Weekly Market Update -Nov 3

We had another roller coaster week in the markets, with the Fed cutting interest rates on Wednesday, a better than expected GDP number, a good monthly Payroll report on Friday, and shakeups in management at Merrill Lynch and Citigroup (Merrill took a write-down last month of about $8.4 billion, and Citi had a $5.9 billion write-down) -busy week! Also, most of the bank stocks tumbled this week. As I mentioned before, the sub-prime and real estate debacle is far from over (foreclosure rates just doubled compared to last year). On the bright side, Google crossed $700, and BIDU crossed $400.

Bottom line is that we still have a market with no clear direction. We did move up past the 1540 level on the S&P 500, then headed back down as predicted (see last week's comment). This week I see the possibility of more downside action coming, given all the bad news.

The US Dollar sank to fresh new lows again this week, with corresponding highs in the Euro, Canadian dollar, and other world currencies. This helped push Oil prices over $95 and Gold over $800. In spite of this, the government insists that we have no inflation. Do you believe the government numbers, or how much you are actually spending every day! I expect we'll get a bounce in the US Dollar soon, before it resumes the downtrend.

Bonds headed higher this week hitting a new high for the year, and reflecting a flight to quality.

India markets on the move too!

News links:
Big Drop in Merrill Stock on Hint of New Troubles
Citigroup Chief Is Set to Exit Amid Billions in Losses
Fresh Credit Worries Grip Markets
Foreclosure Filings Soar in 3Q
Dollar Falls to Record Low Versus Euro on Credit Concern, Fed
Gold closes above $800 at highest level since 1980