout the day. A breakout above 8050 could result in a positive to flat close, however a failed breakout will likely result in a close under 8000.

Daily Stock Picks: RYAAY, SXE, APOL, NVTL, HURN [What's that Sucking Sound?]

There was an attempt to break out of the triangle pattern to the downside today, however the volume was so light that the breakdown could not be confirmed. That could all change tomorrow with the news after hours of yet another bank (Back of America, argued for a long time to be one of the stronger banks) needs even more money to maintain its capital structure. The markets should open up lower tomorrow, but rally in an attempt to get back into the triangle formation. However, we could see the sell off accelerate to the downside on rising volume which would confirm the breakdown and signal a retest of old lows and a possible fall of the Dow to 5000, yes 5000. Also, the reason why JP Morgan and Citi are reporting early isn't because they are going to report great numbers, it is because they want to dictate how their books are marked and not have another company dictate their marks.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(#1 --)	RYAAY	1.11	2
#2	(#2 --)	SXE	1.00	2
#3	(#3 --)	APOL	0.86	2
#5	(#5 --)	NVTL	0.76	2
#6	(N/R)	HURN	0.72	1

Note: #4 CYCL, it is a cash buyout and not included.

The Apple news about Steve Jobs' health is rather unsurprising, but it is an example of trust, and why nobody should trust anything that any company says. Until people can do so this market is for traders only and will continue to scare away investors. That sucking sound you're hearing from the economy, from the banks, from everywhere around you is the great pull of deflation gaining strength. The clearest place to see the deflation picture is with gasoline. Today you can buy twice as much gas for the same price as you could a year ago, and yet people are using less gas and still cutting back on driving. That is deflation and one doesn't have to look any further than Japan to see the effect it can have on an economy for decades!

Daily Stock Picks: RYAAY, SXE, APOL, NVTL, ESI

I'm changing the format of my daily stock picks a little bit and giving the top five stocks from my the medium/long term view and over weighting the timing, you can view the list yourself by using the Stock Screener on the Noiseless Return.com website.

Rank	Previous Rank	Symbol	MLT+Swing	Days in Top 5
#1	(N/R)	RYAAY	1.13	1
#2	(N/R)	SXE	1.00	1
#3	(N/R)	APOL	0.89	1
#5	(N/R)	NVTL	0.70	1
#6	(N/R)	ESI	0.69	1

The market continues to be in the triangle holding pattern as you can see from the following charts of the S&P 500 and the Nasdaq. At some point the two ends of the triangle are going to join up and a resolution to this sideways action will be seen. That day is quickly approaching and I believe that breakout is going to happen on Tuesday or Wednesday of next week. Flags and pendants normally fly at half mast, which would indicate more pain for the markets ahead. There was a failed breakout to the upside last week, but it was very easy to spot as the volume has been anemic as the triangle continues (which only servers to confirm the chart pattern).





No real reason to be long the markets here, if we do break out to the upside the markets will signal it, just as it will on the downside. It's all about waiting right now.

2008: A Look Back, 2009 A Look Ahead

The Year that Was 2008

Being long in 2008 was clearly the wrong strategy, and the Noiseless Return trading single proved to be dead on with the S&P 500 have being sold on Jan 12th 2008, the Nasdaq having a sell on Feb 12th 2008, and the Dow having a sell on Feb 14th 2008. Both the Nasdaq and Dow gave false buy signals early in the year, but quickly reversed well in advance of the sharp declines in October.

I stopped posting at the end of September because I didn't feel the need to pile onto a market that was already getting pounded from all sources. I'd like to take the time to quote myself from some previous posts that I did make last year, before things turned rather nasty.

September 14, 2008
This week saw an upturn in the financial, consumer services and consumer good sectors; all pointing to signs of a potential recovery for the markets. On the other side Energy continues to fall and the short term damage is starting to drag down the longer term view. Of course, because of Lehman Brothers the world may end up looking very different come Monday. These moves in the sector averages and the news on Lehman Brothers has me believing that a day of decision is approaching for the markets: One that will see us starting a new bull or one that allows this bear to really sharpen its claws.

August 15, 2008
Right now, if you view the market as a means to bet on the future, people are betting that the worst is behind the markets. There may be more shoes to drop, but they won't alter the long term picture. Unfortunately I believe people are just excited over the major drop in oil and energy prices, that they feel a slight drop in oil prices will suddenly get consumer spending again and that will power the economy forward. I just don't see that happening, the consumer still has reasons to worry about their job and their wealth. I just don't see them spending their money any more freely because they suddenly have to pay a little less at the pump.

In the end, nothing has really changed for the market, in my opinion. The credit crisis still looms, the economy is still weak and getting weaker, all that has really changed is oil has dropped in price as demand has fallen. Which, in the end, is also a sign of a weak global economy. None of these things are good for the markets, however new bull markets do start by climbing such a wall of worries, but I feel this mini bull is going to fall on it's back.

July 31, 2008
The Market and Energy are showing signs of starting to trade In Line with each other vs. inversely related - In case you missed it today oil was down and the markets were down. Up until recently a drop in oil prices would mean a good day for the markets. Even Jim Cramer used the price of Oil to try and justify that the markets were undervalued by some 6%. This just isn't the case as Oil, and energy prices, are high for a reason; strong global economic demand. Take away that demand and all the market has to look forward to is a weak global and US economy, a bleak picture for stocks indeed. I've said it before and I'll stay it again: If the markets are going to start a new bull Energy will be the sector that leads it higher, if Energy fails here the markets will end up following it after the short term bounce.

And there are many other posts where I point out, even pound the table, that energy was the market leader and it was going to lead the market down, even when it did not look so at the time. I just wish more people had been reading this blog and listening to me as I said time and time again: Energy was the market leader in 2007 and in 2008 when it reversed course and corrected. In the end it wasn't falling home prices that lead to the collapse of the house of cards that was the over leveraged debt, it was the fall in oil and the global recession that ended up taking down the house of cards.

It was a very tough year for the Long only Noiseless Return portfolios, as in 2007 the main bet was on the continued rise in energy and commodities. Obviously that didn't pan out as expected, but the portfolios have started to adapt now with a quarter of the funds being bought at the start of the year. The portfolios look to be taking a much more defensive posture with heavy buys in healthcare and utilities, the two sectors bought for the ETF portfolio.

The Year that Will be 2009

The crystal ball for 2009 is very cloudy and the outlook for 2009 is standing on the knives edge of a single political question: Does Obama have the strength to stand up to his own party? If the answer to that question is yes, then we could see an economic recovery start to take shape in the third quarter of this year. If the answer to that question is no, the economy and the country will suffer for a long time to come.

The reason for this is a simple one and can been seen quite easily in the microcosm that is General Motors. GM isn't breaking under a huge debt load or even under the pressure of a tough economy, it's breaking under the financial inflexibility that happens when the average Joe is took looked after. The unions, the individual dealerships, even the suppliers have all made it impossible for GM to take the steps needed to quickly adapt to the changes in the economy. Looking at GM, could end up being our country, where the little guy is looked after as the company, or our country, crumble into nothingness around it.

The problem is a rather simple one, you cannot look out for the little guy when the big guy is in trouble. In GMs case the UAW, the dealerships, the suppliers should all be willing to face a little pain so that GM itself doesn't have to face all the pain (and eventually fold or be totally owned by the government). This, sadly, is the path that the democratic leadership would like to take the entire country, one where all the pain is felt by those that are trying to create products and jobs, the ones truly taking the risk. The problem with this vision is that people and businesses do not have to take that risk, and the second that risk becomes greater than the reward the risk is no longer taken, businesses no longer expand or stay in business.

When the pendulum swings too far to those that create jobs you end up getting excesses like the .com boom at the end of the last decade. You get all sorts of risky, fast growing companies that end up being little more than firecrackers. The result is a lot of high paying, though insecure, jobs for workers. When the pendulum swings too far to the workers you end up with businesses that don't higher, don't expand, and people that might be willing to take on risk to create jobs no longer do so. The result for workers is that it becomes harder to find employment and wages suffer overall. This may just sound like a standard boom and bust cycle that you would get under normal economic cycles. Unfortunately this isn't the case, this could be a major policy shift that could stagnate economic growth for decades regardless of the current economic cycle.

In 2008 things still favored those that create jobs, in 2009 we stand on a knives edge of swinging to the other side, and it will be Obama that decides if we do indeed plunge to the other side. I'm a small business owner, of course I'm a supply side buy, but the policies that are enacted now will have a huge effect on me and my business for years to come. In all likelihood I'll be closing up shop in the next few months because of the policies enacted in response to a crisis. The second I have to stop making decisions based upon the business and base them upon taxes or other regulations, is the day I close shop and things are already very close to that.

Now with all that political crap out of the way I can get on with my 2008 bullet point predictions. (With these predictions I think you can tell which way I feel the political question is going to go).

• Q1 will be the strongest Quarter of 2009. There was a small bit of pent up demand from the total shutdown from Q4 in 2008. Things will continue to deteriorate economically for the balance of 2009.
  
• Q1 and Q2 will continue to see monthly job losses north of 500,000 per month
• Q3 or Q4 will see a monthly job loss total in excess of 1,000,000 in a single month, with the average for this period in excess of 600,000 and unemployment will hit 10% with "true" unemployment nearing 20%
• For all of 2009 over 6.5 million jobs will be lost
• The markets will break out from their current triangle patern to the downside and lose another 25-30% of their value. The markets will get a true panic bottom (without a real bounce) In May or June.
  
• The stimulus plan will top $1T (passed in two installments, the first being $800B, the second being between $300-500B), will include additional $50B in loans to GM and Crystler, and will not actually stimulate the economy.
• Small businesses outside of healthcare, technology, and finance will all but vanish.
  
• The Treasury Bond market will bust, along with the dollar, once the world realizes there will not be an economic recovery in the US in 2009. Yields will end the year north of 7% and mortgage rates will rise to 8.5%, preventing any recovery in housing.
• Personal savings rate will top 20% by the end of the year
  

I'm going to stop trying to pick individual stocks and focus in more on what the larger picture that Noiseless Return is able to provide.