Trust…All But Gone!

Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"... a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts click here or call 888.484.8220 ext. 1.

For the better part of 18 months, I have been writing to you about the withering trust of Wall Street, the government and all the players involved. I have been posing the question about how markets will react to all the crooks, all the charlatans and all the chicanery. Well, simply put, the beat goes on.

In the past, I have talked about:

Ratings services rating stuff AAA.

CEOS of major financial institutions out and out lying to the world...and in plain sight. For instance:

John Thain saying on a conference call that Merrill did not need to raise more capital...6 days later...raises $8.5 billion.

Dick Fuld removing losses off the balance sheet of Lehman and only putting them back when called out by a hedge fund manager.

Chuck Prince telling Wall Street on several occasions their capital base was just fine and losses were limited.

On top of that:

The Bush and administration and specifically Hank Paulson telling us everything was just fine as housing was bottoming, subprime was contained and the economy will stand tall.

Ditto for Ben Bernanke.

The head of the SEC, Chris Cox, going on TV to defend Bear Stearns' capital base several days before Bear Stearns went out of business. Yup...the #1 regulator defending a company he regulates.

Barney Frank defending FNM/FRE and their business prospects.

Emails out of WAMU where upper management talk about horrid lending practices.

Apple Computer selectively putting out material information. Don't get me started on their earnings guidance.

Do I need to mention Madoff?

This is just a starter list!

After all this, you would think someone would learn a lesson that the markets need to trust...and when they do not trust, they will be sold off. The market does not trust anything coming out of the Financial giants. You do not need me to tell you that. Look at the stock prices. But no one is learning.

We are now finding out that Ken Lewis, the head honcho, top dog, big cheese of BAC knew in December that Merrill's losses were much bigger than told. What did he do? He held the information. Only this week, did shareholders find out. Of course, this is a clear violation of securities law. Don't even get me started on John Thain's commode as well as the paying of billions in bonuses to a company that was going down like the Titanic.

So...we come into this week with a new president where hope pervades the air...where the talk of transparency and honesty is now filling the room...and what do we now get? We get a Treasury Secretary that will now oversee the IRS...that evaded taxes. Yes...tax evasion. Last, I looked, I would think the little people would be prosecuted for what he did. Taking a write-off of your kid's summer camp? Are you kidding me? What do we hear from government officials? We will overlook the "mistake!" Who are they trying to kid? You may kid some...but you cannot kid the market.

That leads me back to my main point...a point I have been making for a long while...what happens to the markets when they recognize those that are in charge cannot be trusted? What do we get when no one is investigated the bad guys...but instead rewarding them? What do you get? We are getting the answer!

Markets are teetering on the edge of breaking the 15 week trading range I have been talking about. The market had better make a goal-line stand...and soon! I wish I had better news...ok here is one...my son Eric becomes a man this weekend as he celebrates his Bar Mitzvah. Lord knows we need some good men right now!

Disclaimer: The opinions expressed herein are those of the writer and may not reflect those of Wunderlich Securities, Inc. or any of its affiliates. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.