CHESSNOID

The stock market is under increasing recession pressures. Many of the recent headlines are focusing on the state of our economy and its ability to cope with a mild to severe recession. Most stories are focused on the results of the subprime debacle that just seems never to die down. Each month foreclosure figures skyrocket which is building up the current housing and condo inventory to record levels as the number of real estate sales activity diminishes. The housing bust is still happening and may even be gaining more momentum.

The federal reserve has lowered rates 5 times in the last 5 months and they are running out of room to cut interest rates which is currently at 3%. Many investors and analysts are predicting and hoping for more severe rate cuts of 3/4 to 1 percent. That would temporarily boost the market up but as we can see not changing the confidence of the consumers. Those rate cuts haven’t stimulated the real estate market.

In fact, each rate cut seems to push many commodity prices up. Most notably crude oil which is near an all time high and hovering on the other side of $105 a barrel. Rates at gasoline stations have jumped up to an average of $3.50 a gallon and it isn’t even summer yet. Predictions of $4.00 a gallon are going to continue to hurt this economy and at a recent press conference, President Bush seemed to be surprised that gas was getting expensive.

The global stock markets are trading about 1 1/2 to 2 per cent to the downside as I write this. The US stock futures are just off by about 1/2 a percent.

This week will be another tough one on our stock markets as more reports will confirm more problems caused by the housing recession. The stock market is still in a downtrend and negative news keeps making it a stronger downtrend. We have reached an 18 month stock market low but I don’t think we have hit the bottom yet.