Blood on the floor.

[tricha]

I read this last Friday Huang and a few other things and over the weekend pondered the situation. It was like an almighty bell ringing.

Lets face it, the USA Govt can not be trusted to tell the truth.

The OZ market is in excellent condition, but unfortunately when the USA sneezes we catch a cold.

When a Bear market begins, no one rings a bell before hand.

I sold all my metals stocks (except one) since Monday and the cash stays in the bank. So now 40% cashed up.

The oilers stay.

Does it really matter if I'm 40% out of the market for a few monthes?

[Huang Chung]

Wow Tricha...you were right in bailing out of Ni stocks before they tumbled, I hope for my sake you are wrong on this occasion. :D

OK, the big question, which metal stock did you hold onto? (not GDM, surely!)

[tommy]

Tricha mate,

That chart you posted is spooky stuff... I hope you are wrong but we could be in for a massacre in the coming weeks if you are right.


The question is, is it actually possible to fall by that much when there are "brakes" in stock exchanges (limits to transactions that can be imposed) to prevent the fall from getting too sharp? In any case, the stop loss triggers would be activated like dominos if such a sharp downturn takes place.

[tricha]

Hi Huang and Tommy

I hope the chart is wrong as well, taking 40 % cash out is my insurance as I do not run stop losses. I'm still 60% exposed.

Tommy - "In any case, the stop loss triggers would be activated like dominos if such a sharp downturn takes place."

Dominos all right Tommy, in this pyramid game, all those billions in marginal lending loans, the lenders enforcing payment immediately upon % call, :(

Cheers

P.S Oh and Huang, I kept ADY as it fits into the peak oil scenaro, long term investment.

US economy 'heading for slowdown'

http://newsimg.bbc.co.uk/media/images/44098000/jpg/_44098179_fordap203jpg.jpg The outlook for the US economy is set to worsen

The US economy will slow sharply in the second half of the year and the risk of it going into recession cannot be ruled out, the OECD has warned.
The 30-nation group of top economies said the global financial fallout from the current US sub-prime mortgage crisis would continue for some time. But it said US consumers remained resilient while Europe was unlikely to be as badly affected as the US. Uncertainty over the size of sub-prime losses has caused stock market turmoil.

http://news.bbc.co.uk/2/hi/business/6979577.stm

[STRAT]

FN ARENA NEWS - 06/09/2007
The Australian banks' safe haven status is increasingly coming under pressure amidst what only can be described as ongoing freezing temperatures on global debt and credit markets. The latest victim could well be Australia's fifth largest bank, St George (SGB), with analysis by Deutsche Bank analysts revealing management's 10% EPS growth target for FY08 should now be considered under threat.
Analysis conducted by Deutsche Bank's team of banking analysts suggests St George's capital position is likely to fall below its APRA approved target of 6.7%. The impact of this would be that the bank may need to underwrite its dividend for this year. This would, on Deutsche Bank's estimates, dilute St George's forecast EPS for the year by an extra 1%. However, the analysts also believe this will undermine market confidence in the bank maintaining its current 77% payout ratio.
In a research note released this morning, Deutsche Bank analysts stated they have grown increasingly concerned about St George's capital position in the second half of calendar 2007.
Deutsche Bank believes St George is likely to be forced to shelve a $3.5bn securitisation issue scheduled for September. In addition, and hot on the heels of similar announcements by ANZ Bank (ANZ) and National Australia Bank (NAB), St George is likely to be forced to move circa $1.3bn in conduit assets on its balance. The result of this, Deutsche Bank believes, is that St George's tier one capital for the end of this month is likely to drop to 6.4%. This would be well below management's 7-7.5% target range and also well below the APRA temporary 6.7% target.
The banking analysts believe there can be little doubt St George will be able to access securitisation markets again, but when? The current situation on global debt and credit markets doesn't imply this moment will come anytime soon. Yesterday, the Reserve Bank of Australia (RBA) was forced to inject $3bn into the local banking system, which was $0.5bn more than what was apparently required by the banks.
Deutsche Bank believes the speed and the costs at which St George (and other banks we assume) will regain access to securitization markets again remains very uncertain. This does not take away that both factors are regarded as "critical" to St George's capital and earnings outlook.
The analysts add St George's near-term earnings outlook is not exactly helped by the recent spike in the cash/90 day bank bill spread to 55bps.
Last time we looked St George bank shares were trading 60c or 1.77%, lower at $33.34 in a generally poor day for bank stocks.
Deutsche Bank has for the time being left its Hold rating unchanged, as well as its earnings forecasts and $35 price target. The analysts forecasts are currently 1% below management's 10% growth target for the year.

[Scuffer]

You all are running on fear so how many of you have been running on greed if you've just been ticking over you should be fine, Tricha said if the yanks sneeze the rest of the world catches a cold its a nice analogy but I am not fond of the Doodles and I would prefer to think of them as farting and then them expecting the rest of us to be ****ting ourselves, well the warning is the smell.It is times like these were they make even more money.

[tommy]

You all are running on fear so how many of you have been running on greed if you've just been ticking over you should be fine, Tricha said if the yanks sneeze the rest of the world catches a cold its a nice analogy but I am not fond of the Doodles and I would prefer to think of them as farting and then them expecting the rest of us to be ****ting ourselves, well the warning is the smell.It is times like these were they make even more money.

Real fear is the extent to which the real economy is gonna be affected by the subprime problem, as employment figures due out Friday morning in da US should give an indicator for whether Uncle Sam is only sneezing or suffering long term illness. I don't like taking chances so I won't be holding a lot of stocks over the weekend... depending on the figures released, Monday (and the rest of the week) might turn ugly. Better to be safe than sorry in this crazy market.

Whether we like it or not, when DOW tanks so does the rest of the world, regardless of the fundamentals of the economies in the rest of the world.

[STRAT]

You all are running on fear so how many of you have been running on greed if you've just been ticking over you should be fine, Tricha said if the yanks sneeze the rest of the world catches a cold its a nice analogy but I am not fond of the Doodles and I would prefer to think of them as farting and then them expecting the rest of us to be ****ting ourselves, well the warning is the smell.It is times like these were they make even more money.Hi Scuffer, not sure of your point here. The markets run on greed and fear. Thats not a good or bad thing, it just is. Ignore it at your peril. As for the post I just put it up as a matter of interest. An on topic article closer to home.

[Scuffer]

Strat my point is there is a bad smell and the smart money will be already consolidated Duncan went fishing, for me it was a toss up of talking to you guys or mowing the lawns and you guys with all your charm came up "trumps" no pun intended.

[tricha]

Real fear is the extent to which the real economy is gonna be affected by the subprime problem, as employment figures due out Friday morning in da US should give an indicator for whether Uncle Sam is only sneezing or suffering long term illness. I don't like taking chances so I won't be holding a lot of stocks over the weekend... depending on the figures released, Monday (and the rest of the week) might turn ugly. Better to be safe than sorry in this crazy market.

Whether we like it or not, when DOW tanks so does the rest of the world, regardless of the fundamentals of the economies in the rest of the world.

Exactly Tommy better to be safe than sorry and come back fighting another day. And it still looks bloody ugly I'm afraid.
I am not the slightest tempted to buy back what look like cheap PEM and SMY shares.


Credit fears spark fresh action

http://newsimg.bbc.co.uk/media/images/44099000/jpg/_44099854_eurozoneap203jpg.jpg The ECB wants to lower the cost of credit to boost liquidity

The European Central Bank (ECB) has moved again to boost liquidity in the banking system, after warning of fresh volatility in financial markets.
The ECB is lending billions at its minimum rate of 4% in its latest effort to counter the global credit squeeze.
Central banks are trying to cut the cost of credit after the rates at which banks lend to each other soared.
Credit conditions are tightening because of worries about banks' US mortgage-related losses.
Volatility returns
The scale of many banks' liabilities from the troubled US sub-prime mortgage market remains unknown, raising fears about their financial position.
Two German banks have already revealed huge losses stemming from sub-prime investments, while BNP Paribas suspended three investment funds last month after it said the liquidity crisis meant it was unable to calculate their value.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif It seems very clear that in the US there will be an impact on the real economy http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


William Rhodes, Citigroup


The ECB made an additional 42bn euros (£28bn; $57bn) in credit available on Thursday.
It has already pumped billions into the money markets in the past month to try to soothe credit worries, but admitted on Wednesday that the scarcity of liquidity was still a problem.
"Volatility in the euro money market has increased and the ECB is closely monitoring the situation," the ECB said, adding it "stood ready to contribute to orderly conditions".
The Bank of Australia also intervened on Thursday to boost liquidity after a number of banks said they would state the value of special investment vehicles (SIVs) - many of which are suspected of being heavily exposed to riskier home loans - on their balance sheets.
The twin moves came a day after the Bank of England increased the amount of cash banks could deposit with it and gain access to at short notice.
Inter-bank lending rates - the rate at which banks borrow from each other over a three-month period - have risen to six-year highs as the liquidity crisis deepens.
The main three-month London Libor rate, the standard by which such lending takes place, has risen to more than a percentage point above the Bank of England base rate.
Normally, the spread would be less than half a point, making banks' customary short-term borrowing to keep money flowing much more expensive and hitting potential profits.
Central banks want to provide alternative, cheaper sources of credit.
Economic impact
Analysts believe the ECB's latest intervention means it is even less likely to adjust interest rates from their current 4% mark when it meets later on Thursday.
Recent decisions by Australia and Canada to freeze rates reflected growing concerns that a prolonged credit squeeze could damage global economic growth.
http://newsimg.bbc.co.uk/media/images/44099000/jpg/_44099860_ushouseafp203jpg.jpg The scale of bank's liabilities to the US is a matter of debate


This view was reinforced by comments by the OECD on Wednesday, which said the US housing slump would lead to a "substantial" slowdown in its economy later this year.
But opinion remains divided on the likely scale of the fallout from the sub-prime crisis.
William Rhodes, a senior executive with US banking giant Citigroup, said on Thursday that he was "very concerned" about what he was seeing in financial markets.
"It seems very clear that in the US there will be an impact on the real economy," he said.
But the World Bank's chief economist said that the current upheavals were likely to die down within a couple of months with little or no long-term repercussions. "There will be a very small impact of the sub-prime crisis and it will be over in a couple of months," Francois Bourguignon told an Indian newspaper.

[tommy]

Does the FED really understand what is going on about the subprime problem? Should we trust whatver the FED tells us about the state of the US economy? I think the FED would be the last ones to admit "the US economy is in deep sxxt".

http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune//7.html


Subprime: Let the finger-pointing begin!
The crisis brought on by worries about shaky subprime mortgages continues to rattle Wall Street. Even as the storm rages, the blame game has begun.


The Federal Reserve
If we want to talk about one player that certainly had the power to put a stop to the excesses, we have to look at the Federal Reserve, which sets interest rates and therefore heavily influences the amount of lending that takes place in the economy.

The chief charge against the Fed is that former chairman Alan Greenspan kept interest rates at very low levels far longer than necessary, which in turn sparked the bubble in housing prices and mortgage lending. Looking back, the Fed's behavior does seem bizarre. It kept the key Federal funds rate at 2 percent or lower from November 2001 right through to the end of 2004.

Those rate decisions showed that Greenspan had chosen to use the housing market as his main instrument to prop up the economy after the 9/11 attacks. Using monetary policy to encourage a rise in home prices would be a highly unorthodox move for a central bank. But evidence suggests that Greenspan was overly keen to use housing for exactly that.

In 2002 he called mortgage markets a "powerful stabilizing force" because they allowed people to extract equity from their homes, and in 2004 he said that homeowners should consider using adjustable-rate mortgages to save on interest and prepayment costs. In 2005, when a record $625 billion in subprime mortgages were made, Greenspan gave a speech that blessed the creation of new loan products, including subprime home loans.

As a result, Greenspan has lost a lot of favor in Washington. In March, Senator Christopher Dodd, chairman of the Senate Banking Committee, laid much of the blame for the current crisis at the feet of Greenspan's Fed, saying that it "seemed to encourage the development and use of adjustable-rate mortgages that today are defaulting and going into foreclosure at record rates."

Are we being fair? Is the Fed really this culpable? On the subprime issue, a person close to the Fed at the time responds, "It was only when we got to early 2006 that the Fed had any real data on what was going on in subprime. The first time we saw the data, we thought it must have been a mistake because the amount of subprime origination was so high. We then thought about the implications." But why didn't the Fed work harder to find the data?

And was monetary policy too lax for too long? The person adds, "There is a glaring fact, which people who make that criticism do not consider. And that is that interest rates - long-term interest rates - have been going down for 15 years. And it's a worldwide phenomenon."

So is the Fed off the hook? "That's nonsense," says Paul Kasriel, economist at Northern Trust. "The fact is, the Fed should have tightened earlier. That way they probably wouldn't have had this dilemma." So the Fed has to accept a large slab of blame for the current crunch. Perhaps it even deserves the lion's share.

__________________________

Meanwhile, this is what the FED is thinking now:

http://money.cnn.com/2007/09/05/news/economy/fed_beigebook.ap/index.htm?postversion=2007090514

Fed: credit crunch effects limited
In its 'Beige Book' report, Federal Reserve says effect of turbulent markets has been confined to housing.
September 5 2007: 2:34 PM EDT


WASHINGTON (AP) -- A painful credit crunch is taking its worst toll on the already ailing housing market, while its impact on the rest of the national economy at least so far seems limited, the Federal Reserve reported Wednesday.

The Fed's survey of business conditions around the country was anxiously awaited by Wall Street and Main Street for further clues about what the central bank will do with interest rates on Sept. 18, its next regularly scheduled meeting.
Video More video
How will the Fed handle the current credit crisis? Corporate FX's Kevin Gyateng offers his analysis.
Play video

A growing number of economists believe the Fed will lower a key interest rate now at 5.25 percent by at least one-quarter percentage point to protect the economy from any ill effects of the credit crisis. The Fed hasn't lowered this rate in four years.

"Outside of real estate, reports that the turmoil in financial markets had affected economic activity during the survey period were limited," according to the Fed's report.

The survey is based on information that the Fed's 12 regional banks collected before Aug. 27.

Credit problems - which started out with "subprime" mortgages held by people with spotty credit histories or low incomes - have spread to some more creditworthy borrowers. These problems intensified in August, unnerving Wall Street and investors around the globe. To stabilize the situation, the Fed has pumped tens of billions of dollars into the financial system and has sliced an interest rate its charges banks for loans.
Bernanke: Fed ready to act

Fed Chairman Ben Bernanke, in a speech last Friday, pledged the central bank would "act as needed" to limit any fallout on the economy from the credit crunch. He made clear, though, that the Fed's decision would be driven by what is best for the economy. The Fed would not bail out investors and lenders "from the consequences of their financial decisions," he said.

In Wednesday's survey, the Fed said most banks reported that the recent developments in financial markets had led to more restrictive lending standards for people wanting to obtain home mortgages. That "was having a noticeable effect on housing activity," the Fed said. "The reduction in credit availability added to uncertainty about when the housing market might turn around," according to the report.

The Fed said that several banks noted that commercial real estate markets had also experienced "somewhat tighter credit conditions." However, a number of banks said "credit availability and credit quality remained good for most consumer and business borrowers."

Credit is the economy's life blood. It enables people to finance big-ticket purchases such as homes and cars and can help businesses bankroll expansions and other things that can boost hiring. If it becomes more difficult to obtain, people and companies might spend and invest less, slowing overall economic activity.

In the Fed's report, retail sales were "generally positive." But several Fed regions described automobile and furniture sales as slow. Similarly, manufacturing expanded across most Fed regions, although there were reports of "softening demand for building materials and autos."

Bernanke, in last week's speech, said the Fed would pay especially close attention to the "timeliest indicators" as well as information gleaned from businesses and banks around the country. Economic data taken before the credit markets tightened up in August will be much less useful to policymakers to assess the country's economic health, he explained.
Fed rate cut? Don't bank on it

On the jobs front, the Fed said that "nearly every district reported at least modest increases in employment during the survey period." The lone exception was the Chicago region, which characterized employment conditions as mixed.

With regard to inflation, outside a burst of higher food costs, "most districts reported little change in overall price pressures." A subdued inflation climate would give the Fed more leeway to cut rates if it needs to.

The housing slump - which has been the biggest drag on the economy - worsened.

"The weakness in the housing market deepened across most districts, with sales weak or declining and prices reported to be falling or flat," the Fed said.

After a five-year boom, the housing market went bust last year. Higher interest rates and weaker home values clobbered homeowners, especially higher-risk subprime borrowers with adjustable-rate mortgages. Foreclosures and late payments have soared. Lenders have been forced out of business and hedge funds and other investors in mortgage securities have taken a big financial hit. The carnage has rocked Wall Street, ricocheting stock prices in the process.

Against this backdrop, the economy, which grew at a brisk 4 percent pace in the April-to-June period, is expected to slow to half that pace in the current July-to-September quarter. Top of page

[tricha]

Greenspan points to market 'fear'

http://newsimg.bbc.co.uk/media/images/44102000/jpg/_44102011_greenspanap203jpg.jpg Alan Greenspan has been more outspoken since leaving the Fed

Current financial turmoil is identical to that seen in earlier stock market crashes, Alan Greenspan has warned.
The ex-Federal Reserve boss compared today's situation to the crash of 1987 and the fallout from the near-demise of Long-Term Capital Management in 1998.
Anxiety over a global credit squeeze triggered by the US housing slump was driven by "fear", he said in a speech.
"The human race has never found a way to confront bubbles," he said, alluding to booms suddenly grinding to a halt.
'Identical behaviour'
According to the Wall Street Journal, Mr Greenspan drew parallels in a speech in Washington with US financial panics down the years, driven either by a collapse in confidence in banks or land speculation turning sour.
The current turbulence is being driven by banks' unwillingness to lend until the full extent of their exposure to the troubled sub-prime mortgage market becomes clear, a situation which threatens to hurt the US economy and spread to other countries.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif Fear as a driver, which is going on today, is far more potent than euphoria http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Alan Greenspan

http://newsimg.bbc.co.uk/nol/shared/img/v3/inline_dashed_line.gif

History of financial panics (http://news.bbc.co.uk/2/hi/business/6958091.stm)


The Federal Reserve has said sub-prime losses could total $100bn and is under pressure to cut interest rates later this month to make borrowing cheaper for banks and consumers.
"The behaviour in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998 and what we saw in the stock market crash of 1987," Mr Greenspan said.
The remarks were made at a meeting in Washington organised by the academic journal Brookings Papers on Economic Activity.
Historical parallels
1987 saw the largest one-day peacetime fall in the US stock market, when more than 20% was wiped off the value of the Dow Jones index of leading companies.
The collapse was triggered by the widespread fear that the US economy was set to slow after a period of feverish expansion, in which borrowed money, some of it high-risk, was used to fund huge takeovers.
The financial problems of Long-Term Capital Management, which caused consternation in the global derivatives market, were triggered by the Asian financial crisis of 1997, which spread to Russia and Brazil a year later.
Stock markets in the US recovered relatively quickly after both upheavals. Mr Greenspan, who now advises a number of hedge funds and other financial institutions, said the nervousness which typically gripped markets when a period of "euphoric" expansion ended was extremely powerful. "The expansion phase of the economy is quite different and fear as a driver, which is going on today, is far more potent than euphoria," he said.

[Morebid]

http://www.lowrisk.com/image/87-29-97.gif


Another spooky graph - to complement the one posted by Tricha #1049 yesterday. Let's hope a crash does not materialise! Over the past few months I have taken profits and now hold mostly blue chips on the ASX and currently have a higher than usual exposure to the gold sector. Greatly appreciate all the input from posters here at ST.

[shasta]

Wow Tricha...you were right in bailing out of Ni stocks before they tumbled, I hope for my sake you are wrong on this occasion. :D

OK, the big question, which metal stock did you hold onto? (not GDM, surely!)

HC - What is wrong with GDM?

Exposure to Nickel, Iron Ore, Uranium, Platinum, & all sorts!

A basket of goodies at bargin basement prices...

I've posted enough about its incredibly low EV...

Tricha sold out & decided to live to fight another day, & if thats Tricha's system then all good...

What i dont get is those getting "spooked" out of the market during small corrections, are in for a rude awakening & will be mauled alive when the bears decide to stick around for a while!

Are the jittery traders on ST really going to sit on the sidelines & watch?

Doubt it, meantime the irrational market presents great opportunities to buy MCR, PEM, SMY, & many other great "cheap" producing companies on super low P/E ratios.

[Huang Chung]

Hi Shasta

Re GDM....I've briefly looked at GDM about three times in the recent past after positive comments on S/T by your good self and Tricha, but just can't get excited by it. To me, its one of those mining stocks that has a little bit of everything, but nothing much in particular. Iron ore seems to be their main game, but its magnetite ore, and I'm not really a fan of magnetite iron ore projects - although they are probably OK in this period of high ore prices. Don't worry, its probably just me not researching the stock hard enough to see the value that others see. I actually used to own GDM stock about 15 years ago (at a guess). Out of the metals stocks that I recall Tricha holding (GDM, ADY and SMY), I just thought GDM was the one that had the least potential to move substantially higher.


On the markets in general, Huntley's editorial in his Small Companies Guide was interesting this week. I'll just quote a wee bit:

'What are your clients doing,' I asked a broker friend who was this newsletter's first subscriber. ' Nothing,' he said. 'Why is that?' I asked.

'Because they are nervous.'

'Did they buy Thursday week, when the market plunged and everything was lovely and cheap?'

'No, they were too scared.'

'They should have been scared when the market was running hot in July!!!'

'No, they were happy then because everyone else was buying, they like to run with the herd!'

Just another perspective I guess.....

[tricha]

Shasta - "What i dont get is those getting "spooked" out of the market during small corrections, are in for a rude awakening & will be mauled alive when the bears decide to stick around for a while!

Are the jittery traders on ST really going to sit on the sidelines & watch?"

I was lucky enough to be a novice in the 1987 crash Shasta and I lost a lot of a little.
A very good lesson to be had there, ask Gerry and a few of the older ones what a crash is about.

There appears to be nothing fundamentally wrong with the OZ market. If the USA market tanks, that will count for nought.

Shasta and Huang, just think what tomorrow will mean if u lose 20 - 30% of your share assets.:confused::confused:


US jobs data shows surprise fall

http://newsimg.bbc.co.uk/media/images/44102000/jpg/_44102705_ford203ap.jpg The latest jobs figures are not good for the US economy

US employers have cut back on jobs for the first time in four years, Labor Department figures for August reveal.
The Department of Labor said 4,000 jobs were cut in August, although the unemployment rate is unchanged at 4.6%.
The statistics fly in the face of hopes that employers would continue to hire new workers, and suggest that recent market turmoil is already hitting jobs.
Financial services firms are already laying off staff in the wake of the sub-prime mortgage debacle.
Hirings falter
On top of the job losses in August, the Department of Labor scaled back on its estimates for the number of new employees hired in June and July.
It reduced its calculation for overall hirings in those months by a total of 81,000.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif It's dreadful...it seems to me almost inevitable we're heading for recession http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Analyst Michael Metz


The last time the US economy shed jobs was in August 2003 when the total number employed fell by 42,000.
The figures come in the wake of former Federal Reserve Bank boss Alan Greenspan comparing current market conditions to those preceding earlier crashes. Michael Metz, chief investment strategist at Oppenheimer & Co in New York, reacted to the latest employment figures with gloom. "It's dreadful...it seems to me almost inevitable we're heading for recession", Mr Metz said.

[Huang Chung]

You might well be right Tricha about a US recession. I very much doubt that metals will return to their previous highs, recession or no recession, as it seems like extra supply will cap any rises. The question for me is how much further they fall. Probably time to avoid high cost producers at the vary least, irrespective of the commodity.

[tricha]

You might well be right Tricha about a US recession. I very much doubt that metals will return to their previous highs, recession or no recession, as it seems like extra supply will cap any rises. The question for me is how much further they fall. Probably time to avoid high cost producers at the vary least, irrespective of the commodity.

It's not about me being right Huang, it's what the market is telling us. The worst part about is, all those biilions of marginal lending dollars, which could be called upon.
It will amplify the downward spiral, part of this deadly pyramid game we are all playing unfortunately. :o

[soulman]

I have vowed this week to be very selective in buying. So I didn't buy much at all. Bought COA for corporate play and sold today for B/E. I want the best chance to get out of the market for a few months but unfortunately, I do not like selling at big losses on good solid stocks like Suncorp, Macquarie, Tabcorp, Perpetual, PBL and Allco. Hence, I will have to hold them until the storms clear.

Have to read past history. I think the 1997 Asian Crisis didn't last long and the market recover in 6 months? I read somewhere in AFR about those crisis - the 1997 Asian Crisis, the 2000 Dotcom Bust, the 2001 Sept 11. Is this a crisis, yes. It's of US nature and can be managed with sensible Fed Watch. And the Fed has indicated that they will act as needed to stop the US fallin into recession. The positive thing about this job report is that unemployment rate stay benign.

I don't see recession. Two consecutive negative GDP numbers equal recession and we have just seen 4% growth in US and Australia in their past quarter last week. If anything, a slowdown to the 1 to 2 percent with rate cuts having a positive effect on supporting the US GDP falling into negative.

[tommy]

Hi Tricha, HC, Soulman et al

I think it is premature to say whether the subprime problem will drive US economy into a recession or not because this really depends on how the FED and Congress will act to mop the mess up.
The full extent of the subprime mess has NOT been revealed yet.

Remember the non-performing loans problem in Japan? Poor government response led the Japanese economy into a deflationary spiral for more than 10 years, and this was an economy that had never experienced a recession since the end of WW2. Although the legistlative/cultural/globalization situation is not exactly the same (Basel II, SOX law, etc.), there are some common denominators in terms of the fundamentals.

Never underestimate the impact of the credit crunch in the domestic (US) financial market on the real domestic (US) economy, especially when the economy is largely driven by DOMESTIC (US!!) consumption.
Do the math on how much domestic consumption accounts for US GDP and you will get the picture. Better be safe than sorry.

Another important aspect is that financial markets are ALWAYS forward looking: they don't give a toss how well the economy is doing today, all they care about how they are gonna do tomorrow. That is why leading indicators are considered important... and while monetary policy can have an instant effect on the economy and market sentiment, fiscal policy has a time lag, so there is only certain things policymakers can do at times like this (hence the world's focus on the policy direction of the FED).

Read today's jobs report released in the US. mmm... not happy Jan:

http://money.cnn.com/2007/09/07/markets/markets_1045/index.htm

At the end of the day, I am still a BULL with respect to overall world economic growth at least for the time being. However, I am 40% cash to get ready for some serious bargain hunting. I really hope I am wrong this time, I want to make money too you know, I HATE losing money (and I don't short, I only ever hold long positions to limit the risks).

I only hold ISSO and RFG and some freebie BOW/BOWO now, terrible in terms of diversification! Even sold off my favorite BLU and AVE... absolutely nuts but this is purely based on animal instinct, no logic whatsoever, don't follow me because I have no idea about reading da markets! Anyway, I can always buy back in, so who cares:-)

I do see major turbulence in store (Sep 18 is the key date, FED meeting!) but what da heck, if the world collapses so will everyone else :-P

Tricha, I really hope you are wrong... but I am feeling VERY uneasy about the current state of affairs. Keep up the good posts, I appreciate your input mate!

[OneUp]

What terrible jobs numbers.

Fed may have to cut rates 0.5%, rather than 0.25%.

[Huang Chung]

It's not about me being right Huang, it's what the market is telling us. The worst part about is, all those biilions of marginal lending dollars, which could be called upon.
It will amplify the downward spiral, part of this deadly pyramid game we are all playing unfortunately. :o

To my way of thinking, if a doomsday scenario was to happen, it would have been from a king hit to the market....a bit like 87. We nearly had this situation a few weeks ago, but buyers stepped up to the mark and it actually bounced back quite nicely.

Since then, we seem to be hit with bad news every day about either subprime mortgages, credit crunches or US recession, so the market is volatile and probably set to grind lower. BUT, the doom and gloom is well and truely out there....and, as a result,there is no 'shock and awe', just an orderly correction. Even the horrible US jobs report last night had the DOW down by less than 2%....the market sold down in an orderly manner...no panic.

Lets look at Sharetrader...Shrewdy bailed about 3 weeks ago, you sold down within the last week, Tommy's now 40% cash, I've reduced my borrowings etc etc....all fairly orderly stuff.

So, yes we are likely to be down for a while, and yes, there is every chance we'll go lower, but I don't think we are playing a deadly pyramid game, as you put it.

Personally, I'll think about it more over the weekend, but will probably sell SMY and NMS on Monday. Nothing dramatic, just trimming my sails a bit more, as the sky looks a bit threatening.

[shasta]

Shasta - "What i dont get is those getting "spooked" out of the market during small corrections, are in for a rude awakening & will be mauled alive when the bears decide to stick around for a while!

Are the jittery traders on ST really going to sit on the sidelines & watch?"

I was lucky enough to be a novice in the 1987 crash Shasta and I lost a lot of a little.
A very good lesson to be had there, ask Gerry and a few of the older ones what a crash is about.

There appears to be nothing fundamentally wrong with the OZ market. If the USA market tanks, that will count for nought.

Shasta and Huang, just think what tomorrow will mean if u lose 20 - 30% of your share assets.:confused::confused:


US jobs data shows surprise fall

http://newsimg.bbc.co.uk/media/images/44102000/jpg/_44102705_ford203ap.jpg The latest jobs figures are not good for the US economy

US employers have cut back on jobs for the first time in four years, Labor Department figures for August reveal.
The Department of Labor said 4,000 jobs were cut in August, although the unemployment rate is unchanged at 4.6%.
The statistics fly in the face of hopes that employers would continue to hire new workers, and suggest that recent market turmoil is already hitting jobs.
Financial services firms are already laying off staff in the wake of the sub-prime mortgage debacle.
Hirings falter
On top of the job losses in August, the Department of Labor scaled back on its estimates for the number of new employees hired in June and July.
It reduced its calculation for overall hirings in those months by a total of 81,000.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif It's dreadful...it seems to me almost inevitable we're heading for recession http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Analyst Michael Metz


The last time the US economy shed jobs was in August 2003 when the total number employed fell by 42,000.
The figures come in the wake of former Federal Reserve Bank boss Alan Greenspan comparing current market conditions to those preceding earlier crashes. Michael Metz, chief investment strategist at Oppenheimer & Co in New York, reacted to the latest employment figures with gloom. "It's dreadful...it seems to me almost inevitable we're heading for recession", Mr Metz said.


You are so right Tricha

There is NOTHING wrong with the Australian market & if your system says hold cash & lock in profits etc - stick to it, you will do well.

The issue here is only those with no system at all will be left holding the baby should it all go south...

Yes, the US is heading for a recession & yes, the feds will probably cut the interest rates again, but...

- The Iron Ore/Lithium deposits ADY have, aren't disappearing?

- The oil being pumped off Taranaki didnt disappear during the US Sub prime crisis...

- Finance companies falling over like dead flies in NZ, DOESNT affect the Uranium market etc etc

What i do agree with, is those unsure/risk adverse should be largely in cash & probably not in the market at all.

Those with risk tolerance (anyone holding stocks like Uran would qualify!), are merely using these "corrections" to re-position themselves "looking forward".

For every seller is a buyer & at low prices (low forward P/Es) producers paying dividends is surely a better bet than cash?

Tricha - I'm surprised you kept most/all of your oilers, you were quite well diversfied i would have thought?

[Huang Chung]

Yes, the US is heading for a recession & yes, the feds will probably cut the interest rates again, but...

- The Iron Ore/Lithium deposits ADY have, aren't disappearing?

- The oil being pumped off Taranaki didnt disappear during the US Sub prime crisis...

- Finance companies falling over like dead flies in NZ, DOESNT affect the Uranium market etc etc

What i do agree with, is those unsure/risk adverse should be largely in cash & probably not in the market at all.

Those with risk tolerance (anyone holding stocks like Uran would qualify!), are merely using these "corrections" to re-position themselves "looking forward".



Agree Shasta.

I also don't think oil stocks will necessarily prove to be a safe haven. A slow down will inevitably affect the demand for oil as well. Oil is holding up well at the moment, but may succumb to recession talk once the US hurricane season is over in a few weeks. There may also be an argument that oil has potentially further to fall than metals from this point in time, as most metals are already well off their highs. A lot of our metals stocks are trading on very cheap multiples. If metal prices come off some more, they will still be trading on low multiples, but just not as low.

Longer term, energy and metals will do well. China still wants to get its hands on as much of our resources as it can. Even Russia wants our uranium. The Chinese have now had a taste of what the west has to offer....and there will be no going back.

[hero]

Agree too - but not sure about the US recession (ie 2 consecutive quarters of negative growth) but it's a possibility.

One thing for sure is that there is a 'recession' in positive sentiment on Sharetrader. Economics is sometimes referred too as the 'dismal science' - but it can't be any more dismal than reading these threads over the last couple of months. I personally do not buy the doom and gloom story. I think we are in the middle of a lengthy period of volatility until the impacts of the credit bubble are clarified and subsequent trends become apparent. So lots of swings - like last night in the US. Good and bad in the jobs data - bad for forward real growth (but not that bad unless it is repeated month after month) but good in that it makes the wanted interest rate cut certain (and 50 basis points now becomes a possibility). The focus will change to this in a few days and then we'll have a bounce back....and then another media-fanned drama, and we'll be down again....and then up...until clear forward vision is restored...and more people see the future like, for example, BHP management sees it. The professional traders must love it all.

Agree with Shasta. If you don't have the appetite for volatility, its probably best to be out of the market. But there will always be opportunities there, no matter what is happening.

I expect the market to be higher by the end of the year, so will generally stay put. Wouldn't be surprised to see more significant spikes though, both up and down, between now and then.

[JackSprat]

Sold everything except HTM; (what? who the hell is that), buying ADY next week when they reach .28c and AGS when they reach $1 :D

You're right Shasta, it's all sitting there in the ground and a lot of people want it. Hasn't Jonnie just signed up deals with Hu Jintao and Putin over the weekend?

In the meantime put a few bucks on the AB's to win the World Cup.

[Scuffer]

Yup Shasta I think your correct in your thinking and everyone wants to be Mr. Howards friend at the moment one politician in australia said last year watch the shift of power from the middle east to australia the emphasis is shifting from oil.

[ScrappyO]

[QUOTE=JackSprat;164048]Sold everything except HTM; (what? who the hell is that), buying ADY next week when they reach .28c and AGS when they reach $1 :D

Good choice mate, HTM/HGD worth the punt.

[tricha]

Huang - "Lets look at Sharetrader...Shrewdy bailed about 3 weeks ago, you sold down within the last week, Tommy's now 40% cash, I've reduced my borrowings etc etc....all fairly orderly stuff."

If I have $100,000 worth of shares.

And I have 40% as cash = $40,000 ( 40% seems a good figure )

If the market tanks 20%, then I've only lost 20% of $60,000 = $12,000 rather than $20,000 at a $100,000.

It also gives me $40,000 cash to buy a few bargins, maybe.

Shasta - "I'm surprised you kept most/all of your oilers, you were quite well diversfied i would have thought?"

The trouble with oilers Shasta is if you hold mid-tier to low-tier ones like I do, you need a spread of 6 + to cover the odds. It's my bad gambling habit, oilers. I want a 6 bagger.
New producers seem to run into all sorts of trouble.

Huang - " I also don't think oil stocks will necessarily prove to be a safe haven. A slow down will inevitably affect the demand for oil as well. Oil is holding up well at the moment, but may succumb to recession talk once the US hurricane season is over in a few weeks. There may also be an argument that oil has potentially further to fall than metals "

You are 100% right Huang oil will fall as well, but I'm into this peak oil theory ( A Thousand Barrels a Second ) and oil is not recycle-able like most metals. Oil will recover the fastest, oil keeps all wheels turning.

Tommy - "At the end of the day, I am still a BULL with respect to overall world economic growth at least for the time being. However, I am 40% cash to get ready for some serious bargain hunting. I really hope I am wrong this time, I want to make money too you know, I HATE losing money (and I don't short, I only ever hold long positions to limit the risks)."

Hmm, Tommy have u read "A Thousand Barrels a Second" It implies when oil goes up to much, the global economy declines.
I hope u r wrong and I hope I am wrong, like like u Tommy we have some insurance ( Quote - "Buffett never lose money" )

It's going to be an interesting week :rolleyes:

My guess will be the ASX down 110 points on Monday.

[Huang Chung]

If I have $100,000 worth of shares.

And I have 40% as cash = $40,000 ( 40% seems a good figure )

If the market tanks 20%, then I've only lost 20% of $60,000 = $12,000 rather than $20,000 at a $100,000.

It also gives me $40,000 cash to buy a few bargins, maybe.


Tricha, I don't disagree what with what you are saying here....completely logical. The way I've been interpreting some of your recent posts however is that you sense a far greater fallout that the numbers above suggest. I guess all I'm saying is yes, we will be down for a while, but no, blood won't be flowing on the streets (for most people, anyway).

There are also the issues of timing the markets and ones tax position to consider. Timing markets is not easy, and tax complicates decisions on selling stock. (For example, I'm not too far off holding my initial parcels of PDZ and VML for 12 months. If I sell these now, I will have to pay CGT at my marginal tax rate, no discount. Holding for a few more months will halve my CGT liability on these shares when I sell. In other words, selling now would give me the same after tax result as a decent recession!)

[Dazza]

my 20% cash position seems small compared to urs tricha

but its all very good, my previous highest cash position i believe was 2%... lol

licking my lips at MBL dropping like a stone mmmmmmmmmmmmm

[hero]

Huang chung,

So true about the after-tax position. Besides, the market "down for a while" is a good buying opportunity. Days like tomorrow are the days to buy ('buy in gloom, sell in doom'). The over-cautious always get back in too late.

[macduffy]

While USA is not technically in a recession, all the signs point to the strong possibility of one within the next 9-12 months. ( House prices/market, sub-prime defaults, job data etc.)
My concern is that there is a wide-spread feeling that the business cycle is obsolete, that the Fed can always engineer a soft landing for the US economy, that China/India will stoke the world economy suficiently if USA can't and that things will never turn down. I don't believe it.

Disc. 20% cash and gradually adding to it.

[JackSprat]

Thanks ScrappyO. HTM/HGD have a very good support page on ST and they have a big potential IMO.

By the way; anyone know what happened to TRENDY. He has a red dot next to his name in the members list page. Does this mean what ??

[Huang Chung]

macduffy - My concern is that there is a wide-spread feeling that the business cycle is obsolete, that the Fed can always engineer a soft landing for the US economy, that China/India will stoke the world economy suficiently if USA can't and that things will never turn down. I don't believe it.

Neither do I Macduffy. I guess in the end, its all a matter of degrees....HOW MUCH can the Fed do to help, HOW MUCH the domestic markets in Chindia can replace a recessed US etc etc.

Then you can always get left field events.....oil supply, China domestic problems, major terrorist event etc.

Nothing is certain, and markets WILL go down.

[hero]

yep, run for the hills Monday, the sky is caving in:eek:

Yep SS, not a great deal of testicular strength on this thread

[fihr]

Tax also affects my decisions where a profitable share is coming up to be a 12 month hold. Especially if I've already realised enough income or profit to put me in the top tax bracket, so that the tax takes 40% of my profit. On the other hand, selling or transferring loss making shares (that you still want to keep) between different entities can crystallise some losses nicely, which can ultimately be a benefit of a correction, depending upon your time frame for holding the shares. Does require some strategic thinking, unless you really need the cash now. But its a good problem to have! Timing of dividends sometimes affects the selling decisions too, for me. Nonetheless, I have to admit that all that solar eclipse and charting correlation in this thread does make me nervous for the near term!

[pago]

this thread is good reading from the beginning.

Mar 05, May 06, Aug 07


ASX 6500+ by year end.

yes surfer,packers had a good feel for the market,i remember when pok started the blood on the floor thread and robbo said its nothing.kahuna on ss also has a good feel for the market.some of us have endured through previous corrections,1/5 months to see ongoing highs,the current situation/crisis is threatening,its up there scale 6/7 .iv been tempted to liquidate the portfolio.decision making is governed by unknowen factors.eg.when/by how much will the fed lower rates,the extent of usa economy downturn.this will take months to play out.its going to be volitile,but i suspect not armageddon.the decision then,as i see it ,liquidate in part or totall,you will sleep better,investors are getting battle fatigue,and you may get some bargins.or hold your stocks,keep your nerve ,ride it out.why do the latter?maybe the fed will drop rates this week.its all a gamble.please dont tackle me on the fed did it too late/too little issue. a rates drop will,imo,change sentiment,and given 6 months turn this around.if the fed drops its rate expect lower usa dollar value/your investments in usa to take a hit,at the worst a flight to other currencies/maybe gold.cheers pao.

[ratkin]

.or hold your stocks,keep your nerve ,ride it out.why do the latter?.

Trying to time the market is not as easy as it seems. Look what happened a couple of weeks ago , people were falling over themselves to sell , the world was caving in and we were in for months of despair.
The marketr has since climbed rapidly and we have had the biggest weekly rally since 1974. Those who sold to sit on the sidelines missed out on that one.

May all happen again of course , in which case the ones who soled might not have been so silly. Trouble is none of us really know

[tricha]

Market jitters expected amid US recession fears

Bridget Carter
September 10, 2007


THE Australian sharemarket is predicted to open substantially lower today in the wake of sharp falls on Wall Street, with fears that the US economy is heading for a recession.
US data released last week showed US employers cut a net 4000 jobs in August amid subprime mortgage market turbulence, the first monthly drop in payrolls in four years.
There were also jitters ahead of the anniversary of the September 11 attacks, with an unauthenticated video circulating on the internet featuring al-Qaeda leader Osama bin Laden saying the US was still vulnerable to attacks.
Expectations are strong that the US Federal Reserve will cut interest rates when policy makers meet on September 18.
"The clear message is that prospects for the US economy will get worse before they get better," said Guy Hutchings, the chief executive of MFS Investment Management.
"Australian investors, while protected somewhat by strong domestic earnings and continuing gains from base metal energy and bulk commodity exports, will not be immune to faltering global market sentiment."
The major US indexes fell almost 2 per cent on Friday, with the Dow Jones industrial average down 249.97 points, or 1.87 per cent, to 13,113.38, the Standard & Poor's 500 Index down 25 points, or 1.69 per cent, to 1453.55 and the Nasdaq Composite Index 48.62 points or 1.86 per cent lower to 2565.70.
In Australia, the APEC leaders week drew to a close yesterday. The Australian Bureau of Statistics will release data for housing finance for July today, lending finance data for July tomorrow and dwelling unit starts for June on Thursday.
On Wednesday, the federal Department of Employment and Workplace Relations releases the monthly leading indicator of employment for September, while the Reserve Bank of Australia's 2007 annual report is also released.
Commonwealth Research economist Joseph Capurso said markets were likely to be held hostage to developments in the US housing and credit markets in the week ahead.
The expectation was that there would be an 8 per cent decline in Australian home lending in July after the surge in June.
"In Australia, the housing market takes centre stage in the local data calendar," he said.
"Recent changes to superannuation rules encouraged some investors to borrow against their homes to lift inflows into their superannuation fund."
The building approvals report had been signalling a near-term downturn in Australian dwelling starts for some time, he said.
"We expect commencements to decrease by 6 per cent in the June quarter, but the downturn should be temporary," he said.
He said the population and income fundamentals for housing remained strong as the demographics implied a need for 175,000 new dwellings each year, but current construction rates were closer to 145,000.
The Reserve Bank of New Zealand also announces its September Monetary Policy Statement this week.

[Bilo]

Hmm, u can't hide from it, but can u run fast enough - trisha

I have to agree with the sentiment Trisha but personally have some reservation that there is a fair bit of manipulation going on.


“Employers cut 4,000 workers in August, according to the Labor Department. Economists expected an increase of 100,000, the median estimate in a Bloomberg survey. The drop, following a monthlong increase in the cost of credit prompted by mortgage losses, is the clearest sign yet that the U.S. economic expansion is in jeopardy.”- Bloomberg September 8 2007


Shock!!!! Horror!!! the mighty USA loses 4000 jobs!! In one month!
The first loss in 4 years!
This is very bad report – Bloomberg headlines shout!
The USA and by inference the whole world must be heading for recession!


If these are the jobs of those responsible for the “subprime problem” then good riddance!
If the jobs were for servicemen returned from Iraq and now unemployed, then Thank the Lord!

But wait 4,000 out of how many 100,000,000s?
“absolutely key”, “people are really worried”,

Is this just more spin? from the Hedge funds, Banks and Press who are attempting to convert a sows ear for some into a silk purse for themselves – ramping big time? - trying to stampede the rest of the world into selling assets cheap so that they can save their sorry annual bonuses.
And in the process rob the naive and elderly who invested in the non-bank finance sector, and part the poor and less-fortunate from their houses and life savings?

It all sounds like american hype to me but that doesn’t stop it from causing another temporary-depressing-effect on the NZX and ASX on Monday – time will tell I suppose.

An attempt to Bully Bernanke perhaps…

Dusting off Osama around 9_11 also seems a bit contrived.

Isn’t this internet connected world a wondrous vascillating dangerous beast.

[STRAT]

Excellent post Bilo. I agree but bottom line is the ramping works ( if you can call it that ) and and the markets will react so it makes sense to me to try and take advantage of the movements. Tricha having a pocket full of cash seems like a good plan to me

[Mick100]

It all sounds like american hype to me but that doesn’t stop it from causing another temporary-depressing-effect on the NZX and ASX on Monday – time will tell I suppose.

An attempt to Bully Bernanke perhaps…

Dusting off Osama around 9_11 also seems a bit contrived.

Isn’t this internet connected world a wondrous vascillating dangerous beast.

[/QUOTE]

well put Bilo

I think you are spot on there
.

[Phaedrus]

Trying to time the market is not as easy as it seems. The Australian market is much bigger and more diversified than ours. At any given time, one sector could be booming, but weakness in another sector can offset this and mask it. This limits the use of the All Ords Index as a market barometer. Timing the market is MUCH easier if you look at market sectors, rather than individual stocks or an all-inclusive index.


Look what happened a couple of weeks ago, people were falling over themselves to sell, the world was caving in and we were in for months of despair. Really? Where is the crisis here? Holders of healthcare stocks were hardly falling over themselves to sell were they!
http://h1.ripway.com/Phaedrus/ScreenHunter_002.gif


The market has since climbed rapidly and we have had the biggest weekly rally since 1974. Really? You would have a lot of trouble convincing holders of telecommunication stocks that there has been any rally at all, Ratkin, never mind the biggest since 1974!!!!
http://h1.ripway.com/Phaedrus/ScreenHunter_001.gif


Those who sold to sit on the sidelines missed out on that (rally). What garbage Ratkin! Those that sold out of telecoms stocks at the end of their uptrend missed out alright - on the subsequent fall! They certainly haven't missed out on any subsequent rally have they!
----------------

Indices provide a much needed sense of perspective and help us to evaluate the wild "manic-depressive" swings of opinion that are bandied about. Holders of utility stocks would have been quite bemused by Ratkin's comments that the market was "looking bad", "next stop 5000" etc - followed shortly by his excitement at the "biggest rally for decades". It has been a fairly flat year for holders of utility stocks - they have seen neither crash nor rally.
http://h1.ripway.com/Phaedrus/ScreenHunter_003.gif

Look at most any of the other sector indices. Broadly speaking, they were all in very clean tidy steady uptrends. Which ended. There was no need for any technical indicators to detect this - it was obvious to even the most casual observer. When/if to sell out was not an issue. When to buy back in again is slightly more problematical and will obviously be different for each sector.

[whiteheron]

Packers last post seems to have been back in November 2006, when it appears he was not well

I used to enjoy his posts
Does anybody know anything ?

[JackSprat]

Same with TRENDY. He suddenly stopped posting here after regular nightly insertions from the States, most of with dire warnings or indicators. He does have a red dot by his name in the members list. What does that indicate? The plaque or something?

[STRAT]

Same with TRENDY. He suddenly stopped posting here after regular nightly insertions from the States, most of with dire warnings or indicators. He does have a red dot by his name in the members list. What does that indicate? The plaque or something?The red dot means someone has added to his reputation with a negitive comment.:eek: See the scales icon bottom Left of each post

[trendy]

Give me a break JackSprat. I just moved houses and Verizon stuffed up my DSL move.....had no internet for over a week.....switching back to cable for broadband. Freakin whole family was going nust with web withdrawal!

Once I get things sorted out in the house I'll be posting again. In the meantime I'm cash and invested in some high div canadian energy trusts.

[Dazza]

picked up some BNB today @ 23.30

[trendy]

[QUOTE=Bilo;164234]Hmm, u can't hide from it, but can u run fast enough - trisha

I have to agree with the sentiment Trisha but personally have some reservation that there is a fair bit of manipulation going on.


“Employers cut 4,000 workers in August, according to the Labor Department. Economists expected an increase of 100,000, the median estimate in a Bloomberg survey. The drop, following a monthlong increase in the cost of credit prompted by mortgage losses, is the clearest sign yet that the U.S. economic expansion is in jeopardy.”- Bloomberg September 8 2007


Shock!!!! Horror!!! the mighty USA loses 4000 jobs!! In one month!
The first loss in 4 years!
This is very bad report – Bloomberg headlines shout!
The USA and by inference the whole world must be heading for recession!


If these are the jobs of those responsible for the “subprime problem” then good riddance!
If the jobs were for servicemen returned from Iraq and now unemployed, then Thank the Lord!

But wait 4,000 out of how many 100,000,000s?
“absolutely key”, “people are really worried”,

Is this just more spin? from the Hedge funds, Banks and Press who are attempting to convert a sows ear for some into a silk purse for themselves – ramping big time? - trying to stampede the rest of the world into selling assets cheap so that they can save their sorry annual bonuses.
And in the process rob the naive and elderly who invested in the non-bank finance sector, and part the poor and less-fortunate from their houses and life savings?

[FONT=Times New Roman][SIZE=3]It all sounds like american hype to me but that doesn’t stop it from causing another temporary-depressing-effect on the NZX and ASX on Monday –QUOTE]

You need realise that the US needs to grow 100k jobs per month to keep positive employment/growth. Anything less is higher unemployment = lower growth.

[spruik]

It all sounds like american hype to me but that doesn’t stop it from causing another temporary-depressing-effect on the NZX and ASX on Monday – time will tell I suppose.

An attempt to Bully Bernanke perhaps…

Dusting off Osama around 9_11 also seems a bit contrived.

Isn’t this internet connected world a wondrous vascillating dangerous beast.



well put Bilo

I think you are spot on there

Relax guys, the planned crash for tomorrow (tuesday) has been cancelled.

[soulman]

Some of the big cap trading ex-div (AMP, BHP, LEI, COA, WAN, TTS) and the market is recovering from their lows. Of course, the market will always be a stock picker market and the chart by Phaedrus just proved that theory. I can tell you a few stocks that haven't recovered from this rally. MacBank, Allco and Babcock & Brown are all still substantially lower. IAG have a bad profit report and their shares are at a 2 year low and battered everyday. I am holding hoping QBE might build a stake in IAG and an engagement might eventuate soon.

It's always a stock specific theme for the market and when the market goes up, it doesn't mean your stock are up as well.

[tricha]

Every day we get more bad press.

My personal view is the USA is facing judgement day. Which has been
put off for 10 years.
Their ATM's are now defunct and they will have to pay their dues, like u, me or anyone else
who keeps borrowing.
Gerrys prediction that gold will be king again might finally come to fruitition.

Just sit back, take a deep breath and imagine what a major terrorist attack will do
somewhere against Americian interests, while all the markets are already jittery.
Can u imagine what the Americians will do, they will more than likely blow Iran to bits
and blame them for all their troubles.

And if anyone thinks I'm lining up cash to buy cheap shares, think again.
I'm preserving a good part of what I have, just in case.

Lets all hope this all blows over, but in this crazy world ........................

Cheers

Banks could face £70bn debt bill

http://newsimg.bbc.co.uk/media/images/42565000/jpg/_42565231_money203.jpg Banks rely on such debt to boost their short-term cash flows

Leading UK and European banks may be forced to pay out as much as £70bn ($142bn) over the next 10 days as the global credit crunch continues to bite.
The banks may have to pay out that sum if investors, such as pension funds, decline to buy the banks' latest debt issues which are now due for renewal.
Analysts say investors are reluctant to buy the new debt until the full impact of the US home loans crisis is known.
With fewer buyers for the debt, banks may have to refinance it themselves.
Banks' cash flow
Officially called "commercial paper", banks use the issuing of such short-term debt to help boost their day-to-day working funds or cash flow.
Many of the loans that are due to mature have been financed for three months or less.
Institutional investors, such as pension or insurance funds, are usually happy to buy the commercial papers, as the banks then pay them interest, and they are traditionally seen as very safe investments.
However, all this has now changed since the start of the ongoing crisis in the US sub-prime mortgage sector, which specialises in higher risk loans to people with poor credit histories or those on low incomes.
As US mortgage rates have risen sharply over the past year, it has led to record levels of loan defaults and home repossessions.
Unknown sub-prime exposure
This crisis has spread across the Atlantic, as US sub-prime loans are often combined with other debts and then resold around the world.
Investors are therefore said to be much less willing to buy the latest commercial papers of European banks until the full extent of their possible exposure to the US sub-prime market is known.
Analysts say this is why UK and other European banks have been stockpiling cash to pay for any commercial paper renewals they cannot sell.
The further knock-on effect of this, means that banks are less willing to lend money to other lenders or businesses, as they need to reserve cash to cover their own debt obligations, exasperating the ongoing lack of credit in global markets. This means that businesses both large and small currently face much higher interest rates if they want a bank loan. An unnamed boss of one of the UK's largest banks told the Sunday Times at the weekend that conditions in the money markets were the worst for 20 years.

[hero]

Must say, I was surprised to wake up this morning to find that the world was still here - despite solar eclipses, bin laden and the US economy. Guess you were right spruik, someone must have cancelled the crash...again.

[spruik]

Good Morning Hero.

It's time to extinguish the messengers of evil news.


PS
The "delete" key doesn't work in this editor, maybe a sign of bad omen? :eek:

[STRAT]

Hi fellas, Dooms day is every other day so it was always scheduled for tomorrow anyway :D

[Joe King]

Dows up, gold up, silver up, nickel up,oil up, a good chance ASX and NZX will be up, suns shining, not a cloud in the sky nor a breath of wind. What a glorious day for a major world calamity. Thanks for the warning Trisha. I'll go play nine holes this morning, spend a couple of hours fishing then go hop in the spa with a bottle of Pinot, watch the sun go down and wait for the BOOM!.
Cheers
JK

[ananda77]

...After months of adamant official denial of any potential threat of the subprime mortgage meltdown spreading to the global financial system, the US Federal Reserve (Fed) on Friday, August 17, a mere 10 days after declaring market fundamentals as strong and inflation as its main concern, took radical steps to try to halt financial market contagion worldwide that had become undeniable. The Wall Street Journal reports that the emergency measures were hastily taken to promote what the Fed publicly referred to as “the restoration of orderly conditions in financial markets.” The telling words were “restoration of orderly conditions” in a market that had failed to function orderly. The Fed let the market know that it has shifted to panic mode.

read:
Central Bank Impotence and Market Liquidity
By
Henry C.K. Liu
http://henryckliu.com/page137.html

tidbits:

...The ultimate effect of central banks injecting money into the banking system is the depreciation of money which now is fiat currency in all countries. When the European Central Bank (ECB) injects euros into its banking system, the euro will fall against other fiat currencies, including the dollar, forcing the Fed to also inject money into the US banking system. This can quickly turn into a competitive currency depreciation game. For all central banks facing a liquidity crisis, the option is a market crash or a currency crash, or if central bankers are not careful, it can easily become a crash of both equities and currencies.

...A liquidity crunch can develop even if there is plenty of zero-interest rate cash in buyers’ pockets but every buyer is waiting for lower prices, causing assets to be illiquid, i.e. unable to be monetized without lowering prices. It can also develop if buyers lose confidence in the future of the economy. Distressed assets cannot exit to cut losses at any price and they bring down prices of even otherwise good assets. This is what causes contagion which can start a downward spiral of self-fulfilling fear...

...The current challenge is one of returning an abnormal economy of excess liquidity to an economy of normal liquidity without extinguishing the flame of liquidity entirely. The period of stress will be the time it will take to work off the excess liquidity, to turn the liquidity boom back to a fundamental boom. It is not possible to preserve abnormal market prices of assets driven up by a liquidity boom if normal liquidity is to be restored. All the soothing talk about the fundamentals of the economy being strong notwithstanding the debt bubble is insulting to the thinking mind. This is a debt economy fed by a liquidity boom. When the liquidity boom turns to bust, all the strong fundamental indicators such as corporate earnings will wilt from a debt crisis....

...But the time has long passed when central banks adding liquidity to the financial system can help a liquidity crisis in the market. When the Fed injects funds directly into the money market through the repo window, banks and thrifts and other non-bank financial institutions that need funds can participate. With the daily volume of transaction in the hundreds of trillions of dollar in notional value of over-the-counter derivatives, the Fed would have to inject fund at a much more massive scale to affect the market. Such massive injection will mean immediate and sharp inflation. Worse yet, it will cause a collapse of the dollar...

...Politicians are talking about taking measures to help households suffering from the subprime crisis to prevent as many as 3 million largely low-income households from losing their homes. However, that will not solve the crisis in the financial markets. In fact it may add to it...


Kind Regards

[JackSprat]

Dows up, gold up, silver up, nickel up,oil up, a good chance ASX and NZX will be up, suns shining, not a cloud in the sky nor a breath of wind. What a glorious day for a major world calamity. Thanks for the warning Trisha. I'll go play nine holes this morning, spend a couple of hours fishing then go hop in the spa with a bottle of Pinot, watch the sun go down and wait for the BOOM!.
Cheers
JK

After watching "The Tudors" on Sunday night this sounds almost as utopian a life as Thomas More's except you left out the nubial wenches Joe. It seems to me that no matter the facts and figures, gloom and doom, cup half full/half empty outlook, we either fall into the category of being positive or negative but when the writing is on the wall, as it is now I tend to err on the side of caution. I would agree infact, with Tricha on this one.

[JackSprat]

Give me a break JackSprat. I just moved houses and Verizon stuffed up my DSL move.....had no internet for over a week.....switching back to cable for broadband. Freakin whole family was going nust with web withdrawal!

Once I get things sorted out in the house I'll be posting again. In the meantime I'm cash and invested in some high div canadian energy trusts.

Good one; glad you're still out there. Good luck with your sorting.

[Bilo]

For all central banks facing a liquidity crisis, the option is a market crash or a currency crash, or if central bankers are not careful, it can easily become a crash of both equities and currencies.[/i]

...A liquidity crunch can develop if buyers lose confidence in the future of the economy. Distressed assets cannot exit to cut losses at any price and they bring down prices of even otherwise good assets. This is what causes contagion which can start a downward spiral of self-fulfilling fear...


...But the time has long passed when central banks adding liquidity to the financial system can help a liquidity crisis in the market...... massive injection will mean immediate and sharp inflation. Worse yet, it will cause a collapse of the dollar...


It is hard to extract oneself from the market when there are premature signs that it may be returning to normal. But the following caught my eye - it is simple logic and convinced me that it is most unlikely that we have seen the end to this "liquidity problem" yet - because it is ceasing to be a liquidity problem. It seems like there is no easy way out other than recession at least for the USA and Japan - a bearish message because there will be collateral damage if these two go down.

This from CNN:

"Fed rate cut wont help markets

Lower interest rates will not bring in money but instead send dollar into a tailspin, says Punk Ziegel banking analyst.

September 10 2007: 8:44 AM EDT
NEW YORK (AP) -- A widely watched banking analyst said late Sunday the best solution to the crisis plaguing financial markets is to let cash-strapped borrowers default and their lenders go bankrupt, rather than slashing interest rates.
Punk Ziegel & Co. analyst Richard X. Bove wrote in a client report the hoped-for cut in interest rates this month will do nothing to bring money back into the U.S. financial markets. Instead, Bove said, lower interest rates will send the dollar into a tailspin and wreak havoc in the job market.


Fed: Don't panic. We're here (http://money.cnn.com/2007/08/28/news/economy/fed_minutesanalysis/index.htm)

Many investors believe the Federal Reserve will cut its target for interest rates next week by at least 25 basis points, from the current benchmark 5.25 percent federal funds rate.
Investors have clamored for Fed Chairman Ben Bernanke to cut rates to stabilize financial markets, which have been in turmoil since July amid decaying credit quality and a flight to safer investments like Treasury bonds.
Bove cautioned that cutting rates will not lure investors back into troubled markets. Investors and banks already have the cash to buy risky loans and investments, he said.
"There is no liquidity problem, but a serious crisis of confidence," Bove said. "In a financial system where there is ample liquidity and a desire for higher rates to compensate for risk, the solution is not to create more liquidity and lower the rates that are available to compensate for risk. ... (The Fed) cannot reduce fear by stimulating inflation."
In fact, cutting interest rates will only encourage investors to borrow dollars at the lower rate and bring the cash to places like Europe, Bove said.
"It is illogical to assume that holders of cash will have a strong desire to lend money at low rates in a currency that is declining in value when they can take these same funds and lend them at high rates in a currency that is gaining in value," he said. "By lowering interest rates the Federal Reserve will not stimulate economic growth or create jobs. It will crash the currency, stimulate inflation, and weaken the economy and the job markets."

Bove said the solution to this crisis is to allow people who cannot repay their debts to default and allow the companies that issued bad loans to fail."

A sorry commentary but it appears to be the New Zealand way.

[soulman]

"Fed rate cut wont help markets

The rate cut was never supposed to help the market. They are to help instill confidence in the market. Since a rate cut of min 25 basis point are expected, I do hope the Fed do cut rates, otherwise, all hell in the US market on Sept 18th, which also happen to be my birthday.

Business confidence in Australia are robust and is the reason why the market is up today. All the banks are up due to the business condition survey and this augur well for Australia. When US sneeze, do we catch a cold? It was like that during August (we actually were hit harder in August - DOW down 2%, we go down 3%) but now, not too sure.

Maybe now, when US sneeze, we just take some vitamins and get on with life.

[macduffy]

I'm confused.
How is instilling confidence in the market not helping the market?

[Placebo]

Good Morning Hero.

It's time to extinguish the messengers of evil news.


PS
The "delete" key doesn't work in this editor, maybe a sign of bad omen? :eek:


Given the title of the thread, it appears someone has been out with the mop :)

[winner69]

I'm confused.
How is instilling confidence in the market not helping the market?

Fed cutting interest rates does matter but it's all psychological.

They do 'instil confidence' in the financial markets but also encourages speculative risk which is the real problem now.

However don't I recall that a series of rate cuts (in excess of 12) not that long ago did not prevent the US stock market from losing more than half its value.

Interesting times

[ananda77]

...besides, would not call this a bullish advance in the market...

[spruik]

Seems like the whole world was waiting for the Crash On Tuesday, but no-one dared to pull the trigger.

Joe King, did you enjoy your bottle of Pinot? There's a big rainbow out here, maybe look for the pot of gold. ;)

[soulman]

Sorry Macduffy, I meant instilling confidence in the financial market, not the stock market.

The credit problem originated from the financial market and the stock market just react to it. Before the problem, the stock market were trading at near all time high in US, UK, NZ, Australia etc...etc...so the stock market is not the problem and they are still doing great despite the fall. If you think the Fed Governor and our RBA Chief are here to help the stock market, obviously not. I don't think they care what's going on in the stock market. They are only worried about the financial market system that has been hit hard with liquidity, credit squeeze, housing activity and possible recession in the US.

[macduffy]

Thanks for the clarification, soulman.
All agreed!!

[tricha]

Now's the time to sit tight

Author: David Koch
Date: September 12, 2007
Publication: Sydney Morning Herald (http://www.smh.com.au/) (subscribe (http://www.fairfax.com.au/cgi-bin/subs/smh.cgi))
http://smh.com.au/ffximage/2007/09/12/ussubprime.jpg
The US subprime problem and related issues aren't over, not by a long shot.
Don't be fooled by the settling down of credit and sharemarkets, this problem still has a long way to go before it works itself out.
Over the past couple of months I've regularly devoted this column to the risks for investors from property finance companies and hedge funds, since compounded by the problems with the subprime market in the US. The past few wild weeks have focused the minds of regulators, investors and fund managers on some of the fundamental problems facing them.
When the subprime disaster hit the fan and some of the world's biggest banks owned up to being caught in the whirlwind, central banks around the world did the right thing by coming to the rescue, pumping much-needed cash into their credit system and cutting wholesale rates to avoid a credit crunch.
Only the foolish would see this as the silver bullet that clears up the problem. Far from it. The actions of the central banks simply buy time to work through the issues. They are still there and that means, for private investors, an enormous degree of uncertainty remains.
I've said before that there are three actions available for investors: buy, sell or sit on the sidelines and do nothing. I still reckon the latter is the safest route.
That doesn't mean get out of the sharemarket completely. If you have a good quality portfolio which has performed well over the years then, of course, stick to it. But there are many saying this is the time to spend up big in the sharemarket; buy straw hats in winter, when the market is down. You've heard it all before. I just think winter is not over yet.
Think this subprime issue through. In the past I've called them "liar loans" - loans issued by dodgy finance companies to borrowers who can't afford them and have lied on their application forms so they can qualify.
The dodgy finance companies promise not to check the application, so millions of Americans have loans they can't afford.
The dodgy finance companies have raked in the fees from the loans and then offset the risk by bundling these loans up into fancy high-yielding investments that they've flogged to other banks and even Australian local councils. What a disgrace that is! A bunch of Aussie councils being too smart by half and risking their ratepayers' surplus for a few extra per cent in interest.
It always worries me when financial whiz kids come up with some fancy new investment scheme which is high-return and supposedly low-risk. It just doesn't stack up and it never will because they always reckon they beat the fundamental risk-reward ratio.

We don't really have that degree of liar loans here in Australia. Our version is the low-doc loan. But, by comparison to the US, low-docs are a sort of fib loan - not quite outright lying but certainly stretching the truth.
In fact, several US banks wanted permission to offer liar loans here a few years ago but their approaches were, thankfully, rejected by the Federal Government.
It is estimated that 20 per cent of America's "liar loan" holders are in default. The scary bit is it seems the default rate is only going to get worse.
Remember, the US is an economy that is driven by the consumer - two-thirds of it is dependent on consumer activity.
All these borrowers going to the wall won't be spending at the shops, banks will start to tighten their lending criteria, new home building will slow rapidly, property values will start to fall, banks will worry about security levels - and around it goes. The US consumer is already geared up to the eyeballs, based on booming investment markets, cheap money and easy credit.
The ripple effect could be quite a worry. Remember the Asian financial crisis of the 1990s? The US could be headed in that direction.
Here in Australia we managed to avoid being dragged into the Asian crisis through a combination of good economic management, savvy exporters who switched markets quickly and the doubling of the first home owners' grant.
The latter initiative was sheer brilliance. Home building is labour-intensive and, when the property is finished, it has to be fitted out and furnished, so retailers are another major beneficiary. In the US the reverse ripple will occur as liar loans dry up and borrowers tighten their belt. Thankfully, our Government has a massive budget surplus if the economy needs stimulating in order to fight off a US economic downturn.
So far in the US it's the banks that have been admitting their exposure to the subprime market. But over the next few months a whole range of other US companies will report adverse effects of the subprime fallout on their profits. Home builders will be hurt by the drying up in demand for new homes. Retailers will see sales fall as fewer new homes are furnished. Profits fall, staff levels are cut, unemployment takes a hit and US consumers start to become pessimistic.
The subprime problem isn't over by a long shot. It's a time to sit tight and see how it all plays out.

[tommy]

Just to add a note that Japan's weak market today was due to Prime Minister Abe's sudden resignation.

Not only do we have the subprime problem in the US adding to global financial market insecurity, now we have a political vacuum in Japan which causes some uncertainty in the future direction of Asia's political stability.

Unlike Koizumi, Abe was an incapable lemon surrounded by scandal-ridden Cabinet ministers and faced nothing but Diet resistance so it's good that he left (though the timing is pretty bad), but the problem is he might be replaced by someone worse than him... hopefully it won't be someone from the LDP who will undermine the already-rocky Japan-China-Korea (both North and South) relations.

http://mdn.mainichi-msn.co.jp/national/news/20070912p2a00m0na017000c.html

Abe's resignation announcement leaves Japan in shock


News that Prime Minister Shinzo Abe told ruling party members he wanted to resign sent shock waves through Japan's political community and groups of supporters on Wednesday.

The announcement came just three days after Abe declared that he was ready to resign if the Diet failed to prolong the nation's refueling mission in the Indian Ocean to support U.S.-led anti-terrorism operations.

In a news conference on Wednesday afternoon, Abe said the political situation had proved difficult in terms of public support.

"Under the current circumstances it is difficult to proceed steadily with policies in terms of public support and trust," he said. "I decided that I had to resolve the situation by drawing a line."

Abe added that he wanted to make a quick decision on his resignation to "avoid confusion." He said he hoped to have the next party president chosen as soon as possible.

Abe's government has been dogged by a series of scandals involving Cabinet ministers, and a humiliating defeat in the July 29 House of Councillors election, while his own support rating has fallen.

Abe had asked opposition Democratic Party of Japan President Ichiro Ozawa to participate in talks on an anti-terrorism law relating to refueling missions, but Ozawa turned down the request saying that Abe didn't have the nation's support.

The news on Abe's plans to resign surprised many government officials.

One Health, Welfare and Labor Ministry official was shocked as he saw a televised message announcing Abe's intentions.

"If the whole Cabinet resigns, then does that mean that the minister will change? The pension issue and other things had just started to move along smoothly. I just want to know if the news is for real," the official said.

Another official from the Ministry of Agriculture, Forestry and Fisheries, learned of Abe's intentions through a television report.

"Is that really true? He's only just given his policy speech," the official said, stunned by the news. "I don't think the series of scandals in the Agriculture ministry was a direct cause. This situation is unusual."

The Defense Ministry's Self Defense Forces (SDF) had planned seminars across Japan starting on Friday calling for support for Japan's refueling missions, and the news on Abe's intention to resign also left SDF officials surprised.

"There was no one like Abe who visited SDF sites and paid as much attention to morale," one official said. Another official from the ministry said, "I was surprised when I heard that (former Defense Minister Yuriko) Koike wouldn't be staying, but I never thought this would happen with Abe." (Mainichi)

[Heavy Metal]

Snigger snigger

And some people may actually have believed the end was nigh leading up to 11 September 2007. Others warned they may lose 20 - 30% of their assets in one day....


Want To See Something Spooky?


Have a look at the following chart:

http://www.fnarena.com/images/provider/dynamic/29-87-07.jpg


Okay, this is one for the tea leaf readers.

http://ad.au.doubleclick.net/ad/fnarena.com/HomePage;tile=2;sz=300x250;ord=833277351? (http://ad.au.doubleclick.net/jump/fnarena.com/HomePage;tile=2;sz=300x250;ord=833277351?)

The crash of '29 occurred just after the full moon preceding the solar eclipse of November 1 that year. The crash of '87 occurred after the lunar eclipse of October 7 that year. Last night we had a lunar eclipse, and on September 11 (another notable date in history) we will have a solar eclipse.

According to one celestial watcher, Peter Eliades, whose observations are currently doing the rounds on the web, research done by Steve Puetz and Chris Carolan back in 1995 (Carolan won an award) with regard to the unusual correlation between full moons and solar eclipses, and stock market crashes, there will be a stock market crash some time between July 24 and August 2. He was writing ahead of time, so he was spot on. Although you couldn't really call the correction a "crash".

However another star-gazer, J. Adams, has interpreted the Puetz/Carolan findings to suggest that the "panic climax" will actually occur going into new moon following last night's full moon which is the September 11 solar eclipse.


For what it's worth.

[hero]

Yes HM, there sure are some highly suggestible people on this thread. Guess its a bit difficult seeing the wood for the trees when you sit at a computer all day and night reading charlatan journalists with an agenda or a desperation for a 'good story'.

[STRAT]

Hi fellas, whats the point of the last couple of posts? Everyone as far as I can see is finding it difficult deciding what will happen tomorrow let a lone in a months time. People here all have the same purpose. To make money without having having to do it the hard way. The whole point of the forum is to tap in to a collective information source and a collective of opinions. Some posts are placed simply to supply others with information the poster has found or to use the forum as a sounding board for a second opinion and may not completely or partly reflect the opinion of the poster so why make it personal? Why shoot the messenger? A collective of opinions that differ from ones own should serve to make one reflect and re validate ones own opinion. Something we should all be doing every day

[Joe King]

Totally agree Strat. Who can tell what will happen after lunch. And if a posters own opinion differs from the opinion of another poster then the other poster is merely a messenger of a different opinion, a collection of which will probably be inconsistent with ones own personal re-invalidated post or opinion, depending on the consistency or quantity of reflection, which is what this forum is all about. Over the years I have personally found this forum to be a great source of information. Some real, some totally incorrect but most just like this post... a load of bollocks.

Spruik, today could be THE day. My buy/sell orders are all in place, we have a 1.30 T booked and just in case the world survives till dusk, the pinot is opened and breathing, and spa pool hot and ready...
Have a great dooms day all, there are fortunes to be made ;) :p
Cheers
JK

[STRAT]

Spruik, today could be THE day. My buy/sell orders are all in place, we have a 1.30 T booked and just in case the world survives till dusk, The world will survive just fine today :D As for tomorrow :confused::confused::confused:

Tricha , Keep those posts coming. They are appreciated here. If I had taken up your Nickle warnings a wee while back my bank balance would be larger.

[spruik]

Tricha, from me also.

Besides, I like doomsday stories as they contribute to new lows so I can shake the last coins out of my wallet.

I am very long now, ready for some upward moves, but I am also very patient and not leveraged.

[Huang Chung]

I'm starting to sense that the fundies that Bloomberg / CNBC interview are generally getting more upbeat in their outlook. Big caveat now seems to be the POO, with a break above the US $80 seen as a negative.

Will be interesting to see how the market reacts if the Fed delivers only a .25 percent cut in rates next week, and not .50.

[slam]

This may play a part today
From the Forex markets, but applies to stocks

"Sydney, September 14: The AUD/USD was getting support from the buoyant mood on Wall Street due to the perception that the worst was over for the credit crunch, when just after the markets closed news hit the wires that UK mortgage lender Northern Rock has gone to the Bank of England for financial support. The news sent the GBP spiraling lower and JPY-funded carry trades were swept lower with it. The news could not have come at a worse time for the FX markets, as it completely changed the upbeat mood that dominated all of the market during the US session. US stocks surged higher, Treasury yields rose and the JPY-funded carry trades were in demand owing to the upbeat view of the credit markets and turn in mood following the Northern Rock news has caught the market out.
"

Cheers
Slam

[soulman]

It seems a 0.25% rate cut is already factor in. I am only worried if there is no rate cut at all. I just have a feeling the respond will be muted if there is a quarter cut but a rally of some sort if there is a half a percentage cut.

Hence, I am trying to stay out until these are known.

[frostyboy]

i think no matter what he does he is in trouble - i think a week after he announces a cut the market will be down from the close of the day before he announces. like if he cuts it .5% there isnt much for the market to look forward to?

disc. im short, with a bit of longs in gold.

[tricha]

I am not conviened we are out of the woods yet, will maintain 50% cash, it could take a few more monthes for all this to finally unravel.:rolleyes:
.................................................. ......

Northern Rock shares plunge 23%

http://newsimg.bbc.co.uk/media/images/44116000/jpg/_44116189_rock_queue203bbc.jpg Some customers are queuing outside Northern Rock branches

Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen 23% after it had to ask the Bank of England for emergency funding.
But experts say it does not mean Northern Rock, which has £113bn in assets, is in danger of going bust.
The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer.
Other bank shares fell, with those in Alliance & Leicester, HBoS and Barclays down by 7%, 5% and 4% respectively.
House builders were also hit, Barratt Developments' shares falling 11%, as the benchmark FTSE 100 index on the London stock market slid 2.3%, or 150 points, to 6,212.

See Northern Rock's share price since January (http://news.bbc.co.uk/2/hi/business/6994328.stm#shares)

Northern Rock said that its profits for 2007 will be hit, but that it remains solvent.
Unlike most banks, which get their money from customers making deposits into savings accounts, Northern Rock is built around its mortgage business.
http://newsimg.bbc.co.uk/shared/img/o.gifNORTHERN ROCK FACTS
Founded in 1965 after merger of Northern Counties Permanent Building Society and Rock Building Society
Became a public company in 1997
Has 18.9% of UK lending
Loans and assets of £113bn
Deposits from customers of £24bn

http://newsimg.bbc.co.uk/nol/shared/img/v3/inline_dashed_line.gif

Northern Rock's share price (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23193/intraday.stm)


It raises most of the money which it provides for mortgages by borrowing from banks and other financial institutions.
Speaking on BBC Radio 4's Today programme, Chancellor Alistair Darling said: "The problem here is there is a lot of money in the system but they are reluctant to lend it to each other at the moment."
Queues at branches
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif It is much more exposed than its rivals to this distaste for mortgage debt http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Robert Peston
BBC Business Editor

http://newsimg.bbc.co.uk/nol/shared/img/v3/inline_dashed_line.gif

Robert Peston's blog (http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/09/rock_or_crock.html)
Q&A: Northern Rock (http://news.bbc.co.uk/2/hi/business/6994160.stm)
Treasury statement on loan (http://news.bbc.co.uk/2/hi/business/6994434.stm)
Reaction to the news (http://news.bbc.co.uk/2/hi/business/6994230.stm)


Mr Darling said that "in order to create a stable banking system, the Bank [of England] steps in and it makes facilities available to the Northern Rock."
"Northern Rock can draw on them when it requires, but it means it can carry on trading, people can use their accounts in the normal way, they carry on making their mortgage payments in the usual way, Northern Rock will be able to carry on its business."
And Angela Knight, chief executive of the British Bankers' Association, also told the programme: "I think that anybody who is waking up this morning who is either a saver with Northern Rock or has got a mortgage... can be absolutely confident that they have got their money with or they have borrowed from a very sound financial institution."
Despite the reassurances, there have been reports that long lines of customers have formed outside several Northern Rock branches around the UK.
One Edinburgh customer, who preferred not to be identified, told the BBC he was a "little bit concerned about the stability of the bank".
The emergency lending facility to Northern Rock was agreed by Mr Darling, on advice from Mervyn King, governor of the Bank of England.
Northern Rock chief executive Adam Applegarth said that it had not yet borrowed any of the "unlimited" funds available.
He urged customers to remain calm, and stressed that it was "business as normal".
However he indicated that it may, in future, be more expensive worldwide for institutions to borrow money, and that in turn could mean that mortgages generally become more expensive.
'Lender of last resort'
The decision for the Bank of England to become the "lender of last resort" is extremely rare - and also comes after consultation with the Financial Services Authority.
It is an unlimited facility, with interest rated at a "penal rate" of more than 1% above Bank base rate.
To obtain the money, the Northern Rock will have to deposit some of its customers' mortgages as collateral, which are regarded by the Bank of England as sound.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif On the assumption that the current conditions remain until the end of 2007, there will clearly be an impact on Northern Rock's 2007 asset growth and, therefore, on profits http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Northern Rock statement

http://newsimg.bbc.co.uk/nol/shared/img/v3/inline_dashed_line.gif

Send us your reaction (http://newsforums.bbc.co.uk/nol/thread.jspa?threadID=7333&edition=1&ttl=20070914085024)


In a statement, Northern Rock said it had "agreed with the Bank of England that it can raise such amounts of liquidity as may be necessary by either borrowing on a secured basis from the Bank of England or entering into repurchase facilities with the Bank of England".
It added: "Such repurchase facilities would include securities that have prime residential mortgage assets as underlying collateral.
"On the assumption that the current conditions remain until the end of 2007, there will clearly be an impact on Northern Rock's 2007 asset growth and, therefore, on profits."
The bank also said that it was considered by the FSA to be "solvent".
An FSA statement said Northern Rock "exceeds its regulatory capital requirement and has a good quality loan book". http://newsimg.bbc.co.uk/media/images/44115000/gif/_44115970_northernrock_416.gif

[Dazza]

In Britain's biggest casualty of a global financial crisis sparked by U.S. mortgage defaults, queues stretched out into the streets as customers waited to withdraw savings from Northern Rock branches, with some reports of fighting in its home town of Newcastle.


i especially like that part :D

TIMMMMMMBER

[spruik]

Let them withdraw. The moneys will be deposited into bank accounts who pass it on to the Bank of England which will pass it back to Northern Rock.

[winner69]

This joker says let Northern Rock collapse ...... hell they pay more for the money they borrow than they lend it out for




Northern Rock: let it go under!
Posted by Richard Lander 09:14 Friday 14 September 2007

Willem Buiter, professor of European Political Economy at the LSE and former external MPC member at the Bank of England says it's something rather more.

He writes on his blog (http://maverecon.blogspot.com/2007/09/northern-rock-paper-tiger.html) :

'The organisation has followed an extremely aggressive and high-risk strategy of expansion and increasing market share, funding itself in the expensive wholesale markets for 75% of its total funding needs, and making mortgage loans at low and ultra-competitive effective rates of interest.

'No matter how efficient you are, or how safe your assets are, if the effective interest rate on your borrowing exceeds that on your investments, you are unlikely to be a long-term viable proposition, no matter how impressive the growth of your turnover.'

He also argues whether the bail out was necessary. So what if NR went bust?

'The bank is not ‘too large to fail’. As the fifth largest mortgage lender in the UK, it is not systemically significant. When all else fails, the ‘threat of contagion’ argument can be invoked to justify bailing out even intrinsically rather small fish, but irrational contagion, that is, contagion not justified by objective balance sheet and off-balance sheet realities, is extremely rare in practice, and could have been addressed directly had it, against the odds, occurred, following the insolvency of some bank.'

The irony, he argues, is that the bailout comes just one day after a paper from Mervyn King, Governor of the Bank of England, outlined that bailouts like this would be made when

'the failure of such a bank would lead to serious economic damage, including to the customers of the bank.'

Well bank depositors would have been damaged, but only those who had more than £33,000 with the bank (under the terms of the Financial Services Compensation Scheme). But that limit is there precisely to stop the likes of Huge Rates Bank offering 20% interest on deposits - it adds moral hazard.

Let it go under, he argues.

'If most of its mortgage assets are good (albeit unprofitable, given Northern Rock’s funding costs), they will find willing buyers among the remaining viable mortgage lenders. Northern Rock’s shareholders would, of course, lose everything and the remaining creditors (including depositors with balances in excess of the deposit insurance limit) would have to wait to see how much the realisation of the assets generates. Top management would lose its jobs. All this is as it should be. What would happen to staff below the strategic decision-making levels would depend on which parts of the business remain viable after the financial restructuring following the insolvency.

Instead the bank has wimped out:

'I can only conclude that the Bank of England is a paper tiger. It talks the ‘no bail out’ talk, but it does not walk the talk. It does not matter whether the decision to bail out Northern Rock was initiated and/or actively supported by the Bank, or whether the Bank was bullied into it by the Treasury and the FSA. Moral hazard has received a boost in the UK banking sector and in the UK financial system as a whole. We will all pay the price in the years to come, when the next wave of reckless lending washes over us.

[tricha]

Rate cut, due next week. When inflation is going up, hmm.
How will that fix things:confused:. Who will lend them the money :confused:
Me thinks the last bastion, the DOW, the last ATM in their pack of cards is on shakey ground.
I wonder what the great master Warren Buffett's game plan is right now ????????????????????

U.S. Economy: Sales, Production Slowed in August (Update2)

By Joe Richter and Bob Willis
http://www.bloomberg.com/apps/data?pid=avimage&iid=iUxSZxp9LTJ0
http://images.bloomberg.com/r06/news/enlarge_details.gif (http://www.bloomberg.com/apps/news?pid=photos&sid=aUCLj.ZveBPA)

Sept. 14 (Bloomberg) -- The U.S. housing slump and credit- market rout are reverberating through the economy, according to two reports that strengthen the case for an interest-rate cut next week.
The figures, showing less-than-forecast increases in retail sales and industrial production, add to the sense of urgency surrounding the Sept. 18 meeting of Federal Reserve policy makers, analysts said. Three Fed officials said this week that risks to the six-year expansion are growing, and economists expect the benchmark rate will be lowered by at least a quarter point.
``Today's numbers confirm that the economy is weakening,'' said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``I don't think there is any debate about whether the Fed will cut next week. The only issue is how much.''
The 0.3 percent increase in sales during August followed a revised 0.5 percent gain in July, the Commerce Department said today in Washington. Purchases excluding automobiles unexpectedly fell 0.4 percent. Production gained 0.2 percent, with factory output declining for the first time since February.
While a report from the University of Michigan and Reuters Group Plc showed consumer confidence increased, their sentiment index remained near the lowest level in a year. Treasury notes rallied after the retail sales and production reports, before losing the gains.
Behravesh, who accurately predicted the industrial production figure, forecasts the central bank will reduce its benchmark rate by a quarter point next week to 5 percent. Two reductions will follow by year-end, he said.
Spending Picture
Retail sales, which account for almost half of all consumer spending, were projected to rise 0.5 percent after an originally reported 0.3 percent increase in July, according to the median estimate in a Bloomberg News survey of economists.
``The consumer is pulling back a bit,'' said Peter Kretzmer, a senior economist at Banc of America Securities LLC in New York. ``Maybe some of the issues in financial markets and housing are starting to limit the upside'' in spending.
A separate report from the Labor Department showed the price of goods imported into the U.S. unexpectedly fell 0.3 percent in August as oil and natural gas costs dropped. The decline, the first since January, provides a check on inflation that may prove to be temporary.
Building Materials, Clothes
Declines in purchases at building material merchants, clothing stores and service stations restrained total sales last month, the report from Commerce showed. Sales at furniture an electronics stores improved last month.
Receipts at automobile dealerships and parts stores rose 2.8 percent last month, the most since July 2006. Sales at service stations dropped 2.4 percent, the most since October, reflecting a decline in gasoline prices. Excluding autos and gasoline, sales dropped 0.1 percent, the first decline since April.
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales rose 0.1 percent, the smallest increase since April, after jumping 0.8 percent the month before. The government uses data from other sources to calculate the contribution from the three categories excluded.
The yield on the 10-year Treasury note fell to as low as 4.40 percent today after the sales and production report. The yield was 4.46 percent at 4:47 p.m. in New York, little changed from late yesterday. The Dow Jones Industrial Average rose 17.6 points, or .13 percent, to 13442.52.
Jobs, Wages
Even as Americans lose confidence in the economy, gains in wages have so far prevented a collapse in spending, which makes up more than two-thirds of the economy. Hourly earnings were up 3.9 percent on average in August from last year, according to figures from the Labor Department.
That may help take some of the sting out of a drop in hiring. Payrolls fell by 4,000 in August, the first decline in four years.
``Most of the underlying fundamentals of the U.S. economy are pretty good,'' Rick Wagoner, General Motors Corp.'s chief executive officer, said in an interview. Detroit-based GM is the largest U.S. automaker.
Early evidence suggests spending isn't deteriorating further this month. Retail sales at stores open at least a year during the seven days ended Sept. 8 rose the most in five weeks as consumers bought back-to-school clothing and supplies, according to the International Council of Shopping Centers and UBS Securities LLC. Consumers are spending at a ``moderate pace,'' the trade group said Sept. 11.
Housing Woes
Falling home values and the decline in payrolls signal the housing recession may wear down consumers in coming months, economist said.
The Fed will probably cut its benchmark target rate by a quarter percentage point to 5.00 when they meet Sept. 18, based on the median forecast of economists surveyed by Bloomberg. Some businesses are calling for a bigger reduction to revive demand.
``A significant rate cut of 50 points would be helpful,'' said GM's Wagoner. ``A rate cut would certainly do a lot to shore up confidence'' and ``help avert a potential continued downslide in the U.S. economy.''
Consumer spending will probably grow at a 2.25 percent average annual pace in the final six months of the year, compared with a 2.55 percent rate from January through June, based on the median in a Bloomberg survey of economists Aug. 30 to Sept. 7. Quarterly gains averaged 3.7 percent in the last decade.
Audi AG, Volkswagen AG's luxury brand, said U.S. sales will decline in the fourth quarter, in part because competitors will offer more incentives to spur sales.
``We need to batten down the hatches, so to speak,'' Johan de Nysschen, Audi's U.S. chief, said in a Sept. 12 interview. ``We think it's going to be stormy for a while.''
To contact the reporter on this story: Joe Richter in Washington jrichter1@bloomberg.net (jrichter1@bloomberg.net)
Last Updated: September 14, 2007 16:53 EDT

[winner69]

....The Fed will probably cut its benchmark target rate by a quarter percentage point to 5.00 when they meet Sept. 18, based on the median forecast of economists surveyed by Bloomberg. Some businesses are calling for a bigger reduction to revive demand.
``A significant rate cut of 50 points would be helpful,'' said GM's Wagoner. ``A rate cut would certainly do a lot to shore up confidence'' and ``help avert a potential continued downslide in the U.S. economy.''


Clever joker that Wagner .... he realises cuts only shore up confidence

Rate cuts won't save the US share markets though ..... remember last time the US economy was stuffed ..... 14 rate cuts and the S&P went down nearly 50%

Tricha .... you probably are on to it

[winner69]

This was written a year ago by Taleb in The Black Swan (taleb is always an interesting read)

"A similar effect is taking place in economic life. I spoke about globalization in Chapter 3; it is here, but it is not all for the good: it creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial institutions have been merging into a smaller number of very large banks. Almost all banks are now interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks (often Gaussianized [bell curve] in their risk measurement)-when one falls, they all fall.

The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur...I shiver at the thought. I rephrase here: we will have fewer but more severe crises. The rarer the event, the less we know about its odds. It means that we know less and less about the possibility of a crisis." (Nicholas Nassim Taleb, The Black Swan, p. 225, probably and presciently written last year.)


Taken from an article by Mauldin

http://www.investorsinsight.com/thoughts.aspx

[Lizard]

Winner-the-pessimist :p, that reminds me just too much of all the warnings adults used to pass around when I was a kid about how we were all going to blow ourselves up with global nuclear warfare this year, next year, sometime... soon...

We are not total idiots. We will step back from pointless disaster. I think.

[winner69]

Lizard --- not really a pessimist .... more a realistic ... over the next few years overall average returns (like index huggers) will be pretty poor .... maybe slightly +ve but could be =ve ..... and in times off poor sentiment you manage downsides risks eh

Even if there are a few casualties along the way there will still be some winners ..... stock selection is even more important now.

[shane_m]

In 2010, machines will control the world like in the Terminator Movie...

Index going under 6000 points unlikely now...bring on sept 18 fed meeting..

[Mick100]

I'v read one of taleb's books - "fooled by randomness"
Was it him that claimed Warren Buffet's success could all attributed to chance (good luck). I wouldn't dissmiss everything he says but I definately think the guy is overrated - particuarly by his self.

[tommy]

I'v read one of taleb's books - "fooled by randomness"
Was it him that claimed Warren Buffet's success could all attributed to chance (good luck). I wouldn't dissmiss everything he says but I definately think the guy is overrated - particuarly by his self.

I don't think Warren Buffet's performance can be attributed purely to "good luck", I think a lot of his decisions are based on analysis, observations and experience and when he gets things right, it looks like he was "lucky" in hindsight. Share investing is nothing like buying a lotto ticket (which IS about probability = luck).

I respect Buffet highly and his decision to donate all that wealth he created over his lifetime. Maximum respect to the man!

[tricha]

Winner - "This was written a year ago by Taleb in The Black Swan (taleb is always an interesting read)

"A similar effect is taking place in economic life. I spoke about globalization in Chapter 3; it is here, but it is not all for the good: it creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial institutions have been merging into a smaller number of very large banks. Almost all banks are now interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks (often Gaussianized in their risk measurement)-when one falls, they all fall."

Well Winner the picture below must raise a few hairs on the back of a few people, I was not partly to the great depression, but my dad was and from what I read about it the picture below brings back distant memories.
Lets hope for all our sakes this is not a prelude to whats around the corner :confused:

Northern Rock shares plunge 23%

http://newsimg.bbc.co.uk/media/images/44116000/jpg/_44116189_rock_queue203bbc.jpg [B]Some customers are queuing outside Northern Rock branches

Email this article
Printer friendly page (http://onlinejournal.com/artman/publish/printer_2396.shtml)
Are the banks in trouble?
http://onlinejournal.com/artman/publish/article_2396.shtml

By Mike Whitney
Online Journal Contributing Writer

Sep 10, 2007, 01:25

“The new capitalist gods must love the poor -- they are making so many more of them.” Bill Bonner, “The Daily Reckoning”


“The hope of every central bank is that the real problem can be kept from public view. The truth is that the public -- even professionals on Wall Street -- have no clue what the real problem is. They know it has something to do with derivatives, but none of them realize that it’s more than a $20 trillion mountain of unfunded, unregulated paper that has just been discovered to not have a market and, therefore, no real value . . . When the dollar realizes the seriousness of the situation -- be that now or sometime soon -- the bottom will drop out.” --Jim Sinclair, Investment analyst.

Full articule.
http://onlinejournal.com/artman/publish/article_2396.shtml

P.S Yes and I know it's from the gold bug division, but the reality of it is after crying wolf for the last 10 years, recessions and depressions do happen, so they are bound to get it right one day.

[Bilo]

well put Bilo

I think you are spot on there

Relax guys, the planned crash for tomorrow (tuesday) has been cancelled.

A Bearish Bilo

Flash back to last week on this thread. I had written much of this note but Share Trader cut me off, timed out and I lost my submission before I posted it – don’t you hate that!

It (the crash) was next Tuesday USA time after the Fed Meeting
(now Wednesday 19th September our Time).

I cashed up some more last week on the (for me) distinctly uncommon feeling of bothersome bearishness, mainly at the thought of what the crowd trying to bully Bernake would do when the Fed comes up with a “steady as she goes” interest rate call on Wednesday.

It isn’t easy being out of the market when it appears to be going gangbusters on the expectation of a 0.25% cut and the promise of a 0.5% cut - unless you are Phaedrus…but it does provide time for (morbid) reflection.

What restarted me down this current bearish track was Neville Bennett’s “Market falls parallel previous collapses” article in the NBR on Friday a week ago. It came after a shot creased my brow in August and enabled my bearish sentiment. A UK comment at the time “even dead cats bounce if dropped from a great enough height” has rung in my ears and the bounces have put a hole in my pocket a couple of times since.

Bennet struck a note with me when he identified the role of leverage in previous sharemarket collapses.

The sub-prime problem is only a small part of this situation. Hedge funds are another part. It is also clear to me that CFDs have changed the environment around sharemarket volatility. I have identified to my own satisfaction that CFD software being used accentuates market movement, as does leverage, as could over 30pc of the ASX trading volumes being via CFDs.

Bennett reiterated in this weeks NBR in a continuation of last weeks article “ there are too many examples where strongly leveraged programmes are disastrous when they go into reverse….when crises turn to panic.” CFDs are primed to do this.

Some may say the “sub-prime problem” has been isolated and that Australia appears to have escaped, but for the time being, as I sit and watch my favoured company shares go up, I am comforted that I have taken some steps to reduce my exposure to margin calls or an unfriendly bank manager. “The DOW has fallen in every September – October period in a decade, except for 2006.” – Bennett signing off Sept 7 2007 - is still far from comforting!

Or will the market reaction take until Friday 21st to reverberate around the world?


P.S.
I don’t think the US would mind a bit of recession as long as the rest of the world shared it. Clearly the US cannot afford the Iraq war on their own. Is a USA engineered worldwide crash a way of squaring the ledger/sharing the cost before pulling out of Iraq? A crash would confirm historical findings and not look engineered - and Bill Bush doesn’t care – he is packing his bags anyway having completed his father’s unfinished business in Iraq.

[spruik]

Leading up to other crashes in history, were they anticipated like the (re-instated) crash coming up now?

I would have thought crashes take people by surprise, even traders - with the exception of a few.

Are we being those "few" elites who are priviliged to be informed beforehand... :confused:

[shane_m]

fed meeting coming up....

I have moved all money from ASB to commonwealth bank in case NZ dollar crashes too fast...

[shane_m]

I am taking 1/2 day off from work on 19th, so I can spend some time in front of the putter to buy the bargains...

[Bilo]

Leading up to other crashes in history, were they anticipated like the (re-instated) crash coming up now?

I would have thought crashes take people by surprise, even traders - with the exception of a few.

Are we being those "few" elites who are priviliged to be informed beforehand... :confused:

Bennett's article on previous collapses: "there were uneasy movements but then there was a compelling rush to get out"

but later: "the fall is not necessarily immediate" "at present equity markets are in denial"...."There is a compelling vested interest in euphoria. The public is fed good news. Caution is shunned."

[Bilo]

KKR, TPG Gain Investors' Confidence Amid Credit Woes

By Jason Kelly
Sept. 14 (Bloomberg) -- Stock investors are becoming increasingly optimistic that Kohlberg Kravis Roberts & Co. and TPG Inc. will clear the $320 billion logjam in the leveraged- buyout market.

Isn't this where the fiasco started and then we got side-tracked into sub-prime? Who has the most to gain from an interest rate cut? Maybe inflation is the real problem and this flood of money will only add to it. See also:

The Fed's unkindest cut

Wall St. is certain the Fed will cut rates to ease the pain of the credit crunch. But how will investors react if Bernanke & Co. cut by just a quarter of a point?

By Paul R. La Monica (paul.lamonica@turner.com), CNNMoney.com editor at large

[spruik]

In summary...

Fed cuts rate by .50%: Rally
Fed cuts rate by .25%: No rally
Fed does not cut rate: Crash
Fed increases rate : Disaster


:eek:

But if a major institution would go to the wall, I surely think a crash will follow.

[winner69]

......Who has the most to gain from an interest rate cut?


When you see the likes of Donald Trump on TV explaining (OK pleading for) why a a cut of at least 1% is needed it does make you think who has the most to gain .... or maybe lose

Remember this shane ..... 14 consecutive rate cuts couldn't save the S&P falling by 50% not that long ago

But hsitory never repeats itself so no worries eh .... good buying on Wednesday

[tricha]

Bennett's article on previous collapses: "there were uneasy movements but then there was a compelling rush to get out"

but later: "the fall is not necessarily immediate" "at present equity markets are in denial"...."There is a compelling vested interest in euphoria. The public is fed good news. Caution is shunned."

Thats the one Bilo, most people stay in denial and have their head buried deeply in the sands. I can imagine the Yanks are totally in denial with all their fanfare and bull. A society run on debt, debt and more debt and their property ATM's now in reverse.

It's called pass the parcel and then the music stops .............................
They say no one rings a bell when the market crashes, but I can clearly hear a distinct ring in my ear, enough to maintain 50 % cash and be very wary :eek:



Greenspan in warning on inflation

http://newsimg.bbc.co.uk/media/images/44120000/jpg/_44120252_greenspanap203jpg.jpg Mr Greenspan has been outspoken since leaving the Fed

Alan Greenspan has said the turmoil in credit markets was an "accident waiting to happen", and has also warned of much higher inflation in future years.
The former Federal Reserve boss said it was too early to tell whether the current financial crisis would be more damaging than that seen in 1998.
"This has not fully played out," he told the Daily Telegraph.
He also suggested UK inflation would rise above 3% and that the housing boom would soon come to an end.
Inflationary pressures
Bank governor Mervyn King was forced to write a letter to the Treasury earlier this year explaining why inflation had risen above 3%, well above the government's 2% target.
Mr Greenspan said this would become a more regular occurrence as the Bank had to deal with the prospect of higher inflation and higher interest rates.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif There's going to be more correspondence between the Chancellor and Mervyn King http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif


Alan Greenspan


"There's going to be more correspondence between the Chancellor and Mervyn King," he said. "Markets are going to start turning round and inflationary pressures are going to start to build."
On house prices, Mr Greenspan said the UK market was vulnerable because of the large number of variable-rate mortgage holders.
"The housing thing has not turned yet and the consumer households are more subject to interest rate changes than in the US.
"It is going to turn. It has got to turn because it is not projectable."
Pressure is building on Mr Greenspan's successor, Ben Bernanke, ahead of the Fed's crucial decision on interest rates on Tuesday.
'Weak link'
Most experts believe the Fed will cut rates in an effort to restore confidence to the financial markets as the scale of the current crisis in the sub-prime mortgage market unfolds.
"Sub-prime in the US was the weak link in our system," Mr Greenspan added.
"There was an accident waiting to happen. If it wasn't sub-prime, it would have been something else." Mr Greenspan reiterated previous remarks that a recession in the US was a possibility while adding that the economy was currently "holding up". "It is possible the stability in the underlying economy in the US and the world at large is such that ultimately this financial crisis defuses like a hurricane which hits land and all of a sudden runs into the mountains."

[hero]

but later: "the fall is not necessarily immediate" "at present equity markets are in denial"...."There is a compelling vested interest in euphoria. The public is fed good news. Caution is shunned."[/B]

There is also, of course, a "compelling vested interest" in doom and gloom. My guess is that the reality is somewhere between the two extremes. Volatility will continue...forever...in some shape or form in the souls and psyches of individuals, in families, groups, nations. ecosystems and economies. No reason in my view to stand on the sidelines of life.

Here's a couple of pertinent quotes:

"No pessimist ever discovered the secret of the stars, or sailed to an uncharted land, or opened a new doorway for the human spirit." (Helen Keller)

"Imagination and fiction make up more than three quarters of our real life" (Simone Weil)

[JackSprat]

Brilliant expose' Hero. Something must be afoot for people to begin waxing this lyrical. ;)

[spruik]

I also agree that "markets don't like uncertainty". Whatever the outcome of the upcoming fed's meeting, afterwards there will be certainty in that respect (for a while anyway), for better or for worse.

I think we will wake up tomorrow and there is no crash. Perhaps today is a better day to go long in our favourate stocks rather than wait until tomorrow.

Hero's post also reminds me of some in my family who say that we should build our new house without stairs as we might not be able to use them in our old age (which is decades away...). Another voice says we should live on a smaller block in town for when the "petrol runs out".

My point is, if you listen and act on all the voices we hear around us, we will be stopped from living life and enjoying what nature has to offer.

Meanwhile, I am proceeding with my dream .

[shane_m]

I was talking with few of my mates last night, and one said there is a ASX safety rule saying, "if the index drops more than 10% the trading will stop for the day". I tried to look it up on ASX home page without much success. Is there a such a rule?

[tommy]

I was talking with few of my mates last night, and one said there is a ASX safety rule saying, "if the index drops more than 10% the trading will stop for the day". I tried to look it up on ASX home page without much success. Is there a such a rule?

I know some overseas markets have such circuit breakers but I am not sure about ASX.

In any case, Bernanke's FED decision on how much interest rate will be cut is the key... I have a feeling he might only cut 0.25% and if stock market really crashes, then perhaps another 0.25%. Giving the market 0.5% cut in one go might instill a false sense of security to the market (which really needs to cull subprime mortgage lenders who deserve to go bankrupt).

If 0.5% cut is given by FED, it implies that the U.S. economy is in a worsening state because the FED is more interested in the state of the real economy than the stock (or more broadly financial) market... in a way, the FED is damned if is does, damned if it doesn't.

[soulman]

It seems our market has more jitters than the US market and this is indeed a US market decision. We are already falling for a fall in the US tonight but this is just in hindsight. I supposed we will get battered again if the US falls further. That's life.

In a market like this, cash is definitely king and there is uncertainty aplentiful.

If the fed cut interest rate, is this the start of a cut cycle or just one-off. I supposed the accompanying statement will provide some clue. If the fed don't cut interest rate (very bad news), will they cut next month. And if they do cut by 0.5%, they can signal 2 things - the economy are in worst shape than first thought or the fed are trying to resolve this issue quickly and swiftly.

[Kropotkin]

I found this little snippet - link to the full essay in the Northern Rock thread.

Speculative but fascinating....

"The troubles facing the dollar are as grave as those in housing. The stock market and the teetering hedge funds are counting on an interest rate cut, but they’ve ignored the effects it will have on the greenback. If Bernanke lowers rates, as everyone expects, the bottom could drop out of the dollar. We’re already seeing gold soar to new highs (above $700 per Ounce) That’s an indication of dollar-weakness and a potential sell-off of US Treasuries. If Bernanke lowers rates, the greenback will nosedive.
Author Gary Dorsch explains the potential hazards in his recent article, “Hopes for an Easier Fed Policy Boost the Euro and Copper”:

“Interest rate differentials have played a key role in determining exchange rates. Since the ECB (European Central Bank) began its rate hike campaign in December 2005, the US dollar’s interest rate advantage over the Euro has narrowed from 240 basis points to as low as 70 basis points today. Thus, the Fed can only afford a small rate cut to bail out Wall Street bankers who hold toxic sub-prime debt and avoid tipping the dollar into a free-fall. But that might not be enough to prevent a housing led recession in the months ahead.”

After years of abuse under Greenspan--an $800 billion current account deficit, a $9 billion per month war, and a 13 per cent yearly increase in the money supply---the poor dollar has run out of wiggle-room. If the Fed slashes rates, the mighty greenback will be a dead duck."

[hero]

Oh dear...the 'crash' has been cancelled again. The doom and gloomers will, I guess, only see it as a postponement though. They'll have plenty more walls of worry up their collective sleaves.

[tommy]

FED slashes rate by 0.5 percent points, here comes a short term rally in da financial market and a possible long-term stagnation in da real economy :-P

Real economy has been affected to the extent that it requires such a rate cut despite the risk of inflation (WTF, are you kidding? look at oil price!) and at the sacrifice of da US dollar.

mmm, very worried now, is it time to scrap the greenback and switch to a new currency? Would be a great way to liquidate your debt Uncle Sam.

I had assumed Bernanke is not the same as Greenspan, I expected him to cut the rate by 25 points and then 25 points if the financial market tanked.

It's time for charting now, now that the fundamentals of the US economy are anyone's guess!

[spruik]

Good Morning all! :)

Sun shines, rain has gone and thunderclouds cleared.

[Huang Chung]

Today might be the day to go shopping for a good little gold play.......:)

[trendy]

FED just given approval to inflate its way out of the mess. Remember sub-prime Yanks cannot refinance at any interest rate.

[shane_m]

I have canceled my leave and back at work due to crash been canceled by the feds. It is unlikely any of my my stop loss triggers will get a hit today.

[soulman]

Yep, no buying opportunity today. Heck, I shouldn't have sold SGB yesterday. Today is the day to sell.

I was going to buy plenty yesterday but held off, due to buying yesterday was gambling and I was not going to gamble like this. I only did one gamble and that was Macquarie Bank. Even the few selective stocks like Caltex (drop aplenty after oil prices went up), Zinifex and Perpetual was not being bought as they were pummelled by the market. In hindsight, they were at bargain basement price but again in hindsight we don't really know.

[OneUp]

What terrible jobs numbers.

Fed may have to cut rates 0.5%, rather than 0.25%.

No one knew eh Soulman? You heard it here first.

[Kropotkin]

Post rate cut analysis from Mike Whitney (synopsis of the juicy bits!)

"...The investment banks may be waiting until Tuesday hoping that Fed-chief Ken Bernanke announces a cut to the Fed’s fund rate that could send the stock market roaring back into positive territory.
But interest rate cuts do not address the underlying problems of insolvency among homeowners, mortgage lenders, hedge funds and (potentially) banks. As market-analyst John R. Ing said, “A cut in rates will not solve the problem. This crisis was caused by excess liquidity and a deterioration of credit standards….A cut in the Fed Fund rate is simply heroin for credit junkies....”

"...Consider this: In 2000, when Bush took office, gold was $273 per ounce, oil was $22 per barrel and the euro was worth $.87 per dollar. Currently, gold is over $700 per ounce, oil is over $80 per barrel, and the euro is nearly $1.40 per dollar. If Bernanke cuts rates, we’re likely to see oil at $125 per barrel by next spring.

Inflation is soaring. The government statistics are thoroughly bogus. Gold, oil and the euro don’t lie. According to economist Martin Feldstein, “The falling dollar and rising food prices caused market-based consumer prices to rise by 4.6 per cent in the most recent quarter.” (WSJ)

That’s 18.4 per cent a year, and yet Bernanke is still considering cutting interest rates and further fueling inflation."

"....Economist and author Henry Liu demonstrates this in his article “Liquidity Boom and the Looming Crisis”:

"The conventional value paradigm is unable to explain why the market capitalization of all US stocks grew from $5.3 trillion at the end of 1994 to $17.7 trillion at the end of 1999 to $35 trillion at the end of 2006, generating a geometric increase in price earnings ratios and the like. Liquidity analysis provides a ready answer".(Asia Times)

Market capitalization zoomed from $5.3 trillion to $35 trillion in 12 years? Why?Was it due to growth in market-share, business expansion or productivity?

No. It was because there were more dollars chasing the same number of securities; hence, inflation.

If that is the case, then we can expect the stock market to fall sharply before it reaches a sustainable level. As Liu says, “It is not possible to preserve the abnormal market prices of assets driven up by a liquidity boom if normal liquidity is to be restored.” Eventually, stock prices will return to a normal range...."

"...Rate cuts won’t help to rekindle the spending spree in the housing market either. That charade is over. The banks have already tightened lending standards and inventory is larger than anytime since they began keeping records. The slowdown in housing is irreversible as is the steady decline in real estate prices. Trillions in market capitalization will be wiped out. Home equity is already shrinking as is consumer spending connected to home-equity withdrawals.

The bubble has popped regardless of what Bernanke does. The same is true in the clogged Commercial Paper market where hundreds of billions of dollars in short-term debt is due to expire in the next few weeks. The banks and corporate borrowers are expected to struggle to refinance their debts but, of course, much of the debt will not roll over. There will be substantial losses and, very likely, more defaults...."

[OneUp]

"That’s 18.4 per cent a year, and yet Bernanke is still considering cutting interest rates and further fueling inflation.""

Considering?

He just cut them.

By more than expected to jolt the markets out of the credit crunch/excessive risk aversion mood. By making one big rate cut now he hopes he won't have to make many more down the track.

[OneUp]

Post rate cut analysis from Mike Whitney (synopsis of the juicy bits!)

Market capitalization zoomed from $5.3 trillion to $35 trillion in 12 years? Why?Was it due to growth in market-share, business expansion or productivity?

No. It was because there were more dollars chasing the same number of securities; hence, inflation.

If that is the case, then we can expect the stock market to fall sharply before it reaches a sustainable level. As Liu says, “It is not possible to preserve the abnormal market prices of assets driven up by a liquidity boom if normal liquidity is to be restored.” Eventually, stock prices will return to a normal range...."



Some real data.

http://www.ny.frb.org/research/directors_charts/ipage20.pdf

S&P PE is 17. That's around the 25 and 50 year average.

[Kropotkin]

Oneup, I'm not sure I understand :confused:

Are you saying that double digit inflation and vastly bloated liquidity without underlying fundamental growth in production is a good thing?

Is this cyclical and therefore to be anticipated?

Or have I (quite possibly) got the wrong end of your stick?

[OneUp]

The point is that the P/E of the S&P 500 is the lowest it's been for a decade, and running at long term averages. This hard data is not consistent with Whitney's argument that increases in liquidity have resulted in artificially bloated stock prices. It's also inconsistent with Liu's notion that stock prices are going to fall sharply because they're outside a "normal range".

These pundits get paid to be alarmist. It pays to be skeptical.

[Kropotkin]

OK I see what you mean.

But can't a low market average P/E also be an indictor of overall economic stagnation? Either way, I would never take P/E on it's own as a macroeconomic indicator. It's really just an expression of market confidence isn't it?

The price may still be artificially high due to availability of cheap credit and hence the perception of bargain buying (not based on P/E as much as on cheap interest to borrow debt).

Going by the charts I have agree with your sentiment regarding inconsistency re stock prices, though I think Liu was getting more at the 5tr to 35tr capitalisation increase; more particularly around the banking sector and their ability to repackage debt as equity right across the market.

I agree with you that some pundits may be paid to be alarmist. But equally, Bernanke , the WSJ and other are paid to sell the good news.
I appreciate your thoughts on this though - a stimulating discussion :)

[winner69]

PE is Price / Earnings and a PE of 17.33 as on charts oneup linked is that far above the long term average .... depending how far back you do the average.

Consider the earnings of the total S&P 500. Financials currently make up about 25% of the S&P 500 market capitalization, but close to 40% of the earnings.

Wages as a fraction of U.S. corporate profits have rarely been lower. Irresponsible lending and suppressed labor costs have been strong contributors to S&P 500 earnings in recent years thanks to a massive leveraging cycle – financial profits exploded, while wage demands were low because it was easy to spend out of home equity withdrawals and strong real-estate gains.

But these are not permanent factors are they.

Result is that profit margins of the S&P500 companies average about 11% - the highest in history. Long term profit margins have generally between 6% and 7% .... and here we are today at 11%

So if we believe that todays PE of 17 is OK then we are implicity saying that we believe that record profit margins will remain at todays level indefinitely. Isn't it dangerous to value stocks as if recent profit margins will endure in perpetuity.


If we normalised profit margins one could say that the S&P PE is more like 24


One argument while fundamentally I believe that overall returns from US markets will be pretty pathetic over the next 5-7 years. Not saying there will be a 'crash' to adjust but more likely the US markets will go nowhere for the next 5 -7 years - just as it has for the last 6 years or so .... maybe other world markets will be much the same

So again it comes down to individual stocks (winners we hope) and managing any price downsides that could result from market conditions

[soulman]

You're right Oneup, did you load up yesterday when the fear was evident?

I think the rise in the US was overdone and the US market is approaching all time high again. The same with the Australian market. How can the US approching highs when the problem of housing, employment and credit problem is still prominent. I will continue to sit on the sideline but any stock that reach my target price will get bought this time round. The high aussie dollar and lower metal prices should actually be a double hit for miners but BHP, RIO and co have no problem surging today.

[_Michael]

Good discussion. I am with Kropotkin and Winner though, based on the crude logic that;

- Cheap credit led to irresponsible lending driving assets beyond sound fundamental valuations.

- Those greedily feasting on cheap credit frenzy found themselves in trouble when rose above 5% (still lows Vs historical)

- So the bank is quick to throw those, who bit off my than they could chew, a lifeline in the form of a rate cut- effectively signaling to the market that it is okay to be extremely irresponsible with borrowed money.

People have been taking bigger ad bigger risks with cheap credit, and landing in trouble, yet the fed sends the signal that its fine to be irresponsible, so it will continue until a real, much more serious credit crunch occurs, and in direct contrast to OneUp's (eternally bullish) theory, that this move will save more rate cuts later - my personal view is that this will lead to higher rates in future - and they will need to stay high to be even mildly effective....

[OneUp]

I don't think we're heading back to the 1930s.

So yeah I guess I am optimistic Michael.

[_Michael]

I hope we're not heading back to the 1930's! I probably sound very negative, but actually am still buying stocks so neither am I betting that we are heading quite that way, never the less to me the rate-cut seemed like such a political move, and not a very sensible one in terms of longterm equilibrium for the US. On the other hand who am I to comment, while it is easy to throw my ten cents from the side line! ;) I am sure the Fed have better view of the big picture than me.

[Huang Chung]

I think for investors though, its a case of 'go with the flow'. Yes, the US might be setting itself up for a fall down the track, but the rate cut was the tonic the market needed right now, so we might as well take advantage of the change in sentiment.

[hero]

Of course the US will fall down the track...and there will be rises...and falls...and rises...ad infinitum. This has always been the case and, into the forseeable future, is likely to continue. Picking the right stocks, sectors (and economies) is important but so also is being in for the long term. Getting in and out through predicting the peaks and troughs - the key theme of this thread - is a mug's game. There appear to be many on this thread, for example, who are missing the current rises. Miss too many of those and your long term gains will be cr@p.

[spruik]

Of course the US will fall down the track...and there will be rises...and falls...and rises...ad infinitum. This has always been the case and, into the forseeable future, is likely to continue. Picking the right stocks, sectors (and economies) is important but so also is being in for the long term. Getting in and out through predicting the peaks and troughs - the key theme of this thread - is a mug's game. There appear to be many on this thread, for example, who are missing the current rises. Miss too many of those and your long term gains will be cr@p.

Hero, there are those who are long term holders AND traders, like myself. I have long term stocks as primary income that I never sell - just add to from time to time. In a different account I have stocks that I trade that give me some extra spice in life.

Don't see myself as a mug...:)

[The Great Gold Guru]

In terms of P&L for 2007 I am sitting at my highest level for the year as at last night. ( about 22% return on capital invested ). I have taken $200k off the table in the last 2 weeks as the NZD has fallen and most of my Aussie stocks have risen sharply making for very nice gains. Best move was switching out of Uranium stocks when the U price stopped going up ... and buying gold stocks when no one wanted them !!

Still heavily invested in resource stocks ( 75% of portfolio ) with no exposure to banks or finance stocks.

5 Biggest holdings

Oxiana
Dominion Mining
Murchison Metals
Woodside Petroleum
Lihir Gold

[soulman]

True, waiting on the sideline waiting for the worst to happen might cause you excellent gain.

What you must do is to buy the stock, not the index. If a stock drop to a level you see as good value, you should buy it. Just like Caltex drop on Tuesday when oil prices were soaring. See where they are now.

For people that say this rate cut is bad, that's not entirely true. The re-pricing of risk has gone up and banks and mortgage lender have learned their lessons. Hence, if you are a mug trying to borrow $2 million to buy 15 houses and with no job history and bad credit records, all the bank should say, no thanks. Unlike before they'll say, sure thing. The risk management has gone up and Peter Costello and the US government has already said, we will not bail out speculators.

[fihr]

This link is to a Four Corners report on the sub-prime crisis and its effects in the US. It also has dismal predictions for property values in the US in the long term.

http://www.abc.net.au/4corners/content/2007/s2032799.htm

Use the link on the top right of the page to view the video.

For those in NZ, I don't know if you see Four Corners - it is a highly respected television documentary that has a history of probing issues in depth and raising uncomfortable questions.

[Kropotkin]

The re-pricing of risk has gone up and banks and mortgage lender have learned their lessons.

...till the next time banks get greedy :D


The risk management has gone up and Peter Costello and the US government has already said, we will not bail out speculators.

...unless the speculator happens to be CWB or Chase Manhattan et al.
The Wall St. whales and their counterparts world wide will always be subsidized with taxpayer bailouts for their poor investment decisions - thats the way it works.

Don't forget that you can always tell when a politician is lying - his mouth is moving!

[Huang Chung]

Latest US jobless claim figures just released actually showed a decrease for the week. The report I saw on CNBC pointed out that jobless claims have tended to trend up for a period before each of the recent recessions in the US. Currently the jobless claim trend is basically sideways, thus suggesting (at least for this metric) that no recession in the US is iminent.

[Kropotkin]

I am led to believe that sector analysis around employment figures indicates that job gains are in retail services (barmaids, clearners and mcdonalds burger flippers) and financial services (bankers, brokers and parasitic fund managers :p), with a net decrease in manufacturing and skilled labour.

More of the usual offshoring turning traditional domestic production into imports, hence the catastrophic trade imbalance with the PRC (if only it was an imbalance was with Pike - that'd bump up the SP!)

Interestingly enough as these imports are reported as profits for US companies, a understand a significant proportion is reported as real GNP. :D

That's some rather dubious accounting.....

[skinny]

This presentation by Roubini at the IMF is worth a read - more considered than his blogs and more persuasive IMO for it.

http://www.imf.org/external/np/tr/2007/tr070913.htm

[Huang Chung]

OK, I'm bored. Nobody has much to say this weekend....dull, dull dull.

Alright, a question....where do we go from here? Monday is likely to be mildly positive on the ASX. What about the rest of the week?

Shrewdy, Tricha....what is your take on the rebound that we've had since the US rate cut? A brief respite before heading back down or something else. What about the POO, metals, gold etc.

Somebody, anybody.......

[shasta]

OK, I'm bored. Nobody has much to say this weekend....dull, dull dull.

Alright, a question....where do we go from here? Monday is likely to be mildly positive on the ASX. What about the rest of the week?

Shrewdy, Tricha....what is your take on the rebound that we've had since the US rate cut? A brief respite before heading back down or something else. What about the POO, metals, gold etc.

Somebody, anybody.......

HC

The DOW was up Friday so we should be in the green tomorrow, as for individual metals...

Oil/Gas/Coal prices have firmed so producers should be up

Base Metals seem to be rallying, but keep an eye on the $US & the DOW for guidance, Iron Ore, & Lead prices are going gangbusters, Zinc backwards, Nickel rebounding?

Just shows you need to carefully select metals with a supply shortage/strong demand

Gold seems to be very resilent, & im bullish on it hitting $US1000oz inside 18 months

Lets just hope there isn't any more sub prime type problems yet to surface.

What are you holding at present?

[Huang Chung]

Hi Shasta

Main resource holdings by a large measure are Prairie Downs and Vital Metals.

On the industrial/financial front, holding Babcock & Brown, MFS and Transpacific. All, three have been crunched lately and are yet to recover. Potential large upside in BNB and MFS in my opinion.

Just one energy stock - AED Oil, which I bought last week.

My industrial spec is Hydrotech International (HTI). Amazing potential, but no revenue as yet. Worth keeping an eye on, for sure.

[shasta]

Hi Shasta

Main resource holdings by a large measure are Prairie Downs and Vital Metals.

On the industrial/financial front, holding Babcock & Brown, MFS and Transpacific. All, three have been crunched lately and are yet to recover. Potential large upside in BNB and MFS in my opinion.

Just one energy stock - AED Oil, which I bought last week.

My industrial spec is Hydrotech International (HTI). Amazing potential, but no revenue as yet. Worth keeping an eye on, for sure.

At least you have interests outside the resource sector.

I have stuck totally with resources stocks, & been exposed to the volatile nature of them, especially non producers...

I have tried to spread the risks over severals metals myself, as you can see from my disclosure.

I'm comfortable holding all these through any "further correction", as i believe these stocks are undervalued & any further weakness provides buying opportunities...

As an aside, im looking at companies in the water purification/irrigation & viticulture (wine) industries as my picks to do well in 2008/09.

[Tech Step]

Well.

I am pretty much standing on the sideline. Have got 1/3 of my money in the market with 2/3 in cash. I am concerned that there will be a big falout on the dow that will lead to panic selling in Auz.

I am holding 50k shares in IRL with 11k IRLO. 2k worth of PEN and 1k worth of VSG.

I am waiting for the retrace (hopefully it will be a big one) when that happens I intend to drop 10k into TTY and 10k into NWE.

My portfolio may not be big but it is all the money I have and am just as precious with it as the big players are with their 100+k's

good luck to the guys going long. I think that it is the right way to go but I do see some serious volatility as in August that will give me a much better entry point.

cheers.

[Huang Chung]

Some stocks with an interest in water that you may wish to research Shasta include Hills Industries, through their ownership of Team Polly (water tanks); United Group, Transfield / Transfield Services Infrastructure, Walter Diversified and Leightons through construction / operation / ownership of water infrastructure.

Tech Step, I agree that we may not be out of the woods yet, so you may get the retrace you're looking for.

[shasta]

Some stocks with an interest in water that you may wish to research Shasta include Hills Industries, through their ownership of Team Polly (water tanks); United Group, Transfield / Transfield Services Infrastructure, Walter Diversified and Leightons through construction / operation / ownership of water infrastructure.

Tech Step, I agree that we may not be out of the woods yet, so you may get the retrace you're looking for.

Thanks HC

Will add into the mix to check out :D

[STRAT]

Nickel rebounding?
Lets just hope there isn't any more sub prime type problems yet to surface.
Evening Fellas, I am of the opinion there will be more sub prime drama over the next few months. Not sure wether the market will be as effected/take as much notice. Im thinking in some ways the contagious aspect of the thing may be advantagious in one respect at least, that being if it becomes a global problem then a global effort will be seen to put things right as apposed to each nation only looking after their own interests

PS Nickel is on the mend IMO

[micholas]

As an aside, im looking at companies in the water purification/irrigation & viticulture (wine) industries as my picks to do well in 2008/09.

Hi Shasta - I agree with your views on water. Wine I'd be more cautious with and be particularly choosy about where I invested. It's a capital intensive industry with so much often tied up in vineyards, plant & equipment that is only fully utilised for 2 to 3 months a year and then maturation timeframes lead to significant working capital being tied up in inventory. A lot has been written recently about the price of wine increasing for consumers but many (Australian) producers would have materially increased costs of production from last vintage's hugely reduced yields; costs that may not start to flow through the P&L until the 07 vintage wines start to be sold.

But I've also taken on board Huang Chung's comment earlier on this thread: "Go with the Flow". Pretty sensible view if you can get the timing right - there could well be good gains to be made in the sector if the market gets behind the story of an industry turnaround but it isn't somewhere I would want to be for the long term.

Cheers,
M

[Huang Chung]

Yeah Strat....wish I'd held on to my Sally Malay's. :mad:

Shasta, Hydrotch is also water related, but in a completely different way. HTI is endeavouring to develop and commercialise a 'Multi Pulse Sequencing system of electro-osmotic technology for the prevention and control of water and moisture ingress into subterranean masonary structures'.

In other words, keeping water out of underground tunnels, stations, basements etc, that otherwise finds its way through concrete.

From the prospectus: 'By placing a low voltage charge between negative and positive electrodes within a structure, the water becomes ionised. Ionising the water molecules within the capillaries causes the water to travel towards the negative electrodes to be evacuated at an optimum site, while at the same time preventing the water from intruding back into the structure. The wet area will then dry up and remain dry'.

They have had a system installed at one of the London Underground stations, apparently with huge success. Looks like they may now be close to rolling the system out across a number of London Underground stations. No revenue/profit figures as yet, so its almost impossible to value.

[trendy]

Hi guys....I'm back online now. Only taken 2 weeks and a new ISP to get email backup and running.

Looking forward to the coming historical crash month of October.

[tricha]

Hi guys....I'm back online now. Only taken 2 weeks and a new ISP to get email backup and running.

Looking forward to the coming historical crash month of October.

October huh, interesting times a head then Trendy, two sides to this coin, double edged as well and one side, u fall off the cliff.

Can the world de couple from the USA, thats the big question.:confused: Hey Trendy seems u r from the USA, what is really taking place there?

Yep Huang, Sally as cheap as chips and was tempted to buy back around $3.60 :o

I'll stick with cash and oil till the October storm passes through. Might even wait till Christmas, that's if I'm strong enough.

[Huang Chung]

Trendy, Tricha....what's the issue with October? Anything other than it's the month that every year since '87 people expect the market to crash??

Trendy....out of interest, are you an ex pat Kiwi or Aussie, or an American that's taken an interest in the markets on this side of the world?

[trendy]

Hung & Tricha. I'm an ex-pat kiwi (from Wellington) and have been living/working in the Northeast USA 5+ years now. Use to play the NZ markets a lot and did well with NOG (NZO) options.

I've moved all my trading and investing to the US. Transaction costs are just so low at $4.95 trade with plenty of liquidity. Federal tax rates for long-term cap gains and dividends are just 15%.

If you are wondering I'm actually invested in gold via the GLD exchange traded fund (FOREX hedge against US dollar dropping) and in Canadian oils trusts like HTE with current dividend yield of 16% with monthly dividend payments. Although I may move this to a US based oil trust if the US$ keeps depreciating against the CAN$.

Noticable change in housing market here downwards. Also FED rate cut doesn't help solve the housing issues either as no one will lend homeowners trying to refinance their adjustable rate mortgages (ARMs) when they currently have zero or negative equity....not to mention having no doumentation of income etc.

http://www.bradenton.com/280/story/153753.html

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20070923/A_BIZ/709230301

http://www.baltimoresun.com/business/realestate/bal-bz.re.glink14sep14,0,4290078.story

Homeowners feel the pain of contracting market
September 14, 2007
The fallout continues.

The housing market is contracting. Pending sales dropped 12 percent last month to the lowest levels in six years. Although home selling normally slows at the end of the summer, before kicking back into gear for the fall market, the turn of events is substantial.

Homeowners everywhere are feeling the pain. According to the latest numbers from the Mortgage Bankers Association of America, the number of homeowners starting the foreclosure process hit a record high this spring, with 0.65 percent of all homeowners receiving a foreclosure notice - the third consecutive record-breaking quarter.


The number of homeowners more than 30 days late in paying their mortgage also rose sharply. Slightly more than 5 percent of all loans were delinquent, a rise of 0.75 percent from a year ago.

If you look at a map of the United States showing states with the highest number of delinquencies and foreclosures, two trends jump out, said Doug Duncan, the association's chief economist.

First, a large number of homeowners can't make their mortgage payments in Michigan, Ohio and Indiana, states that have had large job losses. If you lose your paycheck, it's tough to make ends meet.

Michigan, which has suffered through the trials and tribulations of Detroit, also has suffered from higher gas prices, which have cut somewhat into the state's tourism revenues. The state was hit again recently when Volkswagen, the world's fourth-largest auto manufacturer, announced it would fire a quarter of its U.S. staff, amounting to about 400 jobs, and move its headquarters from Detroit.

The second trend that pops out on the map is that states with the highest levels of home-value appreciation are contracting nearly as quickly. The collapse of previously booming housing markets in California, Florida, Nevada and Arizona also has contributed to the rise in delinquencies and foreclosures.

Underlying it all is the subprime mortgage mess, which might claim as many as 10,000 more jobs from Countrywide Financial, the nation's largest independent lender. More than 100,000 people in the financial sector have lost their jobs this year, according to Chicago-based outplacement firm Challenger, Gray and Christmas. The vast majority are mortgage-industry jobs.

As many as 2 million adjustable-rate mortgages will reset in the next year, according to the bankers association. It's likely that some of these borrowers will find themselves unable to afford their new, higher interest rate. Many may be unable to refinance (because their credit scores aren't good enough to qualify for a good rate) or find that their homes are worth less than the mortgage balance.

These, combined with next year's presidential election, are the reasons some housing experts don't see an end to the current cycle until 2009.

What can help? President Bush's plan to loosen refinancing requirements at the Federal Housing Administration might help some 80,000 homeowners. But what about those who don't have FHA loans?

I received a letter recently from a reader whose monthly payments for his primary residence and a rental property gone bad total 100 percent of his take-home pay. His loan is a negative amortization mortgage, which means that the amount he is paying doesn't cover the amount that is due. The difference gets tacked onto the back end of the loan, which means that with each payment, his principal balance grows.

He's living on some cash he has in the bank, but that will run out soon. Since the property is worth far less than the mortgage amount, his options aren't good - and he likely won't qualify for the help the president is promoting.

All of this makes for plenty of housing pain going forward into 2008

[trendy]

Tricha October is a shaky month as far as the markets go historically - not just since 1987. If we can get through October without incident then all the better. Unless we get a major meltdown that spills over into the general economy I'm bullish on commodities due to BRIC demand.

[trendy]

Bloomberg has some great news articles on current financial issues. This article is a worry if the FED cuts rates again and its impact on the global exchange rates.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6rdkQGoXC5c&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9sGvLAsRZFc&refer=home

Fed Will Lower Rates Again Before January Trading History Shows

By Elizabeth Stanton

Sept. 24 (Bloomberg) -- Government bond traders, who predicted six of the last seven recessions, say the Federal Reserve will lower interest rates again before the end of the year as the economy comes to a standstill.

Since the Fed last week lopped half a percentage point off the central bank's target for overnight lending between banks -- the first orchestrated decline in so-called federal funds since 2003 -- traders have pushed the yield on Treasury two-year notes to almost three quarters of a point below the designated 4.75 percent funds rate. In the three previous occasions during the past 20 years when that has happened, policy makers have cut borrowing costs.

``The U.S. economy needs to grow at 2.5 to 3 percent or else it stalls,'' said Bill Gross, manager of the $104.4 billion Total Return Fund, the world's biggest bond fund. ``Historically every time we get close to stall speed the Fed lowers short rates.''
............

[trendy]

I forgot to mention in my last post of "no gain without pain"...US liquidity boom had to come to an end eventually....now we have the pain.

[Heavy Metal]

I forgot to mention in my last post of "no gain without pain"...US liquidity boom had to come to an end eventually....now we have the pain.

Meanwhile in the real world the ASX200 powers to a new high.

The global economy is still moving onwards and upwards despite the US housing issues.

[soulman]

I am dumbfounded by today's rise. All the doomsayers are probably negative because they want the share price to drop so they can buy. However, no significant pull back here so missed out or buy at higher price. I missed out too but will not chase higher price for the sake of it. October is approaching and the sharemarket will turned to massive bout of AGM late Oct for more clues about company profitability.

Huang, have you sold COA?

[Huang Chung]

Yeah Soulman.....out at around $5.76 for a 10% gain.

Very happy today with TPI (up 7.5%) MFS (5.1%) and BNB (4.1%). My resource minnows did nothing though.

[Bilo]

You have to admire the exuberance / resilience of the ASX. AWE drill yet another duster off the NZ coast and the share price after showing some initial concern goes up! It is the culmination of a very discouraging drilling program which should be starting to dent the AWE exploration team's confidence in the biggest search for oil off NZ's coast - let alone shareholder's staying power. Perhaps the odds of finding oil go up the more dry holes you drill?
Oil down today.
US recession expected.
Is this the bellhop buying oil shares?

[soulman]

Huang, did you get the dividend? I sold out too soon as well. Didn't think it will bounce like this.

Again, the market is showing that profit influence company share price, not the credit crunch. Once the US Fed lowered interest rate and said there might be more to come, the uncertainty has dissipated and the market will focus again on earnings.

Although the future uncertainty of weak USD and inflation might fuel problems again in the US, Australia should really be insulated from the problem in the US but then again, who knows. The US housing figures and consumer confidence will be on show tonight.

[Huang Chung]

Huang, did you get the dividend? I sold out too soon as well.

Soulman, yep, entitled to the divvy. It has had a nice run, but is still trading for less than the $6.25 value that National Hire / Private Equity put on the coy, and subsequently knocked back by the COA board.

[tricha]

I forgot to mention in my last post of "no gain without pain"...US liquidity boom had to come to an end eventually....now we have the pain.


So Trendy, tell us, is the picture below correct.:confused:
Can the rest of the world cut the cable and be set free from the USA :confused:
Or R we all tared with the same brush.:confused:

http://www.hyperinflation.net/essays/englund46.html The full story.
From Prime to Subprime, America’s Home-Mortgage Meltdown Has Just Begun

by Eric Englund


Inflation is an immoral tax that leads to immoral values
~ Anonymous South American banker

Having been in the credit profession for the past 23 years, I have observed several cycles involving the loosening and then the inevitable tightening of credit-underwriting standards. Of course, the Federal Reserve stands at the epicenter of such cycles. While money and credit are flowing like beer at an Irish pub on St. Patrick’s Day, everyone ends up looking like an attractive credit risk. When it appeared that the U.S. economy was heading into a recession, after the collapse of the dot.com and telecom bubbles, the Federal Reserve opened up the taps and encouraged one and all to imbibe its tasty, low-cost credit – with the most popular "flavor" being the mortgage loan. At this point, mortgage lenders merely became bartenders serving anyone who walked in the door. To reach this nadir in mortgage-lending standards, it is inescapable that the "Five Cs" of credit were ignored regardless if a mortgage loan was deemed prime, Alt-A, or subprime. This is exactly why the home-mortgage meltdown has just begun.
One aspect of my job entails analyzing personal financial statements. Twenty years ago, without a doubt, households had much healthier financial conditions. Back then, in proportion to household net worth, savings were much higher and debt levels (especially automobile, credit card, and mortgage debts) were dramatically lower. It is alarmingly common, today, to see households with well under ten thousand dollars in savings yet half-a-million dollars in mortgage debt – not to mention thousands of dollars in credit card debt and tens-of-thousands of dollars in automobile debt. Such households are literally one or two missed paychecks away from being destitute. Yet, amazingly, the heads of such households are considered to be prime-level borrowers (as long as there is adequate income to cover monthly debt service and expenses). What has happened, in the sphere of personal-credit underwriting, is that risk parameters have been redefined with the word "prime" having been defined downwards.
Credit Socialism
America’s unfolding mortgage-debt crisis did not emerge in a vacuum. When Alan Greenspan’s Federal Reserve pounded the federal funds rate down to 1%, in June of 2003, it is crucial to understand that such a low rate materialized due to the Fed’s aggressive creation of money and credit. In other words, America’s monetary central planner "knew" that massive inflation was needed to "rescue" the economy from the above-mentioned dot.com and telecom implosions. Housing was specifically targeted (http://www.lewrockwell.com/englund/englund34.html) by the Federal Reserve to serve as "…a key channel of monetary policy transmission. (http://www.federalreserve.gov/pubs/ifdp/2005/841/ifdp841.pdf)" With this colossal inflation of the money supply, I would argue that a hyperreality surfaced in the housing market – with corresponding bubbles emerging in consumer electronics and automobiles. During such episodes of heavy inflation, people tend to lose their sense of value including suspending any fear of debt.

In his remarkable piece, Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics (http://www.mises.org/journals/rae/pdf/rae7_1_1.pdf), Dr. Paul Cantor masterfully describes how central banking brings about such a destructive hyperreality:
If modernity is characterized by a loss of the sense of the real, this fact is connected to what has happened to money in the twentieth century. Everything threatens to become unreal once money ceases to be real. I said that a strong sense of counterfeit reality prevails in Disorder and Early Sorrow. That fact is ultimately to be traced to the biggest counterfeiter of them all – the government and its printing presses. Hyperinflation occurs when a government starts printing all the money it wants, that is to say, when the government becomes a counterfeiter. Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. That is why inflation has such a corrosive effect on society. Money is one of the primary measures of value in any society, perhaps the primary one, the principal repository of value. As such, money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community’s sense of value. By making money worthless, inflation threatens to undermine and dissolve all sense of value in a society.
http://www.hyperinflation.net/essays/monopoly-cash.jpg
In fact, the Federal Reserve’s data (http://www.federalreserve.gov/releases/z1/Current/z1r-2.pdf) support my observations as domestic household debt has increased from approximately $2.5 trillion in 1986, to $7.7 trillion in 2001, to $12.9 trillion in 2006 (with 76% of the 2006 figure being mortgage debt). The toxic combination of mind-numbing inflation and credit socialism has crippled household finances from coast to coast. Therefore, do not believe the talking heads who claim that the mortgage mess is limited to the subprime stratum. As the housing bubble continues to implode, the financial fallout will result in nothing short of an international economic disaster. The Federal Reserve’s September 18, 2007 one-half percent cut in the fed funds rate will not do anything to head off America’s looming household-insolvency crisis.


September 24, 2007

[trendy]

Fact is I know a lot of folks who maxed out their credit lines e.g. equity loans, credit cards etc. Some got into the home buying game "late" and now have negative equity in their investment property. Every 2nd TV show and advertisement seems to be a "Flip This House" or similar.

I'm in a town (2hrs to NYC, 1.5hrs to Boston) that has had steady increases in home prices, but not excessive gains like CA, FL or the metro areas.

Trust me Americans use the "buy first then ask questions later" approach to shopping. The new home we sold in NZ 5yrs ago is back on the market for 100% more than we sold it for. The housing "inflation" issue isn't just in the US, look at NZ, Aussie and the UK.

[fihr]

See this link for the Reserve Bank's opinion on Australia's rise in household debt. A different picture from the US.

http://www.smh.com.au/news/national/debt-a-sign-of-affluence-says-reserve-deputy/2007/09/25/1190486311846.html

Not that this means we won't be affected by a downturn in the US of course. But it could help insulate us from some of the effects.

[tricha]

See this link for the Reserve Bank's opinion on Australia's rise in household debt. A different picture from the US.

http://www.smh.com.au/news/national/debt-a-sign-of-affluence-says-reserve-deputy/2007/09/25/1190486311846.html

Not that this means we won't be affected by a downturn in the US of course. But it could help insulate us from some of the effects.

It could be what happens Fihr, The Yanks will have to pay their dues, while the rest of the world boggies on?



Japan sees jump in trade surplus

http://newsimg.bbc.co.uk/media/images/42843000/jpg/_42843817_japan-port-ap.jpg Japanese exports remain strong

Japan's trade surplus hit a 24-year high in August, with surging exports to other Asian nations and Europe offsetting slower sales to the US.
The monthly surplus grew 288% from a year earlier to 743bn yen ($6.47bn; £3.2bn), led by rising car exports.
While exports to other Asian countries soared 16.4% and to Europe by 15.6%, those to the US rose by just 4.6%.
The weak US figure is being seen as a further sign that the American economy is slowing.
'Offsetting US dip'
The trade surplus recorded in August, as reported by the Ministry of Finance, was ahead of market expectations.
Analysts said the big increase in exports across Asia and to Europe, would ease fears that the apparent economic slowdown in the US could hit Japan's economy.
Japan's overall exports rose 14.5% in August with car exports up by 22%, while imports grew by 5.7%. "Asian economies will likely continue to grow strongly and Japanese exports to this region will continue to rise," said Mamoru Yamazaki, chief economist for RBS Securities Japan in Tokyo. "That should offset the expected slowdown in the US economy and US demand."

[soulman]

The trend is your friend holds true at the minute. Since the rate cut Sept 18th, the momentum of the world sharemarket is unstoppable. Every bit of bad news is seen as good news as the market only sees more rate cut instead of recession or inflation threat. So, bad news equal good news now. Hence, whenever Wall Street release good economic news, their share price might just drop. It shouldn't be like this, but the market has a force on its own.

[tommy]

The trend is your friend holds true at the minute. Since the rate cut Sept 18th, the momentum of the world sharemarket is unstoppable. Every bit of bad news is seen as good news as the market only sees more rate cut instead of recession or inflation threat. So, bad news equal good news now. Hence, whenever Wall Street release good economic news, their share price might just drop. It shouldn't be like this, but the market has a force on its own.

Very true soulman, Bernanke certainly succeeded in bringing back investor confidence back into the market by giving a signal that more rate cuts will come if the economy appears to be suffering, but hey, on the other hand the dollar has only one way to go... DOWN! Bernie can't care less about the US dollar. I am more interested in gold companies now (never been a gold bug) but in this climate it might be a safe bet...

October normally is a poor month in the US though, so I can see a breather coming soon. I'm waiting to pick up cheapo stocks :-)

[shane_m]

I am waiting for asx index to hit 7000 points....

[spruik]

I am waiting for asx index to hit 7000 points....

Is that when you're going to buy something, shane? :)

[The Great Gold Guru]

I've sold 70% of my whole portfolio today ... $280k worth of Aussie stocks. The fact that the Dow is now back to virtually 14,000 seems completely ridiculous to me in the face of an economy in serios trouble, a housing market collapse and a dollar looking into the abyss .... sub-prime seems to be a non-issue due to a 50bp rate cut ... which is like trying to put a plaster on 12 inch knife wound !! ( not that I'm complaining my Aussie portfolio is up 20% in the last for weeks ) ... time to thank my lucky stars and run for the hills. Remaining 30% is in a few gold and copper stocks and PFI and APT property trust in NZ.

Good luck to all those still long up to the ying-yang in stuff thats up 40% inside a few weeks !!

October 1987 .... CRASH ( Wall Street led )
October 1997 .... CRASH ( Asian crises )
October 2007 .... ?????

[Viking]

Interesting ~ GGG~
I remember my dad use to tell me about the financial cycles~ and property cycle too~

What happened in October 1977 just curious?

[soulman]

GGG, I think you got out at the right day today because I feel a drop in the Australian market tomorrow due in part to profit taking. Our market has rise everyday this week and nearly a 3% rise in 4 days. That's big in anyone language.

I think you are partly wrong on the Asian crisis. It wasn't a crash in Australia. The Australian market dodge that crisis pretty good and the market recover quite quickly, thanks in part to our RB Governor, which shields us from our neighbouring countries. The crisis in the US is no different. We are also partly shields from their problems, as more coy tells us recently. Don't quote me though, I was in high school during the Asian crisis.

[tommy]

Asian markets going up steeply, Nikkei up 2.5%, WTF?!

http://finance.yahoo.com/intlindices?e=asia

This is crazy, markets celebrating as if subprime problem vanished. Must bear in mind that oil set to reach record high next year though (source: http://www.cnbc.com/id/20991330).

With the weakening dollar, I wonder whether a lot of US investors are shifting their wealth overseas to protect the value of their assets? Aussie dollar seems like a safe bet... Is ASX drawing in more overseas investors on top of the massive pool of money pouring in from super funds?

[shane_m]

TGGG: what an sell out...

all my money is back in the market
ADY, AGM, DLS, AMA, TRH
I am waiting for 7000 points to sell out :)

[The Great Gold Guru]

I'm not greedy ... am up $90k for the year , having been in the red in Mid -August , I'll take that. October gives me the willies !! Was on the floor of the NZ stock exchange in Oct. 1987 and a few months later lost my job ... was working for a Japanese bank in Oct. 1997 trading equity derivatives ( futures and options ) ... they lost their nerve and bailed at the bottom , a few months later I lost my job .... now we face Oct 2007 and I am basically a house husband with a $400k share portfolio to live off ... I'll take my $90k for the year which is virtually locked in now , good luck to those looking for higher levels, we will probably reach them and I am sure if we do my remaining gold and copper stocks ( principally OXR,EQI and LGL ) will do well.

The money I will recieve from my sales today will go into Rabobank at 8%+ until 2008 and I will enjoy watching from the sidelines for the rest of the year.

Adios Amigos

[soulman]

Tommy, the Nikkei is just catching up. They haven't made any move the past 2 weeks so they are just making up the move today. I think the world market has recovered too much as well, with the Australian market rising very quick indeed. The most steeply rise goes to the HK Hang Seng though. It seems that the battered up stocks are the ones recovering the most today.

[The Great Gold Guru]

Just as a post-script ... today is the 13th day on the row I have made money on the Aussie market ... a run I can honestly say in 25 years of investing in the market I don't think I have ever achieved. I can also say in those years I have never sold so aggresively over a few hours ... $270k worth in about 90 mins between 2pm and 3.30pm this afternoon. Great fun !

PS ( My wife will be pleased when she gets home ... she has been saying sell since the red ink turned to black a few weeks ago , she'll probably want a new Audi with the profits !! go figure ... )

[soulman]

I am with you GGG, I am lining up sells as well because I rather sit on the sidelines until Dec. Sold IAG and MBL today at steal prices as it seems (in hindsight) because it leaped after I sold. Best time to sell was near the close.

Just wondering, who here have ever cheated on their tax and have gotten away with it thus far. Making money is good but the tax hurts. A bit like working. Better to win money at the casino tax free.

[Year of the Tiger]

Just wondering, who here have ever cheated on their tax and have gotten away with it thus far. Making money is good but the tax hurts. A bit like working. Better to win money at the casino tax free.

Soulman, I can just see lots of people putting their hands up and sayng ME..ME..ME...... NOT!!!!!

I think there must be a lot of people who wonder whether or not they would be considered an Investor or a Trader in the eyes of the IRD, and are probably seeking Accounting advice to sort it out for them. I can't see anyone putting their hand up and saying..."Yes me, I've cheated on my tax!!!... :D

Cheers
YOTT

[fihr]

I would never cheat on my tax and never have. But I have been stung when they retrospectively amended tax returns based on a reinterpretation of existing tax law. The ATO can audit you years later. If contested in court, they have $$ to pay many more lawyers than anyone else does, except for the really big boys. It isn't even worth thinking about doing it. But I do plan to strategically and legally minimise my tax where I can.

[soulman]

Yeah, I didn't expect much response on that. Please don't crucified me. No one want to cheat because cheating is bad and capital gains is an income, along with dividends. The alternative I took was paying interest in advance, buying more computers, broadband etc.....but is there any other way? I am keen to seek other options to tax deduction so anyone out there with suggestion. I supposed negative gearing on property investment is one way as well.

[fihr]

The only way I know of, other than what you have mentioned, is alternative investments with product rulings, such as those run by Timbercorp. I don't know if you are in NZ or Australia. You can do these in Australia - I don't know how the NZ tax system treats them. They are very tax effective, are typically agricultural, but not always (I've seen some for infrastructure for example), and if they succeed, deliver an income in later years that is often very profitable overall. They also are independently rated - I think Morningstar might rate them. You can see returns listed by % as well as opinions on the projects. However, I think (without checking) that the ATO may be revising its approach to some of these schemes, due to their wild success at reducing people's tax, and although the ones with current product rulings are OK, next year may be different. So it would be necessary to check with an accountant or financial advisor.

The only other way that I know you could save tax is to crystallise any losses in your long term portfolio in a downturn. You can transfer shares off market to your partner or other entity if you want to keep holding them, at the loss making market value of the day of your choice. Of course, while you crystallise the loss, you will then pay more capital gain on the profit eventually when the entity that you transferred them to sells. So it is deferring tax, not eliminating it.

I am not a financial advisor or at all qualified in that area. That is just my understanding which could be entirely wrong - you would need to check everything if anything was of interest.

[Huang Chung]

Latest US jobless claim figures just released actually showed a decrease for the week. The report I saw on CNBC pointed out that jobless claims have tended to trend up for a period before each of the recent recessions in the US. Currently the jobless claim trend is basically sideways, thus suggesting (at least for this metric) that no recession in the US is iminent.

A week goes by and the US jobless claims drop another 15,000.

[spruik]

I've sold 70% of my whole portfolio today ... $280k worth of Aussie stocks. The fact that the Dow is now back to virtually 14,000 seems completely ridiculous to me in the face of an economy in serios trouble, a housing market collapse and a dollar looking into the abyss .... sub-prime seems to be a non-issue due to a 50bp rate cut ... which is like trying to put a plaster on 12 inch knife wound !! ( not that I'm complaining my Aussie portfolio is up 20% in the last for weeks ) ... time to thank my lucky stars and run for the hills. Remaining 30% is in a few gold and copper stocks and PFI and APT property trust in NZ.

Good luck to all those still long up to the ying-yang in stuff thats up 40% inside a few weeks !!

October 1987 .... CRASH ( Wall Street led )
October 1997 .... CRASH ( Asian crises )
October 2007 .... ?????

In 1987 there was no crash before the crash.
In 1997 there was no crash before the crash.

The crash in October 2007 came in August 2007 (16th to be precise).

[Kropotkin]

A week goes by and the US jobless claims drop another 15,000.


Unfortunately this means very little.

US unemployment policy means that after 2 years (approx) of the dole equivalent, you cant claim it any more and are no longer reported on the statistics.

[Huang Chung]

Unfortunately this means very little.

US unemployment policy means that after 2 years (approx) of the dole equivalent, you cant claim it any more and are no longer reported on the statistics.

But as per my original post on the US jobless claims a week ago, the key message is that the US jobless claim figures have trended up prior to the last several recessions. We are not seeing this trend at the moment.

I know these weekly jobless claim reports aren't the 'big ticket' reports the talking heads on CNBC get all hot and sweaty over each month, but it is another statistic in that broard mosaic called the US economy.

[Bilo]

This uncomfortable bear took a peep outside at the absolutely gorgeous weather and almost came out to dance in the glorious spring days we are having. But stumbled a bit when I read this morning that it was the end of the quarter.

Is this just a little old fashjioned window dressing for the funds before knuckling down to address the coming US recession, from next week?

The cave is really very cold and dark but all my little lambs have danced up up and away..perhaps best just to let them get fatter...the golf course holds more interest than the computer today.

[shane_m]

personally I think asx is plotting along nicely on the fundamentals no BULL or BEAR. cant we have some thing in the middle like a giraffe? :)

[duncan macgregor]

personally I think asx is plotting along nicely on the fundamentals no BULL or BEAR. cant we have some thing in the middle like a giraffe? :) How about a dart throwing monkey?. macdunk

[Scuffer]

Hey Dunk I saw a crap throwing albino gorilla in a Barcelona zoo maybe he got better and started throwing darts, although the crap was less dangerous than a dart coming through the bars at you.

[soulman]

Thanks Fihr. Lets face it, you make the money, you got to pay the tax. I have looked through many ways and even most of my major paper losses (MBL, AFG, PBL, SUN) during the fierce correction in mid August are turning around. The agriculture scheme does not interest me. For the tax-loss selling, it's gotta be done in June and I usually buy them back if the stock still offer value.

Another day, another record. I actually could have bet we would fall today after 4 days of rises this week, looking at Wall Streets uninspiring rise. I thought profit taking, I thought window dressing of a negative way from fund manager. Sept has been a big month.

[fihr]

Soulman - an ag scheme was what I was burnt on when the ATO reinterpreted its stance. So I can understand a certain lack of interest. I was a very naive investor at the time.

Tax is only a problem with big capital gains. Its a good problem to have.

Not all shares are up. JBM went down today. Am glad I was exercised at $17.50 yesterday as need the money elsewhere. (Bought at $2.03! Very nice. Still holding some though.)

[The Great Gold Guru]

Looking at my large sales yesterday I would be slightly better off in terms of A$ gains ... however the NZD is on a "tear" ( almost back to US76c ) and so in NZD I am actually better off selling yesterday. Must admist the recent 5c sell-off of the Kiwi$ vs the A$ was also another reason to exit most of my $A stocks.

Nice to see the 2 largest holdings I kept are up strongly today ...

OXR +9
EQI +10

Stay long gold ... USD is toast !!!

[Viking]

GGG~
I noticed you have two stock left, few threads ago was three~
did you sold you LGL too?

[soulman]

True, it's a good problem to have. I know many people in here at sharetrader are holding motza compared to short-term holders. Just like your JBM. SMY, MCR, WOR, IGO was all just starting out in 2002. FMG was $1 about 4 years ago. Now they are nearly $50. Unbelievable. Just imagine you hold the whole time like Andrew Forrest did. Unfortunately, I was never into resource stock and that's where the most gain can be made. SMY and IGO floated at 20 cents, weren't they? So were JBM in 1997? Long-term holder wins everytime and the sell decision will be deferred until you retired to avoid large CGT.

The ag scheme has affect many coy as well such as SHV, TIM and GTP.

[Huang Chung]

GGG - Looking at my large sales yesterday I would be slightly better off in terms of A$ gains ... however the NZD is on a "tear" ( almost back to US76c ) and so in NZD I am actually better off selling yesterday. Must admist the recent 5c sell-off of the Kiwi$ vs the A$ was also another reason to exit most of my $A stocks.

The NZD / AUD relationship certainly complicates buy / sell decisions with ASX listed stocks for you Kiwis.

Life is so much simpler in the land of Oz....

[fihr]

Agree with what you say, Soulman. We are selling some shares, but proceeds are paying for our house. We are very happy with the long term holds. Our first longish buy and hold was NAB. Then we "diversified" into various small caps in 2000-2003. One of them was WOW. Sold when we doubled our money, but had we held we would now have made 5 times. Overall, we made 20 to 30% from the (mainly) small caps. Small part of profit paid for our first new car. (Nothing flash, but a good family car.) Last big change was into resources around 2002/2003. That has been astoundingly good. It is hard to take in. At the time, we put every spare cent in. Best buy was AGM at 3 cents. (Lowest entry point, not average price.) Also bought MCR at 49c, then JBM as you know. (You can tell we liked nickel.) As a result, we can buy the house we want. Like many others, I am sure, who were able to get in then.

I'd love to say we have the skill to repeat that. But honestly, we didn't apply much skill, just a view on certain fundamentals that was right for the time, and analysis of the companies we chose - software helped. Now I use the market to make my income. I am learning a lot and there's a long way to go. Fortunately it is possible to do well with moderate knowledge, even though I am no expert. My aim is to improve. Am finding this forum is good for food for thought and investigation. Enjoy reading everyone's views.

[The Great Gold Guru]

Still in Lihir ... up over $4 at one stage today, Traded down to about 280 in Mid August , up almost 50% inside 6 weeks from lows , crazy stuff really !!

[tricha]

What a piece of work, should be shot for treason, that's the nuts and bolts of it isn't it :confused:

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Greenspan: 'We saw credit risks'

http://newsimg.bbc.co.uk/media/images/44120000/jpg/_44120252_greenspanap203jpg.jpg Mr Greenspan left the Federal Reserve in January 2006

The former head of the US Federal Reserve has denied that regulators failed to foresee the problems which caused the global credit crunch.
Alan Greenspan said they had not acted on concerns about complex and risky financial deals because only very wealthy people invested in them.
In an interview with BBC Radio 4, he also said that he was increasingly pessimistic about the world economy.
But Mr Greenspan said the risk of recession was "still less than 50-50".
However, he added: "It's still less optimistic than one would like."
'Largest culprit'
The credit crunch has brought havoc to global markets, and hit the UK with the crisis around Northern Rock.
One of the key causes was the bundling together and selling of debt from sub-prime mortgages, which subsequently saw high levels of missed payments.
Institutions which were stung by this then became less keen to loan money elsewhere, resulting in a tightening of credit.
"We did know what was going on and the reason we didn't stop them was that to a large extent these types of questionably egregious actions are taken by people who have their own money invested," he said.
"Hedge funds, who are presumably the largest culprit of all of this, are organisations in the US in which wealthy investors invest.
"I must admit that I do not have considerable concern about their net worth going from 40 million to five million, which in many cases is what's happened." Mr Greenspan also predicted that the era of low inflation was coming to an end. "I'm not really able to pinpoint the time but I'm reasonably confident that the inflation tranquillity that we have experienced throughout the world actually for the last 20 years is not something we can hope to readily replicate as we move into the future."

[spruik]

He should be shot, allright.


"I must admit that I do not have considerable concern about their net worth going from 40 million to five million, which in many cases is what's happened."

The bottom line is that affects everybody.

He is the author of the current problems. Now that he had left his job he should also shut up.

[Scuffer]

Hes that old he doesn't care, old with a befuddled mind, someone else pulling the strings on this puppet.

[trendy]

Another bank bites the dust here due to the mortgage meltdown. I expect we will see more failures.

http://biz.yahoo.com/ap/070928/netbank_closure.html?.v=7

FDIC Shuts Down NetBank Due to Defaults
Friday September 28, 6:27 pm ET
By Alan Zibel, AP Business Writer
FDIC Shuts Down NetBank Because of Excessive Level of Mortgage Defaults


WASHINGTON (AP) -- NetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an excessive level of mortgage defaults.
It was the largest savings and loan failure since the tail end of the industry's crisis more than 14 years ago. Federal regulators appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta, Ga.-based NetBank.

Customers with less than $100,000 deposited with NetBank will be protected by FDIC insurance.

While dozens of mortgage companies have closed due to soaring defaults of home loans made to borrowers with weak, or subprime, credit, those problems previously had occurred among non-bank lenders such as New Century Financial Corp. NetBank, in contrast, is federally regulated.

Loose mortgage standards in recent years -- especially among lenders catering to subprime borrowers -- have resulted in a spike in home loan defaults.

Bert Ely, a banking consultant based in Alexandria, Va., said NetBank was in "deep trouble" before the subprime mortgage market's woes accelerated this year. Regulators, he said, "should have closed it a long time ago."

While some Internet-only banks are successful, he said, operating one without retail branches can be a difficult strategy to maintain.

The FDIC said Friday that $1.5 billion of NetBank's insured deposits will be assumed by ING Bank, also a major online bank that is part of Dutch financial giant ING Groep NV. ING will pay $14 million for the deposits and receive 104,000 new customers.

NetBank, which had no physical branches, sustained significant losses last year "primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies," the Office of Thrift Supervision said in a statement.

The FDIC said NetBank had $2.5 billion in total assets and $2.3 billion in deposits as of June 30.

The OTS oversees about 830 savings and loan institutions, or thrifts, ranging in size from giants like Seattle-based Washington Mutual Inc. to small community banks. By law, thrifts must have at least 65 percent of their lending in mortgages and other consumer loans.

The last major thrift to be closed by regulators was Superior Bank of Hinsdale, Ill. It had total assets of $1.9 billion and was shut down in July 2001. Its failure has so far cost the FDIC's insurance fund an estimated $273 million.

In June 1993, regulators shut down Western Federal Savings and Loan Association, which had total assets of $3.8 billion. That thrift's owners included former Treasury Secretary William Simon and former Federal Reserve Board Vice Chairman Preston Martin.

NetBank had reached a deal to sell its deposit accounts and other assets to privately held EverBank of Jacksonville, Fla., but EverBank announced this month that the deal fell through.

EverBank in July completed its acquisition of NetBank's mortgage servicing business, and the FDIC said Friday that EverBank will purchase about $700 million in mortgage loans.

"Customers of NetBank should have confidence and security knowing that they will have access to their insured funds in a timely and orderly manner," FDIC Chairman Sheila Bair said in a prepared statement.

The FDIC insures bank deposits of up to $100,000.

NetBank had $109 million in deposit accounts that exceeded the FDIC limit. Those customers will become creditors in NetBank's receivership, the FDIC said.

[trendy]

More folks falling behind with mortgage payments.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOF_NDogilAI&refer=home

The Mortgage Insurance Companies of America said defaults on privately insured home loans climbed 30 percent last month from year-earlier levels, adding to evidence that home foreclosures may continue to rise. Insured borrowers more than 60 days behind on their payments rose to 58,441 in August, Mortgage Insurance Companies of America said.

[Tok3n]

Whats wrong with Americans?

They earn more relatively to house prices, have lower taxes and interests compared to Kiwis.

And things are a lot cheaper there too.

[spruik]

Whats wrong with Americans?

They earn more relatively to house prices, have lower taxes and interests compared to Kiwis.

And things are a lot cheaper there too.

People who are less educated easily fall into the debt trap. The mentality is why worry about tomorrow (if they are capable of that) when you can live it up today.

Many of the "sub-prime" borrowers would not have understood the fact that their interest rate on their loan would rise dramatically when "reset". They may not have realised that their payments would double, triple or worse. If they did then they surely lived for today only.

My wife has lived in the USA, people there are also more obese on balance, showing a lack of education in terms of health and good diet.

There's more to this story, you'll need to look into the history of this nation.

[tricha]

1 - Whats a recession in the states got to do with your's or my portfolio:confused:

2 - What are the alternatives, to staying ahead of the herd:confused:
Or do we bury our head in the sand and pretend all we well. I wish I knew what Warren was doing right now.???????
101 options and scenaro's to this little saga I guess.

.................................................. ...............................

Unemployment May Rise, Factories Slow: U.S. Economy Preview

By Joe Richter
Sept. 30 (Bloomberg) -- Unemployment in the U.S. probably rose to a one-year high in September and manufacturing slowed for a third month as the housing recession reverberated through the economy, economists said before reports this week.
The jobless rate rose to 4.7 percent even as hiring rebounded, according to the median forecast in a Bloomberg News survey of economists before an Oct. 5 government report. Industry data tomorrow is forecast to show factories expanded at the weakest pace in six months.
Fallout from rising borrowing costs and declining home prices will hit the economy in full force in the fourth quarter as consumer spending fades, economists said. Waning demand may in turn prompt companies to scale back hiring and investment.
``As home prices continue to fall, consumers will spend less,'' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. ``Adding to consumer gloom, the labor market is starting to show signs of weakness.''
The unemployment rate is projected to increase from 4.6 percent in August. The rate reached a five-year low of 4.4 percent in March and October.
Employers probably added 97,500 workers to payrolls this month following a 4,000 drop in August that marked the first decline in four years, the Labor Department's report is also projected to show.
The seeming improvement in hiring will reflect a rebound in government payrolls after three consecutive decreases, economists said. Changes in the timing of summer holidays probably made it difficult for the Labor Department to count the number of teachers hired for the new school year.
`Timing Issue'
``This was only a timing issue and there will be either a big upward revision to August and/or a smart rebound in teaching jobs in September,'' said Steven Wood, president of Insight Economics LLC in Danville, California.
The Institute for Supply Management's factory index fell to 52.5, a six-month low, from 52.9 in August, the Tempe, Arizona- based group may report tomorrow. A reading greater than 50 signals expansion in manufacturing, which accounts for about 12 percent of gross domestic product.
Applied Micro Circuits Corp., which produces components for communications-equipment makers such as Cisco Systems Inc., plans to cut 4 percent of jobs through fiscal 2008, the Sunnyvale, California-based company said last week.
A report on Oct. 4 from the Commerce Department may show factory orders fell 2.6 percent in August after a 3.7 percent gain in July, the Bloomberg survey showed.
Auto Sales
The auto industry will probably be a source of weakness in orders and production in the second half of the year as sales cool following an August surge, economists said.
Purchases of cars and light trucks probably fell to a seasonally adjusted annual rate of 15.8 million in September, from a 16.3 million pace last month, based on the median estimate of economists surveyed by Bloomberg. Auto sales figures will be released Oct. 2.
Service industries may also start to feel the pinch from a more hesitant consumer. A second report from the Institute for Supply Management may show banks, builders, retailers and other service industries expanded last month at the slowest pace in six months. The group's report is scheduled for Oct. 3.
Economists say headwinds for the consumer are likely to grow stronger. A cooling job market and a jump in defaults among subprime borrowers have led banks to raise borrowing rates and made it more difficult to get loans. Home-price declines also mean fewer owners can tap into home equity loans.
Fewer Contracts
The number of Americans signing contracts to buy previously owned homes probably fell to a record low in August, a report Oct. 2 is forecast to show. The National Association of Realtors' index of signed purchase agreements, or pending home resales, fell 2.1 percent to 88, the lowest since record keeping began in 2001.
So far, income gains have helped keep consumer spending from collapsing. The Labor Department is forecast to report hourly wages grew 0.3 percent on average for a third straight month, based on the median estimate.
Consumer spending in the U.S. rose more than forecast in August, a report last week from the Commerce Department showed.
``The consumer hasn't yet pulled back, but the risk is that they will do so by the fourth quarter as the bad news coming out of the housing market takes hold of consumer psychology,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. ``Consumer confidence is pretty low right now.''


Bloomberg SurveyDate Time Period Indicator BN Survey Prior10/01 10:00 Sept. ISM Manufacturing 52.5 52.910/01 10:00 Sept. ISM Prices 62.3 63.010/02 10:00 Aug. Home Resales Pending -2.1% -12.2%10/03 10:00 Sept. ISM Non-Manufacturing 54.8 55.810/04 8:30 9/22 Continuing Claims 2550K 2551K10/04 8:30 9/29 Initial Jobless Claims 310K 298K10/04 10:00 Aug. Factory Orders -2.6% 3.7%10/05 8:30 Sept. Avg. Hourly Earnings 0.3% 0.3%10/05 8:30 Sept. Change Nonfarm Jobs 97.5K -4K10/05 8:30 Sept. Unemployment Rate 4.7% 4.6%10/05 15:00 Aug. Consumer Credit $9.5B $7.5BTo contact the reporter on this story: Joe Richter in Washington Jrichter1@bloomberg.net (Jrichter1@bloomberg.net) .
Last Updated: September 30, 2007 11:10 EDT

[spruik]

1 - Whats a recession in the states got to do with your's or my portfolio:confused:

2 - What are the alternatives, to staying ahead of the herd:confused:
Or do we bury our head in the sand and pretend all we well. I wish I knew what Warren was doing right now.???????
101 options and scenaro's to this little saga I guess.


Receiving too much communication on bad news affects your state of mind resulting in wrong decisions.

Follow your own road.

[Heavy Metal]

Receiving too much communication on bad news affects your state of mind resulting in wrong decisions.

Follow your own road.

Couldn't have said it better myself. If one only chooses to read negative articles then their view will obviously be pessimistic.

It's easy to find negative stories out there, but they're mostly posted by gold or tip sheet peddlers spouting the usual 'the end is nigh buy gold and oil' crap and have a vested interest in doing so.

What would Warren Buffett do? For what it's worth, he's buying at the moment. But those with a negative view on the market probably wouldn't know that since they're limiting what they read about.

[Viking]

I like the sound of your saying Heavy Metal~

WWWD - What Would Warren Do~ :D

[k1w1]

Do you think that if you have cashed out of the market, and it is going up, that you may have a subconscious preference towards bad news ?

[spruik]

Do you think that if you have cashed out of the market, and it is going up, that you may have a subconscious preference towards bad news ?

Indeed, that's human nature - hoping prices will come down to enable re-entry and be better off. Or at least feel justified.

There wouldn't be one of us where that doesn't apply to individual stocks where we erred in our judgement.

[soulman]

I might just add this - the more you read, the more you are screwed. There are bulls articles and there are bears. Whoever have old Australian Financial Review article might want to look at 2004 Sept version, where almost all the analyst said that this is as good as it will get after the reporting season ended. Gerard Minack said the market is going bear every year and he is wrong every year.

About 3 weeks ago, I read somewhere that the market might reach 5000 and you should be careful. It screwed with my head because I actually 25% believe him and stayed out of great transaction opportunities. That said, whatever you read, it's you that decide subconciously, bias or unbias about the current market condition. If anyone decide to stay in or stay out, it's their perogative and no one else.

[fihr]

I believe its called cognitive dissonance - when you only hear what confirms your view (good or bad), regardless of the contrary news. I read about it in a book on trading, in a list of weaknesses traders can be prone to. I recognise it in myself. It's a hard thing to avoid.

[Mick100]

Do you think that if you have cashed out of the market, and it is going up, that you may have a subconscious preference towards bad news ?

I recall that tricha bailed out (100%) right at the bottom of the 06 correction too

Starting to look as if he has made the same mistake two yrs in a row.

If you take some money off the table at the beginning of a correction, or, better still before the correction starts, then that's a smart move. But to cash up right at the bottom of a correction, two yrs in a row, that's not so smart.

It appears to me that the FED is going to pull whatever it can out of the bag to keep the sharemarkets humming - they can't rescue housing but they are not going to stand by and watch the sharemarkets go down the gurgler.
If sharemarkets deteriorate this month there will be another 0.5% decrease in the FED funds rate at the end of this month.

.

[suntboy]

Alright time for the painters view (extremely shallow)
Jeez fihr whats cognitive dissonance ?(should i go to the DR )
As the few posts above allude to , are we not getting bogged down(wowsers)
In the last few weeks shares have gone up and down
Is there somewhere I can look that states "at this point it is called a correction"
but when it reaches this point it it called a crash.
Im doing better now than 6 weeks ago when I thought I was doing alright.
Is it not possible somewhere in this thread it could be a case of people selling up a while ago on the "correction" and now wishing they hadnt, therefor wanting the market to dive?
Any way thats an idiots perception and I welcome the lambasting I will probably receive.

Buy Buy Buy

[tricha]

Couldn't have said it better myself. If one only chooses to read negative articles then their view will obviously be pessimistic.

It's easy to find negative stories out there, but they're mostly posted by gold or tip sheet peddlers spouting the usual 'the end is nigh buy gold and oil' crap and have a vested interest in doing so.

What would Warren Buffett do? For what it's worth, he's buying at the moment. But those with a negative view on the market probably wouldn't know that since they're limiting what they read about.


Thats right there are too many negitive stories out there and what scares me the most is those bloody gold bug will get it right one day.
Sorry Heavy Metal the info is coming hot off the BBC News, bury your head in the sand at your peril, this was not an ordinary correction, something is a miss out there.;)


UBS suffers US sub-prime loan hit

http://newsimg.bbc.co.uk/media/images/40970000/jpg/_40970248_ubs203afp.jpg Appetite for investing has returned as stock markets have recovered

UBS has said it will have to write down losses totalling 4bn Swiss francs ($3.4bn; £1.67bn) in relation to bad investments in risky US home loans.
The Swiss wealth manager admitted that the hefty losses will see its third-quarter earnings slump by between 600m and 800m Swiss francs.
UBS called the results, which mark the first loss for the bank in nine quarters, "unsatisfactory".
It said it will now cut 1,500 jobs and carry out extensive management changes.
Doubly embarrassing
UBS's announcement is likely to send shivers down the spines of investors, who have harboured fears over the extent the downturn in the US housing market will have spread to the wider economy.
These concerns were exacerbated by the fact that many banks and hedge funds have been investing in bundles of debt, containing risky sub-prime mortgages which have seen record defaults in the face of higher US mortgage rates. BBC business editor Robert Peston said: "The mess is doubly embarrassing for UBS since it took a substantial hit in the dry-run for this summer's market mayhem, the crisis afflicting the giant hedge fund, Long Term Capital Management, in 1998." But he added: "UBS is big enough to more than weather this storm."

[hero]

Good to see some common sense starting to gain some sort of profile on this thread. Some of the posters here have long reminded me of my ex mother-in-law who, whenever my partner travelled on a plane, would turn on the radio and sit by it until after the scheduled landing time of the flight because she could never quite believe that the plane wouldn't crash.

[Heavy Metal]

Thats right there are too many negitive stories out there and what scares me the most is those bloody gold bug will get it right one day.


I'm sure those who predict Armageddon will get it right one day too. In the meantime there is money to be made and a life to enjoy.

[Heavy Metal]

Yes the big investment banks have had a turbulent quarter alright. Their attitude has been to have large write downs on the value of affected securities, cop the losses on the chin, and move on. The market is doing the same as the uncertainties in how much the subprime problems are affecting the banks diminish. The DOW might reach record highs tonight...

[macduffy]

Yes the big investment banks have had a turbulent quarter alright. Their attitude has been to have large write downs on the value of affected securities, cop the losses on the chin, and move on. The market is doing the same as the uncertainties in how much the subprime problems are affecting the banks diminish. The DOW might reach record highs tonight...


Yes, up 144 to 14040!!

[aurelian]

14085 and climbing

[aurelian]

just tapped 14100

[hero]

Thats right there are too many negitive stories out there and what scares me the most is those bloody gold bug will get it right one day.
Sorry Heavy Metal the info is coming hot off the BBC News, bury your head in the sand at your peril, this was not an ordinary correction, something is a miss out there.;)
[/SIZE]

This article was posted a few of times on some of the BB's during the first frenetic downturn in early August. Needs to be re-read from time to time. Helps keep things in proportion.


How Speculators Exploit Market Fears
by Ben Stein

Posted on Thursday, August 2, 2007, 12:00AM

Here's a fact: The speculators and hedge fund managers who run today's stock market need market volatility in order to make money.

They can't make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell -- or, as they say, "sell short."

Money Lust Satisfied
That's what's been happening the past couple of weeks. But it's not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.

Supposedly, the market is "correcting" because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.

These are interesting theories, and people who don't know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these "reasons" for the stock market moves are.

Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.

In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That's not trivial, but it's also not the stuff of which recessions are made.

The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.

Corporate profits set new records every day. Whatever's happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in -- and for no other reason.

A Minor Major Mess
Subprime is a mess. But it's a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That's 4 percent of mortgages.

Of these, maybe half, or 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market -- a sum the lenders have already made many times over because of the hefty fees on those deals. In the context of the size of the U.S. financial sector, it's nothing.

And why should a crisis in subprime drive down stocks in Mexico and Thailand? Again, because the speculators seek to create panic to make money by selling short, and they sell short everything.

There's simply no connection between subprime and developed or developing nations' stocks. This by itself shows the thin context of the selling wave late last month.

Money's Still Cheap
What about the supposed drying up of loans for mergers and acquisitions by private equity firms? Well, here's a good, simple test of just how valid that explanation is for stock market moves: The majority of private equity takeovers are financed with junk debt.

If there really were a major shortage of funds for these deals, the interest rate on the junk would skyrocket. Instead, while the rate has risen by about 150 basis points in the past month, the spread between junk and investment grade is now about 290 basis points, according to leading junk analyst Martin Fridson.

This is a lot lower than the year-end average of the spread from 2002 to 2006, and far below the almost 800 basis point spread during a true interest-rate crunch like the one after the tech meltdown in 2000-2002.

So that's phony, too. Interest rates have risen, but not anything like what they've done in real crises. And besides, the Dow fell by about 550 points the week before last, yet not one of the Dow stocks is involved as either acquiror or acquiree in a private equity deal.

In short, money is no longer virtually free the way it was for private equity deals in the past year. But it's not expensive by historical standards, either.

Spreading the Fear
In other words, it's all the speculators trying to panic us so their sell programs will make money. And they'll make money as long as they can spread their panic. When they can't do that any longer, they'll work the long side -- and make up reasons for that, too.

In the meantime, the economy is strong. Profits are great, and interest rates are low and will stay that way. Don't sell. With all the shrieking about the market, it only fell to what it was about five weeks ago -- and we didn't think we were poor then.

So let the speculators shout "fire." As of right now, they're not blowing anything but smoke.

[macduffy]

But still looks like a good day for spring cleaning portfolios!

[MrDevine]

Somebody will be right, someone will be wrong. I'll bet nobody (even the 'professionals') really knew which way this thing was going to swing. Super volatile times. If tricha feels safe with limited exposure to the market then good on him, I'm sure he's made healthy profits these past 6 months

The doom stories do make exciting reading though.

My thoughts are that the China/India story has altered the equilibrium in financial markets, the US is big, but China will be bigger, consequently financial markets will take less of a lead from the US. Does anybody think there is something more sinister going on with market manipulation etc? It seems mind boggling that the DOW is back to record territory, 217 spike last night.

To all those that brought near the bottom, nice work. (i wish I'd had the balls to buy MCR at $2.70)

Mr D held 90%.

[hero]

If tricha feels safe with limited exposure to the market then good on him

Absolutely. I totally agree. But that's different from flooding the BB's with spin literature that's crafted by people with an agenda or journalists after a 'good story' and that is likely to be read by highly suggestible people with limited experience (and perhaps at their considerable cost).

[Huang Chung]

But still looks like a good day for spring cleaning portfolios!

I'm thinking along the same lines macduffy. Nothing drastic, but maybe take some profits on a couple of those stocks I bought cheaply only weeks ago when everyone seemed to be full of fear and dread.

I'll be looking for some strong buying first thing this morning to sell into (maybe).

[shane_m]

bring on the +7000 points...

[duncan macgregor]

Today will be an excellant day on the markets, especially for copper miners. The DOW is at an all time high, spring is in the air, and Macdunk is fully or is it more likely to be fooly invested. I feel quite sure that major corrections are unlikely until after the olympics, so intend to make hay up to that point. Since there are no certainties in this world my wary eye will be cast in the direction of the next crash, which will be China pulling the rug from under America.
America unless they have a complete change in direction will crash, its not if, but when, and by whoom. I would think the longer it takes to happen the less effect it will have on the other markets. TRICHA stop your panic get in boots and all man, now is the time to make a killing. Macdunk

[soulman]

If anything does detrone the Australian market, it will definitely be from the US. You think China might slow but India is hosting the 2010 Commonwealth games and plenty of infrastructure will be built between then. The fall in the US will drag everybody down but when will that happen?

Now, every bit of bad news in the US is good news for US share market. In August, whatever news, good, bad, shares was marked down significantly. It's call momentum investing or trading. When the momentum is down, it will go down down regardless of what's going on. Neutral news is seen as very bad news. No one cares. Sell, sell, sell. When the momentum is positive, buy, buy, buy, like right now.

Anyone here done well as a momentum trader? Shorting in early August and long during Sept.

[shane_m]

I was talking to my mate tonight about Rams getting bailed out by westpack. Apparently this sort of situations the reserve bank forces big banks to buy out small lenders who get in to trouble. Apparently next in the line to be forced is Commonwealth bank to buy out the crashing lender.

[spruik]

This article was posted a few of times on some of the BB's during the first frenetic downturn in early August. Needs to be re-read from time to time. Helps keep things in proportion.


How Speculators Exploit Market Fears
by Ben Stein

Posted on Thursday, August 2, 2007, 12:00AM

Here's a fact: The speculators and hedge fund managers who run today's stock market need market volatility in order to make money.

They can't make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell -- or, as they say, "sell short."

...


Notice who always get onto the bandwagon... stock tipsters, newletters. Whenever there is fear or excitement these people will exploit the market with their "predictions".

For the most part, they just ramble on - not making the reader any wiser (because they don't know anything we don't know).

Their recommendations are mostly quite useless and in fact you will lose money following them - examples galore. Some are frauds.

[STRAT]

Just as everyone thinks its safe to come out and play again. What do you lot recon will be the impact of the US PPI figures due out on the 12th Oct and the CPI figures due out on the 16th. I Dont think it will be pretty.
The correction we, as many here put it "needed to have" never happened with new highs all round. I have an un easy feeling all over again :eek: and it seems to me the market doesnt think more than a few days in advance. Im thinking young Mr Shrewd may have been just that and very Shrewd indeed

Opinions please folks.

[shasta]

Just as everyone thinks its safe to come out and play again. What do you lot recon will be the impact of the US PPI figures due out on the 12th Oct and the CPI figures due out on the 16th. I Dont think it will be pretty.
The correction we, as many here put it "needed to have" never happened with new highs all round. I have an un easy feeling all over again :eek: and it seems to me the market doesnt think more than a few days in advance. Im thinking young Mr Shrewd may have been just that and very Shrewd indeed

Opinions please folks.

Seen as though Shasta can apparently "see into the future" (by two weeks), it's gonna be alright Strat.

If you don't have the mettle to stay fully invested, then fixed interest or property are better options, while bottom feeders like myself profit from the panic selling...

I LOVE these "corrections" & say bring on the bears...:p

[STRAT]

Seen as though Shasta can apparently "see into the future" (by two weeks), it's gonna be alright Strat.

If you don't have the mettle to stay fully invested, then fixed interest or property are better options, while bottom feeders like myself profit from the panic selling...

I LOVE these "corrections" & say bring on the bears...:pShasta you are too kind and you are good for a lot more than two weeks in my books :D But from one bottom feeder to another I was looking for thoughts and opinions rather than reassurance

[shasta]

Shasta you are too kind and you are good for a lot more than two weeks in my books :D But from one bottom feeder to another I was looking for thoughts and opinions rather than reassurance

My avatar is a representation of all the chicken lickens amongst ST.

Some of them even believe a bear market is a bad thing! :eek:

[spruik]

My avatar is a representation of all the chicken lickens amongst ST.

Some of them even believe a bear market is a bad thing! :eek:

Shasta, me thinks your avator is the cause of the severe crashes and other dips. It's very scary...

I like plundering the seas...

[STRAT]

My avatar is a representation of all the chicken lickens amongst ST.

Some of them even believe a bear market is a bad thing! :eek:If I remember correctly when asked about your avatar you said it represented your current feelings and would be updated when your sentiment to the market changed. Does that mean you are currently feeling a bit chicken licken? :eek::D:p

[shasta]

If I remember correctly when asked about your avatar you said it represented your current feelings and would be updated when your sentiment to the market changed. Does that mean you are currently feeling a bit chicken licken? :eek::D:p

Naw - more the evil face of death & doom & gloom, whilst profiting from it.

I'm working my way thru the 7 sins ...

[winner69]

S&P500 all time high close ..... nothing to stop it getting to 1600 in the near future now .... even it is trading at 24 times 'normalised' earnings

Just go with the flow

[Huang Chung]

The blood letting of early August seems like a lifetime ago right now. I was in the 'this is a massive over-reaction' camp, but even I'm staggered by the massive comeback by the market overall in the short time since then.

However, the recovery has been largely restricted to the bigger end of town, with many second line and speculative stocks still in a funk.

I've enjoyed the recent rise, but am now pulling back by selling some stocks that had a teriffic run over the last few weeks. As well as my emerging miners (VML & PDZ), I've kept MFS (actually, been buying more under $5), as so far it has not really enjoyed that much of the bounce back, but should play catch-up at some stage if the market continues to hold or improve on its recent gains. Great yield, and should bounce when they announce a deal regarding the Stella Group.

How are others positioning themselves going forward?

[STRAT]

Just as everyone thinks its safe to come out and play again. What do you lot recon will be the impact of the US PPI figures due out on the 12th Oct and the CPI figures due out on the 16th. I Dont think it will be pretty.
The correction we, as many here put it "needed to have" never happened with new highs all round. I have an un easy feeling all over again :eek: and it seems to me the market doesnt think more than a few days in advance. Im thinking young Mr Shrewd may have been just that and very Shrewd indeed

Opinions please folks.No one has any thoughts on this?

Huang Chung, Im going with the flow as W69 says but will be finger on the button around these dates. More blood letting to come I recon.

[spruik]

well that came sooner than I thought:D

...and some people picked up ADY at 20c! Spruik I think?

Yes, 100,000 in addition to 200,000 already held earlier (ave 21c). Traded twice on the way down from the sixties. My gain in this stock is over $100K and I'm not selling yet.

[OutToLunch]

well that came sooner than I thought:D

...and some people picked up ADY at 20c! Spruik I think?

I think there are quite a few happy ADY holders lurking out there. :) I threw just under A$96k into ADY at around 10.65c average, bought mostly during 2006... my first purchase was a 15,000 share toe in the water at 7.8 cents in Jan 05 and once the penny dropped for me last year with respect to what ADY was sitting on, I went in boots and all. Even so I never thought I'd see ADY evolve so quickly into the tiger that we have now but there you go. And like Spruik I've got no intention of letting a single share go just yet -- I think this baby's ready to fly. :D Maybe once the brokers are all over it and everyone's singing ADY's praises it will be time to sell into the hype, but not yet (and in any case, ADY is about to become two companies with each one looking very promising indeed).

The state of the market in general is a short- to medium-term threat (and I have keenly read and re-read this thread with that in mind) but the industrial revolution going on in Asia is on a scale that we have never seen in our lifetimes; the demand for raw materials as a result is stupendous. I read yesterday that China alone is building the equivalent of a city as big as Brisbane, every month. Something like 95% of China's demand for raw materials is driven internally (read: infrastructure, cars, etc) so even if the US suffers a downturn, resources/energy stocks should power on ahead. BHP are very confident about this scenario, and they should know. :D:eek:

I remain fully invested and will continue to hold through the rough bits. :)

[Viking]

This thread "Blood on the floor" is not "Gold on the floor"~
Guess most people who hold out the turmoil earlier~ or better for some went out and come back in during the lows, now got handsomely rewarded.

[shane_m]

there is a good chance of index going to +6750 points today, if that is the case it will be closer to +7000 than +6500

[JBmurc]

More like CASH ON THE FLOOR from anyone who brought up cheap shares in the recent silly selloff of soild resource shares etc -BHP got to a low of $31 i think, now only couple months its past $44 and looking strong

[quote]Originally posted by JBmurc

is this the start of the recovery
GOLD-570
CRUDE OIL-69

yes it was-
GOLD-642
CRUDE OIL-74


yess yess it is gold-737 Oil -$80

-Now if only my shares in these sectors will get noticed

[Dazza]

jbmerc

werent u 40% cash most of the time?

[shane_m]

15 points short of 6750..