Yes, the FOMC surprised the market with a -50 basis point decline in the Fed Rate to 4.75 pct. The Discount Window was also cut by -50 basis points to 4.75 pct. This is monetary expansion in the extreme – the first such policy move in over four years.

Appropriately, the US major market indexes closed higher on the best day of 2007, including the DJIA (+248.8), S&P 500 (+32.6), and Nasdaq Composite (+55.6).

Lehman Brothers (LEH) 3Q07 net income fell -3.2 pct on write-downs of mortgage securities and leveraged buyout loans, which was a relatively moderate decline compared to expectations.

Foreclosures soared in August, rising +36 pct from July, and more than doubling year over year.

Accredited Home Lenders (LEND) dropped to a net loss of -$260.2 million, or -$10.29 a share, from net income of +$35.8 million, or +$1.61 a share.

Another mortgage company we all thought was an electronic broker, E*Trade (ETFC), warned us that it has been badly stung by the recent fallout in the credit market. I think the share price told us that a couple months ago, when I removed E*Trade from the Cara 100. Good that they “warned” us now though. Goldman Sachs downgraded E*Trade to NEUTRAL, but upgraded ERTS and ATVI to BUY.

Despite the recent price appreciation of General Motors (GM), Goldman Sachs downgraded the automaker from buy to neutral, citing a deal concerning union healthcare costs. A couple weeks ago, I warned that GM was misleading the market with hyped up fleet sales based on hugely discounted prices. The media spin went along with the hype from the company. GM should not be rated “neutral” – it’s a clear cut SELL. Its GMAC and Ditech mortgage lending divisions are bleeding badly, so let’s get real.

Best Buy Co. (BBY) reported a better-than-expected +8.7 pct increase in their fiscal 2Q earnings.

Treasury prices were mixed after the FOMC announcement with the yield curve steepening.

Nymex crude oil soared, adding +$1.81/bbl to close at $82.38.

$USD dropped as expected, as traders now demand higher risk premiums for US assets.

Before the PPI data and the Fed Rate cut, Asia-Pacific markets closed lower, but then the European stocks posted broad gains. This morning Asia-Pacific markets followed through with humungous gains across the board.

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International Economics Review

US Economic Calendar

FOMS Policy Decision Analysis by Econoday

US PPI Report from Econoday

Yesterday morning, the US Labor Dept reported that the Producer Price Index (for finished goods) dropped -1.4 pct in August compared to a +0.6 pct increase in July. They stated that lower energy prices were responsible. Talk about spin. Energy prices include all-time record high levels for Crude Oil.

This morning there is the US CPI report, and on Friday the “quadruple witching” day, which ought to add to the volatility.

The Cara Global 100 Stockwatch

Here are the Tuesday session Cara 100 gainers. Note: Knobias has a problem with the CSCO data.

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Here are Cara 100 losers from Tuesday. Three of 100 were losers on a flaming hot day. Must be embarrassing.

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Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the Tuesday session.

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Here are the Cara 100 stocks that had extreme volume changes.

It pays to watch the price and volume extremes, ie, Money Flow, especially when markets start trending.

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Key Stocks plus Cara 100 In Focus

There are various sources for up/down grades by broker-dealers. One is at Briefing.com. Traders ought to check everyday for ratings changes. That website is updated later in the morning.

I am appreciative to the folks at KNOBIAS, Inc for providing the Cara 100 summaries.

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Relative Strength Index (RSI) analysis of the Cara 100 company stocks . There were 13/5 stocks >70/<30 on Monday. Yesterday the score was 44/0.

RSI > 70 (12 of 44)

RSI < 30 (0)

Here are the Cara 100 stocks that traded Tuesday with the highest and lowest RSI-7, sorted by (i) daily and (ii) monthly values:

“Chris,” used BillCara2.com data that is unsmoothed, unlike the data from Worden used by “David”.

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US Equity Markets Review

DJIA (interactive) chart

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NASDAQ Composite (interactive) chart

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International Equity Markets Review

Asia-Pacific

The indexes across Asia-Pacific equity markets were hugely positive today across the board (except Shanghai, which was consolidating previous record-setting gains).

Nobody was thinking concerns about bank solvency. With monetary expansionary policies, we will now pay with inflation, and ultimately higher interest rates. The banks are off the hook.

Here is the latest session data for the Asia-Pacific stock exchanges.

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Here is the latest chart for the Japanese Nikkei 225 index.

The Nikkei Dow gained +579.74 points Wednesday to more than make up for the -325 point loss on Tuesday. There was a +300 point gain on Monday, so this has been a wild week in Tokyo.

The N225 is now at 16381. It closed two weeks ago Friday at 16569, and was well over 18000 in July.

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Here is the latest chart for the Singapore index .

Today, the Singapore STI was up +3.35 pct, almost to a record high close.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite lost -0.55 pct to 5395.3, which followed the prior day’s fresh new closing record.

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Here is the latest chart for the Hong Kong Heng Seng index .

The Hong Kong market was up +3.98 pct to 25554.64, which is a fresh record high close.

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Here is the latest chart for the India BSE 30 index .

Today, the Bombay Stock Exchange BSE 30 Sensex index rallied +4.17 pct to close at a record high 16322.75. I knew India would not disappoint.

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Here is the latest chart for the Australian All Ordinaries index .

The All Ordinaries index of Australia gained +2.48 pct today to close at 6362.0, which was the high of the day and shy of the record high close of 6469.2.

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Here is the latest session data for the bourses of Europe.

Sensing a set-up day with the US PPI and FOMC, there were solid green arrows early yesterday across Europe. The gains were significant. Today they were even better.

Here is the latest chart for the UK FTSE 100 index.

The FTSE is up +2.50 pct at 6440 in the early part of the session (7:29am ET).

Yesterday morning I said, “Wasn’t that PPI data a lovely set up? Assist goes to the US Labor Dept. Bernanke goal to come.”

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US Dollar Review

Here is the chart of the recent trading.

Yesterday morning, I wrote, “The trade-weighted USD is trading at 79.689 at shortly after the 8:30am ET US PPI report. How can anybody respect a phony dollar?” Obviously this chat shows they didn’t, and don’t. This morning after a bump from the 79.17 open, the price is just 79.337.

Commodity producers will not take wooden nickels, so when you drive to the gas fill-up station, blame the sticker shock on Bernanke (and the banks he’s trying to save).

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Oil Review

Interactive Chart of Weekly Crude Oil:

Here is the e-miNY Oct-07 Crude Oil chart.

Crude Oil is presently (about 7:35am) at 82.10.

“Wooden nickels will keep the OPEC producers asking for more of them.”

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 7:33am) at 722.9.

Zeroing in on a cycle high, and perhaps an all-time record high – like Crude Oil.

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Here is the Recent Spot Silver chart.

Spot silver is stronger today (7:37am ET), presently at 12.98.

Recent Spot Silver chart.

I like the Kitco.com charts btw, but also need the ones at Yahoo Finance, StockCharts.com, BillCara2.com and ADVFN.com before making any opinion.

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Here is the The Goldminers stock index chart.

Let the fun begin. Every prospector with a promoter in front has a story to tell, and you are going to hear it. The phones and fax machines are working 24 by 7. This is the final price spike in the 2002-2007 Bull market. That is to say, it could be one to three or four months long, and then prices across the equity markets will collapse. Gold and silver will be the last ones off the dance floor.

Yes, as LeAnn says, “I hope you dance”. This is the action that the junior miners and developers have been waiting for. The news releases of positive drilling results, positive assays, and so forth are jamming my e-mail system.

But it’s all fun anyway. Right?

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Wrap-up

The luncheon with Noront’s Dick Nemis yesterday (TSX.V: NOT) was very well attended. Toronto brokers smell a huge play in that region. I’ll post a “camp” map so you can see who the players are.

There are no majors there yet, but they’ll show up at some point. The companies that are there will be the ones that typically exhibit at the Cambridge gold show (Toronto October 21-22). I'll be there.

Eight helicopters are flying the McFaulds Lake area, whether it be for geophysics or transporting people and materials. Exciting times. Nothing like it since Voysey’s Bay, just about 12 years ago.

Voysey’s Bay was interesting in that the aboriginals who claimstaked that area came to Nassau to visit yours truly. The bulk of those claims were put into my name and then sold off to many other juniors, who then raised the capital needed to start an exploration camp. The area turned into about $16 billion in minerals value. I should have kept some of those claims. But who knows how life is going to turn out.

Anyway McFaulds Lake is THE PLAY. This is a Sudbury-type base metals camp (nickle/copper with assuredly platinum and cobalt) in Northeastern Ontario in the rugged lowlands of James Bay/Hudson Bay. Don’t ignore it. The trading volumes will be huge.

My friends Dick Nemis/John Harvey (re Noront), Mr. Platinum (re Fancamp) and Mac Watson (re Freewest) have some of the best ground. Sheldon Inwentash’s Pinetree Capital (TSX:PNP) is buying everything he can. These stocks are flying. Halleluia!!!

I mentioned to Sheldon that this community sends me more letters about him than any other person. Hugh Cleland Jr would be a close second.

Have a good day.

Yesterday, I said that I would be inserting a “Tip Jar” because my costs of maintaining this site are going out of sight. Now my closest advisors are waving red flags, asking me to reconsider. So, maybe I’ll have advertisers plus, for those who don’t want advertising, donations. In any event, somebody has to pay. Three and a half years of paying the piper is enough for me.

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