This is an article from October 2007, just came across it and wanted to post it and point something out in the article below. First, right below the title that reads "Dow Hits New Record" is the following, "Stock indexes staged a broad-based rally amid hopes that the worst of the credit crisis may have passed" So that rally was based of a credit crisis that may have passed meanwhile the credit crisis was just about to begin and take equities down 50%+. Second, "Optimism was stoked by Citigroup's saying that it sees continued growth in consumer loans and doesn't expect a consumer-led recession to result from the upheaval in the credit markets. " This just makes me laugh and laugh and well laugh even more. Citigroup was trading for mere pennies just 7 months ago, according to this little quote it seems they had a lot of trust in the good old consumer that makes up 70% of our GDP. Right now citigroup is practically worth ZERO!!!! Third, Also, former Fed chief Alan Greenspan, in his capacity as a paid consultant by PIMCO and Deutsche Bank, said the financial crisis may be nearly finished, noting positive signs such as lenders showing interest in longer term, lower quality assets in recent days, according to Action Economics. Another Funny quote. According to greenspan the financial crisis may be nearly finished, boy was he fucking wrong on that one, sounds like bernanke if you ask me. Fourth, Douglas Peta, market strategist at J. & W. Seligman in New York, cited eight bits of anecdotal evidence over the past few weeks, including a report that Goldman Sachs has raised $1.5 billion for a distressed debt fund, that tell him the market has already priced in all possible bad news from the subprime debacle. Market had priced in all possible bad news at around dow 14k, wow, how foolish are the strategists. Meanwhile GS was borrowing billions and billions and BILLIONS from the government just 7 short months ago to help them and the rest of the financial market from collapsing. October 1, 2007, 8:53AM EST Dow Hits New Record Stock indexes staged a broad-based rally amid hopes that the worst of the credit crisis may have passed by David Bogoslaw Investing Wait -- was the market's August swoon just a bad dream? You would have thought so from the new highs major U.S. stock indexes were hitting Monday, as investors put a positive spin on gloomy earnings warnings from Citigroup (C) and UBS AG (UBS). On Monday, the Dow Jones industrial average swept through the previous 14,000 record threshold, and through 14,100 before slipping back to finish higher by 191.92 points, or 1.38%, at 14,087.55, a new closing high. The broader S&P 500 index rose 20.29 points, or 1.33%, to 1,547.04. The tech-heavy Nasdaq composite index gained 39.49 points, or 1.46%, to 2,740.99, a six-and-a-half-year high. On the New York Stock Exchange, 25 stocks were up for every eight that traded lower, while on the Nasdaq stock market, 21 stocks gained for every nine that were down, Standard & Poor's MarketScope said. Leading the broad-based rally were financials, with technology and retail names also doing well and homebuilders jumping after a sector upgrade by Citigroup, which has previously failed to call a bottom in the housing market. The start of a new quarter after putting to bed the third-quarter's financial roller coaster seemed to be giving investors a fresh perspective on the markets. Optimism was stoked by Citigroup's saying that it sees continued growth in consumer loans and doesn't expect a consumer-led recession to result from the upheaval in the credit markets. Also, former Fed chief Alan Greenspan, in his capacity as a paid consultant by PIMCO and Deutsche Bank, said the financial crisis may be nearly finished, noting positive signs such as lenders showing interest in longer term, lower quality assets in recent days, according to Action Economics. PIMCO bond fund manager Bill Gross's prediction that the Fed funds rate will be lowered by another percentage point to 3.75% within the next six to 12 months aded fuel to the bulls' fire. Citigroup projected a 60% decline in third-quarter profits from a year ago, due to dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer credit environment. There was a sigh of relief once investors realized the bulk of the combined $3.3 billion in asset writedowns Citigroup plans to take for the third-quarter is for possible losses in the future. The nation's largest investment bank said that, while it couldn't predict what market conditions would be, it expected earnings to return to more normalized levels in the fourth quarter, suggesting it now had a firm grasp on the extent of the asset write-offs that resulted from the credit crisis, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati, Ohio. "The market may be extrapolating that to others [in the financial industry] as well," he said. "The credit problems are known, they're serious, but they're seen as a one-time event." But Sparks said he suspected the news from Citigroup and UBS would have had a similar effect on Friday, before the new quarter had been ushered in. Another important factor in Monday's rally, he said, was that after the Fed rate cut on Sept. 18, the stock market took a breather last week with some help from the Jewish holidays. It was very constructive that stock prices didn't pull back very much during last week's low-volume lull, he added. Douglas Peta, market strategist at J. & W. Seligman in New York, cited eight bits of anecdotal evidence over the past few weeks, including a report that Goldman Sachs has raised $1.5 billion for a distressed debt fund, that tell him the market has already priced in all possible bad news from the subprime debacle. "All these things suggest to me that thereâs a growing drum beat of opportunistic investors who think thereâs opportunity in the space thatâs at the heart of the summerâs turmoil," he said. In economic data, the Institute for Supply Management reported a September index of 52, slightly below the 53 reading that was expected, and down from 52.9 in August. Although the index is down from the mid-fifties seen in June, any reading above 50 shows growth in the economy. New orders and production were down a bit, and prices paid were modestly lower. The big news this week will be the September nonfarm payrolls number that comes out Friday. People will be watching to see if it confirms August's sharp move lower, which helped convince the Federal Reserve to ease interest rates by a half-percentage point. Another negative report will boost investors' confidence that another rate cut from the Fed can be counted on, said Sparks. He predicted stocks would continue to move higher unless the jobs data was so disastrous as to suggest an all-out recession was imminent. Peta said he saw any big move in the stock indexes, whether up or down, as premature ahead of seeing the September nonfarm payrolls data, which will give a clearer picture of the economy's direction. Crude oil for November delivery in New York fell $1.42 to $80.24 a barrel, as continued profit-taking from new record highs last week and a modest rally in the U.S. dollar put some pressure on oil prices, Action Economics said. The price probably won't drop below $78 a barrel given persistent tightness in the supply-and-demand balance. Among the stocks in the news Monday, Citigroup shares added 2.3% despite its dark third-quarter forecast. UBS AG (UBS) shares were up 3.2% after it warned about a larger-than-expected net loss of up to $690 million for the third quarter and plans to write down as much as $3.45 billion in fixed-income assets, including securities tied to subprime mortgages. The Swiss investment bank also said it would cut 1,500 jobs and announced some executive shake-ups, including the demotion of the investment banking chief. Another M&A deal fell victim to the credit crisis. Acxiom Corp. (ACXM) shares plunged 19.7% after it said it had reached an agreement with private equity sponsors to cancel a $2.25 billion acquisition by Axio Holding LLC, which is controlled by Silver Lake and ValueAct Partners. The unique feature here is that the sponsors and banks will pay $65 million in breakup fees to terminate the deal. World equity indexes were higher on Monday. In London, the FTSE 100 index rose 0.61% to 6,506.20. Germany's DAX index gained 0.77% to trade at 7,922.42. In Paris, the CAC 40 reversed from earlier losses to climb 1.01% to 5,773.26. In Japan, the Nikkei 225 index climbed 0.36% to 16,845.96. In Hong Kong, the Hang Seng index advanced 0.29% to 27,142.47. The Shanghai composite index gained 2.64% to 5,552.30. Treasury Market Treasury yields slipped lower but rebounded after the weaker September manufacturing index numbers was released. Bond gurus said it may be premature to be think that the worst of the housing downturn and subprime contagion are behind us, Action Economics said.