Fed meeting and market view

Another Fed meeting is on the way. It does not seem that the market is too anxious about the meeting result this time around. I guess we are all tired of Big Ben\'s bullshit at this point. The outcome would be no surprised to everyone, rate unchanged. Based on the current economic situation and a cooked inflation number by the Fed, that seems to be the most logical outcome.

Financial sector has been forming A bottom due to the intervention of the government. What I like to see is, how much further the Fed and Congress will reach out to further help the sector. My bet is that, they might go as far as changing accounting practice to allow the banks to cook their books, thus helping to boost the banking industry\'s so called earning recovery. However, any government intervention can only termporary prevent the sector from a quick diving downfall. What the government is trying to do now is to buy time for the banks and hope for a miracle. Unfortunately, the nature of the economy does not work that way. All the bad numbers and bad debt must take time to work through. I don\'t think we are anytime close to the end of the financial crisis yet.

Commodity sector is going through a severe correction right now. A lot of the analysts are coming out to claim that, the peak of the commodity boom has been reached and the good time for this sector is over. You have to be wondering, where the hell they are a month ago. Like any other industries, besides the speculation factor, commodity prices are dictated by supply and demand. I don\'t think we can claim that the boom is over until we can prove that, the supply and demand balance has turned 180 degree, which would warrant a so called commodity peak. Unless there is a great depression type of recession, I don\'t believe the supply will overwhelme demand in commodity sector anytime soon. One great opportunity I am seeing now is the gold sector. Unless you either believe on the cooked Fed\'s inflation number or you believe the inflation will come down, otherwise, there is no reason to deny the fact that, gold will go much higher from here. I am a buyer of gold here. Mind you, gold can retreat to low 800 level and therefore, there is no need to be too aggressive here.

Bearing with all the bad news, the market is holding on the so called A bottom pretty well with Bull and Bear both getting nervous as the consolidation phase continues. My bias to the market is up for the short term. However, Dow and S&P have trouble penetrating the overhead resistance so far and therefore, we can\'t be too sure about the market direction at this point.

As bad as this market is, one of my long term holding P&G\'s ER reminds us that, we should not abandond long term investment. It\'s always good to hold good stocks with strong FA in your long term porfolio serving as an anchor. Wealth is accumulated, not through short term irrational gain.

[another1]

i think fertilizer companies can pass high energy cost to comsumers. so its not neccesarily negatively related to energy price. it's mainly driven be a combination of bio-energy development, weather, and speculations, etc.

[pisces-hk]

thanks.

I am wondering how you view the agriculture sector/fertilizer? My view is the the demand for the fertilizer should not go down along with oil price (assume oil price will go down). although lower oil price means lower transportation price for fertilizer. or: did i miss something on the oil and fertilizer relationship?
Many thanks.