Friday, November 16, 2007

the next depression?

Wells Fargo's CEO presented at a Merrill Lynch financial services conference today and said the housing issues have a long way to go before bottoming. Cramer described his comments as suggesting a depression was coming.

Interesting comments. On the one hand, Wells is a far better manager than most financials that are suffering write offs -- meaning Wells has avoided writeoffs. On the other hand, Wells is based in CA one of the epicenter's of the current crisis. He might be extrapolating too much from the bad CA numbers he is seeing to the rest of the country.

I don't know the CEO so I don't know if he tends to hyperbole or not -- most bankers you would assume are not into hyperbole.

Certainly makes you wonder though about the economy -- if home values drop like he talks about, what impact will that have on the economy? This is what is driving the market lower right now. Again -- we are ready for a rally again -- probably a better one than the one day wonder of Tuesday -- market has a habit of bottoming in expiration week -- which is this week. I bought more CLB yesterday at 128.75.

I think Cramer is right that without energy this market sucks -- Ag, energy, infrastructure, etc -- most of the bull markets he talks about are driven in some ways by high energy prices.

more this weekend.

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