Market Dives 5% in Three Days - Only the Beginning?

Last week US stocks got taken out behind the woodshed for a 5% thrashing in only three days. Why did this happen? Two reasons:

1. Fooled Investors feared Bernanke wouldn't be retained as FED Chairman when the Senate votes on Thursday or Friday, or whenever Hail Mary Harry calls for the vote to take place. Remember, Bernanke's POA to defeat this depression is to print fiat confetti/monopoly money and blow it around like an Oklahoma twister. Dollar drops, stocks go up. So do nominal earnings of international companies because their overseas' sales translate into more US Dollars here. (which is what is happening right now during earnings season. The US Dollar was extremely weak in the 4th quarter) Real value however? Forget about it. We're still knee deep in a depression.

2. Obama, hotter than a cheap pistol over the Massachusetts election and subsequent ego bruising, came out swinging wildly at the banks like a late round amateur cage fighter in a Vegas casino. This troubled investors because some of his proposals include limiting bank trading activities and equity positions. Investing has been a major source of income for banks in this latest earnings round and many analysts are concerned that more regulations on banks will limit earnings potential and stock performance.

What does this mean for Joe? Is there reason for Joe to worry? Yes of course, because a Bernanke removal is not in the cards. (Joe, can't you just get another deck of cards?) Nope, the dealer of this card game is Ben Bernanke, and the influential players who put him in office are more powerful than Congress. So just like when embattled Merrill Lynch was force FED to Bank of America, and just like when the US taxpayer was force FED 180 billion AIG debt in the famous Goldman Sachs backdoor bailout, and just like when we were force FED TARP casserole, the FED will have its way and Bernanke will be reappointed. As for Obama and the banks? This is any one's guess. Most likely increased regulation will have a negative impact on banks' earnings and stock performance. Keep your family and friends close, and your stop orders closer.....before not only the house of cards falls, but the entire table collapses with it.