The Governor in sombre mood So much for the post-bailout bounce ... it looks as though markets are looking beyond Paulson's band-aid and at the wider spreading disaster. This is no longer simply a financial crisis - even the most populous and wealthy of the US states is now in trouble:
California governor Arnold Schwarzenegger told the Treasury Secretary Henry Paulson on Friday that the Sunshine State who is the most populated state in the country may need to ask the help of the federal government ... In an October 2nd letter to Paulson, Schwarzenegger said, “Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing.”
Arnie then went on to say that "I also need your clothes, your boots and your motorcycle" :-)
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Tomorrow could be interesting. Art Cashin says for this downtrend to end we need a big sell-off with a close at the low of the day (which we had today - Tuesday) - then another sell-off the next morning for a couple of hours, after which the marketneeds to roar back up, which will signal a couple of months of upward trend. We shall see if he's right.
I can quite believe it - markets this morning look like they could be starting to bounce. I'm not really very interested in trying to play any bouncing (I don't think it will be sustained); I just want the current oversold conditions to clear so that I can establish new short positions
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