the worst part about this is how strongly all the markets are correlated... a friend of mine bought into some food commodity ETF and that seems like it's the only thing doing well. will see how it goes tomorrow, probably gonna drop like a sink.

so this is like the 4th time in the last year we have a huge correction. each time the market bounced back, though the 3rd time the bounceback is kind of weak. this looks much more ominous than ever.

well, i guess the only good thing for me is that buying a house should be less expensive this year... since it looks like it's sure to go down so much more.

Fed cut the interest rates....its about dame time!!

When I had to good luck to live in JP for about a year, the Japanese I knew said the US has even less control of its economy. They prefer a mild deflation to inflation and they argured that a mild deflation is less damaging to the middle class than US style inflation. They hated finance controlled companies and thought that making profit by disrupting supply was evil (greed is bad). They did not see the value of US style competition in mature industries. Of course they ignore all the corruption they live with, but there is another side of the coin.

The goal to US economic policies is simple: make things cheap and everyone has a job...means low unemployment rate and low inflation. Everything they do is trying to achieve these two goals. The Fed and the US Government is concerned with the US companies to make money or for the stock price to go up only to the extend that it helps them to achieve these two goals. Since the uprising of the stock market usually help lower the unemployment rate, Fed would not want to see stock market goes down by so much.

On the other hand, Fed also do not want to see inflation. In other words, Fed would like to see the stock market goes up because the "Value" of the stock goes up not because the stock is simply getting expensive(that's inflation). With the value of dollar gets very weak and oil gets expensive, EVERYTHING is going to cost more against dollar, including those stocks traded in dollars.

I think US is going to see inflation over next three months. And I do not believe that FED will have the guts to cut the interest rate more.

interesting viewpoints... though i think the fed is gonna keep cutting rates until around 2.5%, while basically crossing their fingers hoping inflation does not start creeping up. there's good chance that could happen, since with the perception of a US recession starting to solidify, hopefully oil and other commodities will see their prices come down. it already has--hopefully it'll last a year and hopefully that'll be enough time for america to sort out this whole subprime mess.

lots of wishful thinking... sigh.

Nice pop tonight, hopefully there is a short squeeze as we approach earnings.

Preview from WM/Pacter:

Nintendo (7974.JP / NTDOY.US)
Q4 EPS Preview: Expect Upside and Guidance Raised From
Very Strong Holiday Sales

• After the close of the Tokyo Stock Exchange on Thursday, January 24 (3:00pm
Tokyo/1:00am ET), Nintendo will report its fiscal Q3 2008 (ending December 31)
earnings.

• We expect the company to report upside to our estimates for revenue of ¥565 billion
and EPS of ¥773 due to continued strong demand for its Wii and DS. This compares
with consensus for revenue of ¥560 billion and EPS of ¥759. The company did not
provide Q3 guidance.

• Nintendo’s recent financial performance has been spectacular and we continue to
believe its FY:08 guidance is conservative. Nintendo’s hardware, the next generation
console Wii (with over 13 million units sold through September) and the portable console
the DS (with over 54 million units sold through September), had tremendous sales during
the holidays. According to NPD, the DS sold 4.5 million units and the Wii sold 2.9 million
units in the U.S during the quarter (compared with our estimates of 12.0 million DS and 6.5
million Wii worldwide in Q3). Leading U.S. specialty retailer GameStop stated solid
sellouts of both the Wii and DS during the holidays, and Nintendo stated much of its
accessories and software were also sold out as well. We believe that global DS sales
were likely around 12 million units during the quarter, and that global Wii sales were
around 7 million, placing the company on track to exceed guidance for the fiscal year.

• We expect Nintendo to raise FY:08 guidance (currently for revenue of ¥1,550 billion,
operating income of ¥420 billion, net income of ¥275 billion, and EPS of ¥2,150).
Although the company faces some headwind with the strengthening of the Yen (currently
at ¥107/$1 and ¥156/€1 as compared with management plans for ¥115/$1 and ¥164/€1),
we believe the insatiable demand for Nintendo hardware to continue to fuel upside.

• Maintaining BUY and ¥78,000 price target, which reflects a forward P/E multiple of
28x our adjusted FY:09 EPS estimate of ¥2,524 plus ¥8,000 per share in cash. We
value Nintendo at the company’s large cap peer group average, due to its solid earnings
growth, recurring revenue stream and leading market position.

Stock analysts believe that the Fed will cut the interest rate to 2.5% by the end of first quarter! That is a very aggressive move. I wouldn't do that if I were the FED. The inflation is already there in US. Look at oil prices. It is up but only because the value of oil, it is also because the value of dollar is low. If Fed lower the interest rate even further, the dollar will depreciate more. I believe the value of dollars is as low as it can get, any lower will probably spark a major inflation. With interest rate at 2.5%, Oil price will exceeds 100 dollars easily. If the value of dollar gets any lower, everything traded in dollar will be higher...you shoes, your cars, your food, your water, your gas...etc.

There are ways, other than lower interest rate, that can help the US economy...the Government can give the right person right amount of the tax break or low interest loan. All you need is for those people who default on mortgage payment to be able to continue to keep their houses.

From what I read the FED is seeking to avoid creating another asset bubble by toughening the standards a borrower needs to meet, while keeping rates low so that adjustable rate mortgages don't adjust up much. This is hoped to permit very qualified buyers to support the housing market (so the market does not freefall) and to keep inventory low by keeping marginal borrowers from entering BK. Already many banks will not purchase loans written by mortgage brokers.
I think this will lead to a long decline in the market punctuated with frequent sucker rallies. Nintendo should be able to keep selling its products.

Unfortunately it seems the only way ntndoy is winning in this is that is isn't losing as bad as everything else lol. Losing less than everybody else is still losing, unfortunately.