Home builder D.R. Horton reported a wider quarterly loss Tuesday -- yet its shares jumped as much as 28 percent on U.S. government moves to buoy the financial sector. But home prices and mortgage rates dropped further and there seems to be no floor in sight. CNBC heard from experts who say the problem is market schizophrenia: equity markets have bottomed but credit markets are still spiralling downward.
Slump at the Pump Good for 'Old' Energy
CastleArk Management's Jerry Castellini said the plunge in oil and gasoline prices is killing the motivation to seek alternative sources of energy. "They really needed $100 a barrel to make the economic case for these transitional technologies," he said.
Equity Markets Bottomed — But Credit Markets Still Dicey
The economy is caught in "a downward spiral of imaginary transparency," according to Don Putnam of Grail Partners. Putnam said the U.S. Securities and Exchange Commission has completely mis-read the relationship between short-selling and counterparty risk. He sees the markets bouncing around at current levels for the next six to 12 months.
Believe It or Not, Inflation Threat is Coming
The government's bailout plan is not working, said Bianco Research's James Bianco. At some point, though, it will start to work — and there will be massive inflation at least as bad as the 1980s. Bianco said the Fed's challenge in withdrawing the liquidity it has pumped into the system will be bigger than anyone suspects.
The Worst is Yet to Come, Especially for Consumers
Michael Darda of MKM Partners said we're in for a long string of ghastly economic figures. They point the way to "the collapse of the consumer." He sees a return to frugality, with households holding back 8 to 9 percent of disposable income, an $800 billion hit to the economy.
Tech Bubble, Housing Bubble — Now, 'Fear Bubble'
Mike Holland of Holland & Company advised investors against panic selling, saying the current atmosphere of fear is as overdone as technology stocks were at the end of the 1990s. It will take some time, he said, before the cynicism and skepticism are wrung out of the system.
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