Posted by Davy on October 31st, 2007 in Market Commentary, Pundits
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Hard asset equities took a hit yesterday, led by the energy sector. But it looks like they’re recovering this morning and if the Fed cuts rates as expected, I may be waiting for a pullback that never comes. Regardless, I’m not willing yet to move up my price ranges for valuation just yet. Despite this, I opened a new position in this sector yesterday that went out to research subscribers. This stock was just too cheap and prospects too good to worry about a short-term hit.

On a really interesting note, the dry bulk shipping sector ate a really big one yesterday, apparently based on slippage in the spot shipping rates and fears that China is fed up with paying more for shipping than for the actual materials. I don’t know enough about the industry or the companies to go long in this space but it may be an interesting spot to pick up some quarters.

I haven’t really talked much about the Fed this week. I posted previously about Jim Rogers’ assessment that the Fed is irrelevant — they follow the markets. The discussion of the last few days kind of confirms this view. The Fed is feeling pressure to cut rates or risk thrashing the markets. Now Helicopter Ben is realizing the consequences of trashing your credibility. If he had held the line last meeting, NO ONE would now be questioning the Fed’s intent. Now, he’s Wall Street’s b*#ch and the markets discount everything coming out of the Open Mouth committee.

I’ve just finished reading The Return of Depression Economics by Paul Krugman and that books basically lays out modern central banking thinking for developed economies. While I align closely with Krugman’s political philosophy, I don’t agree with his positioning on macroeconomic policies. I’ll post more in-depth on this later but it’s a real eye-opener.