This is The Wall Street Digest Hotline Update for Friday, March 28, 2008, at 6:00 p.m. EST.
Stock prices were weak across the board today. By the close, the Dow lost 86 points, closing at 12,216, while the Nasdaq fell 19 points, closing at 2,261. Oil closed $2.47 lower at $105.11 per barrel, and gold closed $18.20 lower at $930.60 an ounce.
February inflation was up only 0.1 percent. The Fed pushed over $65 billion of M3 money into the banking system last week, and approximately $500 billion since December 1st. Our ten percent fractional reserve banking system will expand that $500 billion to $4.5 trillion during 2008. This is extraordinary expansion of the money supply to accelerate economic growth and provide mortgage money to the housing industry. The credit crisis is passing. The Fed's aggressively loose monetary policy has never, once failed to end a financial crisis. Get ready for an economic boom and higher stock prices both here and abroad by year-end.
Let's continue to avoid the housing sector, banking and the financial sector. I would not purchase residential nor commercial real estate. Approximately 865,000 new home formations occur annually. As home prices fall to more affordable levels, the inventory of homes and condos for sale will decline. However, home foreclosures continue to rise. I do not see a bottom in the housing industry in 2008.
The stock market bottomed in January, survived a test in March, and is now base-building prior to a stronger move up.
Stay close to our Tuesday/Friday Hotline Updates. I will be adjusting our portfolio of recommendations to capture maximum profits from a stock market rally that will surprise everyone, but you.
The global economic boom is still underway. The Smart Money and the institutions have been purchasing U.S. stocks on every pullback. Historically, that has been a reliable indicator of a market bottom.
The next Hotline Update will be on Tuesday, April 1, 2008, at 6:00 p.m. EST.