This is The Wall Street Digest Hotline Update for Friday, February 20, 2009, at 6:00 p.m. EST.
Worries over a nationalized banking system pushed the Dow Industrial Average to an intraday low of 200. At the close, the Dow plunged 100 points, closing at 7,366, while the Nasdaq lost one point, closing at 1,441. The S&P 500 fell almost 9 points, closing at 770. Oil closed $0.54 lower at $38.94 per barrel, and gold closed $25.70 higher at $1,002.20 per ounce.
Wall Street has not reacted well to any measures presented by the Obama Administration to address the banking crisis, the credit crisis, and the deflationary slide of the housing sector.
Date News Event Dow Average
1/30 Fourth quarter GDP down 3.8 percent Fell 148 points
2/5 Obama/Geithner announce executive pay cap Fell 122 points
2/10 Geithner releases $2 trillion bank rescue plan Fell 382 points
2/13 House passes $787 billion stimulus bill Fell 82 points
2/17 Obama signs $787 billion stimulus bill Fell 298 points
2/19 Banks fear Nationalization Fell 89 points
2/20 Confusion after Bernanke speech (today) Fell 100 points
- 12 million home mortgages are under water.
- At least 344 banks have received TARP funds.
- Europe and the U.K. are sliding into a deep recession.
- GDP growth and profits growth will be negative in 2009.
- The Dow peaked at 14,164 on 10/9/07. Today the Dow is at 7,300 down 6,867 points or 48 percent.
Our Washington politicians will not be able to stop the next Great Depression from unfolding between 2010 and 2022, a period of 12 years. Pay off all debts. Sell all of your real estate, if possible.
During a deflationary depression the price or value of virtually everything will decline from current levels. Selling the personal residence is a very personal decision.
All of the bubbles including commodities, the stock market, and real estate will eventually burst and crash. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth have already turned negative.
The next Hotline Update will be on Tuesday, February 24, 2009, at 6:00 p.m. EST.