Sunday, January 25, 2009

No, wait, DON'T GO!

This is still the blog for the infamous Toad Musings. Only, I think I've grown out of my wife's pet nickname for me. I also thought Adverse Selection was more appropriate. In economics, adverse selection is what you call it when you do business with someone/thing that you should not have only because the other party had information you didn't (what many call informational asymmetry). Confused about the parallels? Excellent. Feel free to tell me if you don't like the new layout.

This will be a big week for the markets. There are a lot of earnings reports coming out this week and if the DOW can stay above its psychological floor of 8,000 that will be a good sign that maybe we've reached the bottom. Notables announcing earnings this week include McDonalds and Wells Fargo. Both may act as the proverbial canary-in-the-cole-mine. McDonalds historically has done very well in recessionary environments and Wells Fargo will provide a proxy for financial services in general. My prediction is that it will not be pretty. I think most firms announcing are going to take a big bath in order to lower expectations going in to the next quarter. Losses will be greater than what most analysts predict and I think its highly probable the DOW will slip below 8,000.

Oh yeah, I haven't said happy New Year yet.

1 comment:

brandonm said...

Love the new look--it's easier to read.

As we enter the depression, I'll be sure to remember you saw it coming first...