Blood on the floor.

[jdg]

i've just come in off the tractor after doing the garden...
like you, hawke, i still hold a fair percentage in cash. no buy orders in, however, if things get really crazy i'll certainly be in. but i'm in no hurry. it's going to be an interesting year and i suspect to do well we'll need a bit of luck. if nothing else, not being fully invested means a little less stress when things are going south, particularly when you're into specces (as i am) and the swings get pretty wild.
-j

[winner69]

Here's a good piece (originally from Wall St Journal) of how these CDO thingies were made up ....... and why the impact of these things blowing up will take some time to flow through the system ..... esp credit default swaps ..... nobody really knows how much punters will be out of pocket as mentioned before no 'reserves' backing these 'insurance' policies and trillions at risk of being lost

http://www.theaustralian.news.com.au/story/0,25197,22982136-643,00.html

[tricha]

Recession in the US 'has arrived'

http://newsimg.bbc.co.uk/media/images/44334000/jpg/_44334980_constructionworker_ap203b.jpg Merrill said Friday's employment figures confirmed the recession

The feared recession in the US economy has already arrived, according to a report from Merrill Lynch.
It said that Friday's employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.
Its view is controversial, with banks such as Lehman Brothers disagreeing.
An official ruling on whether the US in recession is made by the National Bureau of Economic Research, but this decision may not come for two years.
The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months".
It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors.
Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle.
"According to our analysis, this isn't even a forecast any more but is a present day reality," the report said.
It added that the current consensus view on Wall Street that there is a good chance of avoiding a recession is "in denial".
It also objected to the use of euphemistic terms for the state of the economy.
"To say that the backdrop is 'recession like' is akin to an obstetrician telling a woman that she is 'sort of pregnant'," the report said.

[Ttops]

Tricha
The real question is how bad it will get. :eek: imo not too bad but it will be years before we know when it started.

In election year you can imagine that Bush will throw all he can at it to retain confidence. The errors were made 2003 onwards fooling the poor that they actually could own a house.

[spruik]

Borrowing from hardballgets at HC: A little worse, then the sun should rise again.


http://i254.photobucket.com/albums/hh86/hardballgets/XJOweekly.png

[STRAT]

Borrowing from hardballgets at HC: A little worse, then the sun should rise again.
Or not:eek: We will only know if the sun wont rise again when it doesnt rise:D

Out of interest I would like to see a longer time frame in the chart showing a few crashes like the one in the 80's ;)

[soulman]

Nice graph Spruik.

Actually, I wonder, does a bull go to bear straight away or does it go sideway first before a bear? Any expert/old timer out there want to enlight me on this?

Our bull here is actually supported by earnings and PE (the fundamentals) so this is not a 1987 scenerio, although you can never say never.

[STRAT]

Nice graph Spruik.

Actually, I wonder, does a bull go to bear straight away or does it go sideway first before a bear? Any expert/old timer out there want to enlight me on this?

Our bull here is actually supported by earnings and PE (the fundamentals) so this is not a 1987 scenerio, although you can never say never.Hi Soulman, earnings are either historical or speculative with 3 months of "who knows?" between reports, wouldnt you say?

A lot can happen in 3 months

[spruik]

Nice graph Spruik.

Actually, I wonder, does a bull go to bear straight away or does it go sideway first before a bear? Any expert/old timer out there want to enlight me on this?

Our bull here is actually supported by earnings and PE (the fundamentals) so this is not a 1987 scenerio, although you can never say never.

I would consider myself an old timer but not an expert. I first started to buy shares in the seventies (can't remember the year) when the market must have just peaked because I was happy that I got them "cheaper". Then I found out that they became cheaper all the time... the start of a long bear market.

A follow-up reply from treggs at HC goes like this:

HBG excellent chart. Pretty hard to argue with that. Only thing I can see that suggests the beginning of a bear market is the break of the MAV at the August lows. If we get to your target of 5900 we will have broken the mav twice which hasn't been broken chart since the beginning of the trend.

It is possible to draw an expanding wedge using this years price action too. Well done if you went short at the last high.

[spruik]

By Colin Twiggs
January 9, 2:00 a.m. ET (6:00 p.m. AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use (http://www.incrediblecharts.com/legal_vizhon/terms_of_use.htm).
2008 (mhtml:mid://00000325/#2008)

A short note to wish you peace and prosperity in 2008 and to remind readers that our regular newsletter service resumes next week.
Bear Market Confirmation (mhtml:mid://00000325/#bear)

Unfortunately the new year has not had a good start, with both the Dow and S&P 500 breaking through primary support after the recent market top. The two major indices, in conjunction with the Dow Transport index, now confirm the start of a bear market.

http://www.incrediblecharts.com/free/trading_diary/images/20080109_djiaa_w.png
S&P 500 (mhtml:mid://00000325/#sp500)

The S&P 500 breakout below 1400 signals the start of a primary down-trend.

http://www.incrediblecharts.com/free/trading_diary/images/20080109_spx.png

[STRAT]

http://www.chartchat.com.au/storage/DJ%2081301.png
The DJ Index is about to enter our reversal box between 12325 and 12460 completing a large 'ABC' correction. The reversal box represents a cluster of Fibonacci points and support (dotted line) and should produce a decent rally at the very least.
What is disturbing though for the US market is what appears to be a 'Head and shoulder' pattern (arrows) considered a good reversal indicator. The neck line (blue line) has been broken which is a bearish signal. I expect a rally back up to at least the 200 DMA around 13600 once our box has been filled. How DJ trades in this region will determine whether the HS pattern will prevail or not. Stay tuned.


Hi Spruik, thought you would be amused by the other side of someones coin:D

[spruik]

Thanks Strat.

There often are opposing and conflicting signals and views. I have been buying today - I play my own fiddle...

[tommy]

Hi STRAT

What is "large ABC correction"? sorry about the lame question, I'm no good with charts :-(

[spruik]

I was just pointing out one of the possibilities for a trend end using your chart. I have added the lines I was talking about. Expanding wedges usually end in a pretty ugly fashion, so hopefully this one doesn't happen. Looking at a few different charts and indicators, it is easier to imagine than a bounce. I hope I'm wrong and we get a bounce at your trend line.

http://i235.photobucket.com/albums/ee236/treggs77/XJOweekly.png

[STRAT]

Hi STRAT

What is "large ABC correction"? sorry about the lame question, I'm no good with charts :-(LOL. Its not a lame question Tommy and I dont know the answer:o. Im no chartist either. I posted this chart simply because it was suggesting the opposite of the one above. That said Im more inclined to agree with the previous one:D

The Chart came from the link below

http://www.chartchat.com.au/asx-200/

Heres a few links to a description

http://store.traders.com/stcov235siab.html

http://209.85.173.104/search?q=cache:0treizL9FE4J:invest-faq.com/cbc/tech-an-elliott.html+ABC+correction&hl=en&ct=clnk&cd=4&gl=nz

[Hoags]

Search Elliot wave theory I think.

[Hoags]

Watching the action in the US it seems we bounced hard off the bottom of the August correction intraday low of 12500. DIJA rallied hard almost 250 points off those lows in the final two hours of trading. Looked very bullish to me. We may see a test again but that support well and truly held. Either that or it was one mother of a short selling rally.

[winner69]

Watching the action in the US it seems we bounced hard off the bottom of the August correction intraday low of 12500. DIJA rallied hard almost 250 points off those lows in the final two hours of trading. Looked very bullish to me. We may see a test again but that support well and truly held. Either that or it was one mother of a short selling rally.


Maybe the Plunge Protection Team in action

[Ttops]

Maybe the Plunge Protection Team in action
Or just statistics W69?
http://www.marketwatch.com/news/story/nasdaqs-8-straight-down-days-do/story.aspx?guid=%7B0B99F3A4%2D9E94%2D49C1%2D938C%2 D8E1682D85D14%7D&dist=TNMostRead

It turns out that, over the 36 years since the beginning of 1972, there have been 37 other instances in which the Nasdaq Composite turned in a string of at least eight losing days. That's quite close to what we might expect on the assumption that the Nasdaq Composite's day-to-day gyrations are random, and serves as a powerful reminder that - difficult as the last eight days have been - we should not ascribe more meaning to this string of losses than it can support.
With that proviso in mind, here's what I found: The Nasdaq Composite more often than not rebounded smartly following past instances in which it had declined for eight straight sessions. The data are presented in the accompanying table.
% of time Nasdaq Composite higher in 3 months' time.. 58%

Average Nasdaq Composite gain over subsequent 3 months (annualized)..17.4%
% of time Nasdaq Composite higher in 6 months' time.. 79%

Average Nasdaq Composite gain over subsequent 6 months (annualized)30.1%

To be sure, the results over the subsequent three months are only modestly worth writing home about. For example, three months after past instances in which the Nasdaq Composite fell for 8 straight sessions, the Nasdaq was higher 58% of the time. That's not much better than the odds that exist at any other time.
Still, there is something even in these three-month results in which the bulls can take some solace: Even though the odds of a rising market over the subsequent three months are not overwhelming, neither are there increased odds of a big decline.
The six-month results are more heartening: Six months after past instances in which the Nasdaq Composite fell for 8 straight sessions, the Nasdaq Composite was higher 79% of the time - about four out of five times, in other words. And on average across all instances (not just the occasions in which the Nasdaq Composite rose), this benchmark rose at an annualized rate of 30.1%.
The bottom line? Though the Nasdaq Composite string of eight straight losses has been upsetting and disturbing, to say the least, it is neither historically unique nor reason, in and of itself, to liquidate your stock holdings and retreat to cash.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

[Halebop]

Speaking of statistics the 36 year sample is flawed. Markets are a reflection of underlying demographics. Baby Boomer demographics have been on the side of financial markets since around 1981 (and guess when share markets started their sustained period of out performance?). By taking a sample from 1972, the author has skewed analysis around 3 to 1 in favour of a demographic sweet spot for financial market investing. As boomers age, their tolerance for risk and desire to preserve capital for retirement / spending will slowly erode their tolerance for volatility (which because of their numbers means the market's average tolerance for volatility). Ironically this may well enable more frequent boom and bust cycles simply by the mechanism of withholding greater amounts of risk capital in times of trouble.

[Ttops]

Speaking of statistics the 36 year sample is flawed. Markets are a reflection of underlying demographics. Baby Boomer demographics have been on the side of financial markets since around 1981 (and guess when share markets started their sustained period of out performance?). By taking a sample from 1972, the author has skewed analysis around 3 to 1 in favour of a demographic sweet spot for financial market investing. As boomers age, their tolerance for risk and desire to preserve capital for retirement / spending will slowly erode their tolerance for volatility (which because of their numbers means the market's average tolerance for volatility). Ironically this may well enable more frequent boom and bust cycles simply by the mechanism of withholding greater amounts of risk capital in times of trouble.
Maybe getting sidetracked here Halebop but have you any ideas about what the boomers will do with their money if withdrawn from the share market?

[STRAT]

Maybe getting sidetracked here Halebop but have you any ideas about what the boomers will do with their money if withdrawn from the share market?Give it to their kids I hope:D

[spruik]

Maybe getting sidetracked here Halebop but have you any ideas about what the boomers will do with their money if withdrawn from the share market?

They gave it to those who put it back into the share market... :p

[Halebop]

Historically retirees choose stable, defensive and liquid assets over growth or volatile assets but if you do some hunting there isn't all that much good research on the subject - most is anecdotal. The performance of economic and financial markets overlaid with demographic (aging) trends is the best evidence I've seen on likely performance without the need to delve too deeply into qualitative analysis (the "whys").

In terms of shares this means utilities, property trusts (do they really still exist? Expect a full circle on the Hybrid / Manager model), insurance companies, maybe banks, supermarkets and perennial stable growth companies like the General Electrics and Proctor & Gambles of the world. I'd expect stable age focussed assets like Retirement Village Properties to do well operationally but most markets have anticipated this already so the gains from here may not match the hyperbole. But in terms of the overall asset mix this means a greater proportion of funds in cash and cash like instruments such as bonds or debentures. The weight of cash would likely depress interest rates relative to inflation (much as the weight of Asian money has recently) but the risk averse nature of it would likely depress more volatile asset classes like Miners, Property Developers, High Tech etc (unlike the current scenario where there is much capital discounting risk to sub-profitable levels and funding marginal business plans).

This makes for a potentially conservative scenario where there is cash being hoarded but not spent or invested for growth - Buffett logically argues he could do a lot better for the average retiree by chasing growth rather than hoarding cash but that would be a lot of psychology to overcome.

I suspect the politically easiest way to overcome this scenario is to ensure younger generations have a surplus of investment capital to keep the cycle going but this risks higher inflation and ultimately the opposite outcome.

In any case, I think we are seeing a correction and not the end of the party. I'm picking we have another 5 or 6 year bull run left before the secular cycle of 1981 turns and we have progressively more obvious boom and bust cycles and progressively lower or more volatile returns. We just need a bit of a deck clearing cleanout before hand. I'm hoping this is it because it will get messy without a breather. Despite some people saying PE ratios are modest the earnings quality is not high - much being reliant upon historically cyclical industries, supercharged investment returns and tolerance for high risk.

[FarmerGeorge]

On the topic of the boomers withdrawing all their cash, I took a class on global business late last year which pointed out that the Gen Y's are almost as big a generation in terms of raw numbers, and may end up being better for capital markets in terms of their higher education and greater financial knowledge. So things could be a lot worse. Also there are of course emerging markets which have high growth populations, of whom a large number are financially literate and will be interested in market investing.
A final thought is that larger populations of boomers haven't driven markets up per se, rather they spent and drove up company earnings. The markets rose, as it were, 'on their own'. Fewer people means fewer customers and a POSSIBLE scenario would be some period of lower profitability, followed by consolidation as industry readjusts to the lower demand levels. After that earnings would be fine and markets would offer further opportunities for people like us. IF this were to happen then, longer term, the markets would actually offer huge opportunities as the lower number of companies eventually were able to drive earnings through market growth as the current 'emerging' markets become more stable. Just my thoughts anyway.

[Halebop]

The challenge is (in the developed world at least) that Gen Y aren't as big a demographic as the Boomers and in terms of capital accumulation and earnings power can't hope to compete with the boomers (as they currently sit) for another 20+ years. It's not just the numbers of people involved, but what they are doing at different stages in their life cycle and their relative proportional concentration to other demographics. Gen Y are costing the economy money at present because they are still being educated and this is expensive. NZ Government policy (like policy elsewhere in the OECD) is trying to coax younger Gen X'ers and older Gen Ys to procreate but having babies is also expensive (Health care, education, diminished economic contribution from Mums and Dads). It's a balancing act between extracting tax dollars from earners (including Boomers) to pay for it in order to produce the future "cattle" to pay tax dollars, contribute labour and spend as the boomers retire (and expire).

If you overlay NZ demographic data over the boomers and estimate what they might be doing at each age cycle, without new sources of bums on seats there is a looming demographic gap. It won't be the end of the world but as in previous demographic cycles it will auger the potential for higher deficits, higher inflation, reduced productivity, more pronounced boom and bust cycles and more volatile (& probably lower) investment returns.

[spruik]

It must be the suspension of CNP sending shivers through the market, despite the 2-day bounce of the Dow. Property trusts seem most targeted, even a quality trust like Stockland (SGP).

[FarmerGeorge]

The point of demographic issues is of course valid. I think I may be a perennial bull in equity markets so I suppose I have a positive bias on how I interpret data. But I'm simply not convinced that over the next, say, twenty years that 'aging baby boomers' will result in lower market returns. But like I say, it's just my position and I don't have any data to back that up.

Halebop, I'm curious as to where the data for this is:

"as in previous demographic cycles it will auger the potential for higher deficits, higher inflation, reduced productivity, more pronounced boom and bust cycles and more volatile (& probably lower) investment returns. "

Sounds like an interesting read.

[The Big Ease]

i love a good old fashioned correction. not the kind that lasts 2 weeks, but a few months of solid downward direction. it feels like heavy rain after a heat spell. keep it coming baby!

im torn between investing incrementally, or just waiting.

[tricha]

It must be the suspension of CNP sending shivers through the market, despite the 2-day bounce of the Dow. Property trusts seem most targeted, even a quality trust like Stockland (SGP).

Who's next in line, who lends them the money :confused:

[spruik]

Try MFS...

Also BBI (holding) got hammered on the release of "good news" having debt funding and hedging in place.

Seems anything to do with debt and hedging has become a dirty word. A lot of worried people around at present.

I am inclined to believe that CNP will not survive in it's present form.

[Halebop]

Halebop, I'm curious as to where the data for this is:

"as in previous demographic cycles it will auger the potential for higher deficits, higher inflation, reduced productivity, more pronounced boom and bust cycles and more volatile (& probably lower) investment returns. "

Sounds like an interesting read.

Read pretty much anything by a demographer and you can start to build a picture of economic impacts. I particularly liked Ken Dychwald and his book on Baby Boomers (Age Wave), its a bit old now and he really only touches on business rather than broader economic impacts but the Boomers ain't dead yet so neither are his observations.

However can still recall the book that led me down this path - if you can look past his smugness, a book by Economist and Self Promoter Paul Zane Pilzer back around 1990 - pretty sure it was called Unlimited Wealth (or something schmaltzy like that). His book was focussed on how to make money in the 90s and beyond but he touched on two factors that struck a chord with me - technological innovation overcomes finite resources (almost the opposite of the economics they taught me at school and not something Peak Oil fans want to hear) and demographics matter (he predicted Japan would tank for this reason at a time when they were buying the world and were apparently invincible). He also scaled the best seller lists by touting direct selling as a growth industry and got cast as a champion of Multi Level Marketing - I'm sure that helped his bank balance!

[tricha]

Try MFS...

Also BBI (holding) got hammered on the release of "good news" having debt funding and hedging in place.

Seems anything to do with debt and hedging has become a dirty word. A lot of worried people around at present.

I am inclined to believe that CNP will not survive in it's present form.

Weird everyone seems to be in denial on this site, Which banks lent to CNP :confused::confused::confused: , Blood on the floor Monday, I picking we will see a 200 point drop.

ASX down to 5800 points.

[spruik]

Weird everyone seems to be in denial on this site, Which banks lent to CNP :confused::confused::confused: , Blood on the floor Monday, I picking we will see a 200 point drop.

ASX down to 5800 points.

Might not be such a bad thing and will take it close to support at around 5700 or so. Meaning it's a buy day (with any money left that is!)

[STRAT]

Weird everyone seems to be in denial on this site, .Hi Tricha, In denial in regard to what?

[winner69]

This joker is usually on the bullish side

Dr Oliver said the ASX200 index could fall as far as 5500 points in the next few months.
http://www.theaustralian.news.com.au/story/0,25197,23046376-20142,00.html

[soulman]

You are way off Tricha but that number might get there eventually.

The big drop on ASX last Friday was already factored in what Mastercard would report in the US.

You are right on that Winner. Dr Oliver is usually solid, not the bullishish but semi bullish. Although, it's the down momentum that is hitting the market ATM.

[tricha]

You are way off Tricha but that number might get there eventually.

The big drop on ASX last Friday was already factored in what Mastercard would report in the US.

You are right on that Winner. Dr Oliver is usually solid, not the bullishish but semi bullish. Although, it's the down momentum that is hitting the market ATM.

Like today maybe, Soulman :confused:

[Bilo]

Even my computer has gone quiet...

[tricha]

This joker is usually on the bullish side

Dr Oliver said the ASX200 index could fall as far as 5500 points in the next few months.
http://www.theaustralian.news.com.au/story/0,25197,23046376-20142,00.html


Hmm the way its going winner, the next few days.

[trendy]

Trendy calling from down here in the boiler room - warning she's about to blow!

CDO and bond insurers are about to default here. This will have massive ramifications on the credit market. Insurance protection for default or loss on CDOs (not just sub-prime) is all but gone. CDO and bond ratings that were AAA today will drop to junk without insurance.

Will require government bailout and backing of insurers to prevent massive credit crunch.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aF5n2mMwD_VE&refer=home

http://news.goldseek.com/GoldenJackass/1198181083.php

Looks like the insurers are being downgraded further.

http://www.bloomberg.com/apps/news?pid=20601109&sid=adLFXGDwqM2Y&refer=home

Moody's, S&P Reviewing Bond Insurers as Losses Mount (Update4)

By Christine Richard and Nancy Moran

Jan. 17 (Bloomberg) -- Moody's Investors Service and Standard & Poor's increased their scrutiny of bond insurers after losses on subprime-mortgage securities prompted Ambac Financial Group Inc. to report writedowns of $3.5 billion.

Ambac and MBIA dropped in early New York Stock Exchange trading and their risk of default soared after Moody's said it may cut Ambac's AAA credit rating. S&P yesterday began examining all bond insurers after increasing its predictions for losses on subprime mortgages. Shares of Ambac plunged $8.01, or 62 percent, to $4.96 as of 9:48 a.m. in New York Stock Exchange composite trading. MBIA shares dropped $4.57, or 34 percent, to $8.83.

Moody's and S&P are starting new reviews one month after affirming ratings on New York-based Ambac and MBIA Inc., the two largest bond insurers. Both companies slashed dividends and announced plans to raise $1 billion to shore up capital and retain their top rankings.

``No one knows when the end may be in sight, including the raters,'' said Richard Larkin, a municipal bond analyst at JB Hanauer & Co. in Parsippany, New Jersey. ``The rating agencies have lost as much credibility as the bond insurers. Every time you turn around they're changing their minds about what's going to happen in the subprime-mortgage market.''

Two weeks ago Ambac traded above $20; a year ago the shares were trading at about $87. MBIA shares cost about $70 a year ago.

Ambac Surprised

The bond insurers came under review after they started guaranteeing securities linked to subprime mortgages that began plunging. Until last year, Ambac and MBIA had recorded annual profit increases for the past decade from their traditional business of insuring municipal bonds.

``In view of the uncertainty generated by Moody's surprising announcement, Ambac is assessing the impact,'' the New York-based company said today in a statement distributed by Business Wire.

Executives will comment on the ratings review and the company's plans to raise more capital on a conference call scheduled for Jan. 22 at 10 a.m., Ambac said.

Losing the AAA stamp would cripple the bond insurers' business and throw doubt on the ratings of $2.4 trillion of debt the industry guarantees, causing as much as $200 billion in losses, according to data compiled by Bloomberg.

After completing a test of the financial guarantors on Dec. 19, S&P put the AAA ratings of MBIA, Ambac, Security Capital Assurance Ltd. and CIFG Financial Guaranty on negative outlook. The firm placed FGIC Corp.'s AAA rating under review for a possible downgrade.

Moody's Affirms

Moody's affirmed Ambac's ranking on Dec. 14, saying it had enough capital to handle losses, and put MBIA's AAA rating on negative outlook.

Ambac yesterday reduced the value of some contracts on debt it guarantees by $3.5 billion in the quarter ended Dec. 31 and ousted Chief Executive Officer Robert Genader, 60.

``This loss significantly reduces the company's capital cushion and heightens concern'' about losses on mortgage-backed securities, Moody's analyst James Eck said in the statement.

Ambac plans to respond, spokesman Peter Poillon said in an e-mail.

S&P now assumes losses on 2006 subprime mortgages will reach 19 percent, up from 14 percent, as housing prices decline more than it previously anticipated. That may make S&P more likely to downgrade the bond insurers.

S&P Anticipates

The new loan-loss assumptions ``reflect the growing economic consensus that U.S. home price declines will be larger than previously forecasted and that the slump in the U.S. housing market is expected to last far longer than previously anticipated,'' S&P said yesterday.

The U.S. Commerce Department will probably report today that housing starts fell to an annual rate of 1.145 million last month, the lowest in 14 years, according to the median forecast of 74 economists in a Bloomberg News survey.

``The market stresses contributing to Ambac's recent financial and organizational announcements are also evident at other financial guarantors,'' Moody's Managing Director Jack Dorer said. ``Moody's will be evaluating, in the near term, the degree to which these issues -- including the extent of customer and investor support -- affect the ratings of other firms in the industry.''

Default Risk

Ambac said yesterday it will sell $1 billion in equity and equity-linked notes, and cut its dividend 67 percent. Fitch Ratings had given the company until the end of the month to raise $1 billion to avoid a cut of its insurance rating to AA+. Fitch affirmed MBIA's rating yesterday, though didn't comment on Ambac's announcement.

The risk of Ambac defaulting on its debt soared, trading in credit-default swaps shows. Investors demanded 22 percent upfront and 5 percent a year to protect Ambac's bonds from default for five years, according to London-based CMA Datavision. That rose from 15.5 percent upfront and 5 percent a year.

Credit-default swaps are a way of speculating on a company's ability to pay its obligations. Buyers receive the face value of the insured debt in exchange for the underlying securities or cash should a borrower fail to adhere to its debt agreements. The swaps rise as perceptions of credit quality worsen.

MBIA's subordinated notes sold last week tumbled as much as 12 percent, bond traders said. The insurer raised $1 billion in the Jan. 11 offering of so-called surplus notes. The AA rated debt fell as low as 88.5 cents on the dollar yesterday, the traders said. That's the equivalent of a yield of 18 percent, data compiled by Bloomberg show.

Credit-default swaps linked to MBIA soared 9 percentage points to 25 percent upfront and 5 percent a year, according to broker Phoenix Partners Group in New York. That means it would cost $2.5 million initially and $500,000 a year to protect $10 million in MBIA bonds from default for five years.

[Damo79]

Wow!! I just counted up all the stocks I have on various watchlists on my comsec account. I watch a total of 33 shares (of which i hold 5), and 27 are in the red, 6 are unchanged for the day. Not a hint of green to be seen :-(

[soulman]

OK, the big 5 banks are up. All on forward yield of about 5.7% FF.

RIO was a bargain at the open at $110. I wonder who got in here.

Our market are recovering right now. Am tipping closing between 80 and 90 points.

As regards to MFS, no comment. Just shock exuberance.

[Halebop]

A pretty strong recovery off the support line. Down trend is still in place but bulls (and TAs) should take comfort in resistance occuring at exactly where it might be expected.

[STRAT]

OK, the big 5 banks are up. All on forward yield of about 5.7% FF.

RIO was a bargain at the open at $110. I wonder who got in here.

Our market are recovering right now. Am tipping closing between 80 and 90 points.

.I think you are right Soulman. Like a big rubber ball. The big question if we are correct is how high will it bounce and how long will it stay in the air. Not long I recon.

[soulman]

Geez, my prediction on MFS compared to CNP was pretty spot on. The selling was relentless, maybe due to stop loss on the buyers today. I mean if someone bought today at $2 or $2.50 are getting spanked today.

I mean the value on Stella is worth at least something. Just look at FLT. Stella have S8 business, along with Harvey World Travel and many others. If anything, the management should work with PE Group to take MFS private, management buyout etc....

The debt is a worrying, probably because they are buying on these coy on leverage and have pushed it too much.

A lesson learned here for me and others, don't buy coys that you don't understand.

As with the market, it's looking like down 40 to 60 points. Massive recovery. Someone is buying or maybe short covering. I think bargain hunting more than short covering.

[spruik]

OK, the big 5 banks are up. All on forward yield of about 5.7% FF.

RIO was a bargain at the open at $110. I wonder who got in here.

Our market are recovering right now. Am tipping closing between 80 and 90 points.

As regards to MFS, no comment. Just shock exuberance.

Today I bought into MFS sub $1.00 average, since I last sold them at $1.80 around 3-4 years ago. Must admit it feels like a gamble but enjoyed the day.

[Bilo]

Wow!! I just counted up all the stocks I have on various watchlists on my comsec account. I watch a total of 33 shares (of which i hold 5), and 27 are in the red, 6 are unchanged for the day. Not a hint of green to be seen :-(

Damo79
I noticed that you are with comsec. Just a question. Has ASX.MCC (MacArthur Coal) been removed from the margin lending list? What did they suggest their clients do?

[soulman]

Good luck to you Spruik.

I know you are a trader but for anyone that is not, I hope MFS is a 2 to 3 fold investment for you in the long-term. I can't sell MFS now. If it go under, so be it. It was mistake not selling AT LEAST half of my MFS on Mon or Tues when volatility looms.

If MFS trade like CNP, then we might see 45 cents on Monday next week. No one knows.

It seems the slide in MFS all has to do with volatility, margin call, and stop loss. Opened at $2, high of $2.68 and low at 71 cents. More vicious than RIO.

I would prefer MFS not to raise anything. Raising capital raised eyebrow. I wonder if MFS will still raise capital on a now shocking share price. If they did, then MFS is no good. I bet Michael King and the executives of MFS did not forsee this market disaster today.

[spruik]

Good luck to you Spruik.

I know you are a trader but for anyone that is not, I hope MFS is a 2 to 3 fold investment for you in the long-term. I can't sell MFS now. If it go under, so be it. It was mistake not selling AT LEAST half of my MFS on Mon or Tues when volatility looms.

If MFS trade like CNP, then we might see 45 cents on Monday next week. No one knows.

It seems the slide in MFS all has to do with volatility, margin call, and stop loss. Opened at $2, high of $2.68 and low at 71 cents. More vicious than RIO.

I would prefer MFS not to raise anything. Raising capital raised eyebrow. I wonder if MFS will still raise capital on a now shocking share price. If they did, then MFS is no good. I bet Michael King and the executives of MFS did not forsee this market disaster today.

I'm sure no-one would have foreseen events of today. I thought they were cheap going below $2.00, let alone 71 cents. Had another buy order at 50 cents - it just can't be worthless.

It was simply stunning to see the speed of price changes and the volumes going through. But that doesn't help you.

It will most probably recover. With hindsight I would also have sold heeps of things (like ADY when 42 cents was cracking up and buying back low thirties) but surely have been too much in love with it. Damn!

[Dazza]

brought BHP at 35 today
hope that was a good long term price

if it goes to 28 ill buy some more i guess

[kura]

brought BHP at 35 today
hope that was a good long term price

if it goes to 28 ill buy some more i guess

I was forwarded an email put out by a Oz broker yesterday, the email was titled "Avoid Temptation"
below is a "cut and paste" of their target buy prices (for what it's worth)

BHP @ $30
ORI @ $26
CBA @ $47
QBE @ $26
CSR @ $2.60
WBC @ $22
DJS @ $4
TLS @ $3.50
ASX @ $40
WOW @ $23
AXA @ $5
LLC @ $11.50
ZFX @ $8

[trendy]

This will be huge next week! Meltdown will become Market Crash!!!

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3Xei2RV5MCY&refer=home

Ambac Insurance Loses AAA Ranking at Fitch Ratings (Update6)

By Christine Richard

Jan. 18 (Bloomberg) -- Ambac Financial Group Inc. became the first bond insurer to lose its AAA rating after Fitch Ratings downgraded the company.

Ambac Assurance Corp. was lowered two levels to AA and may be reduced further, New York-based Fitch said today in a statement. The downgrade ``reflects the significant uncertainty with respect to the company's franchise, business model and strategic direction,'' Fitch said.

Without its AAA rating New York-based Ambac may be unable to write the top-ranked bond insurance that makes up 74 percent of its revenue. Ambac may quit the business or sell itself, said Robert Haines, an analyst at CreditSights Inc., a bond research firm in New York. The downgrade throws doubt on the ratings of $556 billion in municipal and structured finance debt guaranteed by Ambac.

``This makes Ambac insurance toxic,'' said Matt Fabian, senior analyst and managing director at Municipal Market Advisors in Westport, Connecticut. ``The market has no tolerance for a ratings-deprived insurer.''

Ambac, the second-largest bond insurer, fell 4 cents to $6.20 in New York Stock Exchange composite trading. The company today abandoned plans to raise $1 billion in capital after a 70 percent plunge in its shares in the past two days.

Moody's Investors Service and Standard & Poor's, the two largest ratings companies, are reviewing Ambac's ratings for a possible reduction. Moody's said this week it may also cut the ratings of MBIA Inc., the largest bond insurer.

`Matter of Time'

``The likelihood is quite high the others will follow,'' said John Tierney, credit market strategist at Deutsche Bank AG in New York. ``Barring some significant development on new capital, it's just a matter of time before S&P and Moody's act on MBIA and Ambac.''

The seven AAA rated bond insurers place their stamp on $2.4 trillion of debt. Losing those rankings may cost borrowers and investors as much as $200 billion, according to data compiled by Bloomberg. The industry guaranteed $100 billion of collateralized debt obligations linked to subprime mortgages, $22 billion of non-prime auto loans and $1.2 trillion of municipal debt.

New York-based Merrill Lynch & Co., the world's largest brokerage, yesterday took $3.1 billion of writedowns on the value of default protection from bond insurers.

Ambac-Insured Bonds

Fitch, following its downgrade of Ambac Assurance, adjusted ratings accordingly for 137,990 municipal bonds and 114 non- municipal issues insured by the company. Bonds with underlying ratings higher than Ambac's will remain above the bond insurer's level, Fitch said today in a statement.

Fitch last month demanded the company raise $1 billion by the end of January. Ambac on Jan. 16 slashed its dividend 67 percent and said it would sell stock or convertible notes to bolster its capital. The plan provoked a boardroom dispute and led to the departure of Chief Executive Officer Robert Genader.

Ambac's interim CEO, Michael Callen, 67, this week said the company planned to raise capital in ``an accelerated time frame.''

Moody's said this week it may cut Ambac's ratings after the company forecast writedowns of $3.5 billion on subprime-mortgage securities. Standard & Poor's today said it may cut Ambac's rating because its capital-raising options are ``impaired.''

The sudden increase in scrutiny by Moody's, a month after the company affirmed the ratings, sparked tension with Ambac and MBIA.

Ambac yesterday described Moody's decision to place its ratings on review as ``surprising.'' MBIA issued a statement today saying it had started a capital raising plan ``in good faith reliance'' on Moody's stated requirements.

`Exceeds Requirements'

MBIA raised $1 billion last week in the sale of surplus notes and last month entered a deal to sell $1 billion of stock to private-equity firm Warburg Pincus LLC. Both companies slashed their dividends and took out reinsurance on some securities to help shore up capital.

``We believe our capital plan meets or exceeds the requirements previously outlined by Moody's and the other two major rating agencies,'' MBIA Chief Executive Officer Gary Dunton said in the statement.

MBIA's surplus notes plunged as low as 70 cents on the dollar today, indicating a yield of about 25 percent, traders said. MBIA fell 67 cents, or 7.3 percent, to $8.55 on the New York Stock Exchange, taking its decline to 48 percent this week.

Ratings companies, which affirmed their assessments a month ago, are scrutinizing bond insurers to ensure they have enough capital to protect against losses. S&P yesterday said industry losses on subprime securities will be 20 percent more than it initially forecast.

Ambac has a capital shortfall of about $400 million under the new assumptions, S&P said.

Ambac Bonds

Ambac's 6.15 percent bonds due in 2037 have plunged by 25 cents on the dollar this week to 35.4 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The yield has soared to 17.6 percent from 10.5 percent and the extra yield investors demand over government securities with similar maturities has widened 7.2 percentage points to 13.4 percentage points.

Prices for credit-default swaps that pay investors if MBIA can't meet its debt obligations imply a 71 percent chance it will default in the next five years, according to a JPMorgan Chase & Co. valuation model. Contacts on Ambac imply 72 percent odds.

Bond Protection

Contracts tied to MBIA's bonds have risen 10 percentage points the past two days to 26 percent upfront and 5 percent a year, according to CMA Datavision in New York. That means it would cost $2.6 million initially and $500,000 a year to protect $10 million in MBIA bonds from default for five years.

Credit-default swaps on Ambac, the second-biggest insurer, rose 11.5 percentage points to 26.5 percent upfront and 5 percent a year yesterday, prices from CMA Datavision show. They were unchanged today.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

Ambac agreed to guarantee almost $200 million of bonds sold so far this year, or 6 percent of the market for new insured issues, according to data compiled by Bloomberg. Ambac's market share was 22.5 percent as of Sept. 30, 2007, according to a Dec. 13 report from Bear Stearns Cos.

[winner69]

Trendy --- read this from a bond man Bill Gross
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+January+2008.htm


I suggested a few months ago I mentioned this 45 trillion of credit default swaps and what could happen if only normal defaults occurred because the 'insurors' ain't got any reserves etc .......... and was taken to task by a few posters for exagerrating and using big numbers to 'scare' people

But it seems to be unfolding eh Trendy

It's not just the direct losses that could arise from these sort of transactions that is a problem -- it is the as gross puts it 'the drag on economic activity' and the implications throughout the whole financial system

[Sumnerned]

Winner, thanks for the link to Bill Gross, he always talks a lot of sense.

It won't help the market, but the correct move now is probably for the bond insurers to sue the ratings agencies for mis-rating some of these 'conduits', in particular the subprime related CDOs.

[trendy]

Good articel in Economist on the bond insurers.

http://www.economist.com/daily/news/displaystory.cfm?story_id=10553166&top_story=1

[Mick100]

I suggested a few months ago I mentioned this 45 trillion of credit default swaps and what could happen if only normal defaults occurred because the 'insurors' ain't got any reserves etc .......... and was taken to task by a few posters for exagerrating and using big numbers to 'scare' people



Winner, anyone who's throwing these notional derivatives values around is just trying to scare people which is what you are doing

The reason why I say this is because
the notional value of derivatives is irrelevant
What's relevant is how much these derivative holders stand to lose if the markets go against them - as pointed out by Gross - that's $250 billion - not 47 or 500 trillion

Those people who can't make the distinction between notional value and potential gain/loss simply don't understand how these things work or, more likely, they do understand but nevertheless still try to scare those who don't understand.
.

[Halebop]

If I have a contract that someone can't complete do you think there is much difference between notional value and my "mark to market" losses?

As soon as you are awaiting a 3rd party to deliver anything - money, goods, commodities - you are assuming the financial risk profile of that third party in your own business model. Think of something simple - someone makes computers and buys some bad soldering from a contract manufacturer. Think it matters to your customers that the liability on the product they are returning rests with a shelf company owned by your subcontractor?

If between a put and a call you have made money but it turns out only one of those third parties can complete, notional value suddenly becomes very bloody important because the contract is yours, not the defaulters who is probably bankrupt already. If someone actually wants that ounce of gold you thought you'd engineered a profitable trade on, you now have to go out and buy it if the 3rd party failed to deliver it. Suddenly Notional is very real at the pointy end of the transaction.

Notional value represents systemic risk. Of course only a portion will turn bad. But with trillions at stake you only need a portion. Who the hell made up the $250b number anyway? Nobody knows what that number is - a few months ago there was no problem (yeah right).

[Mick100]

Firstly, the vast majority of the 500 trillion in outstanding derivatives are exchange traded derivatives. In this case the counter party to each contract is the clearing house. Each trader maintains a margin in his account in case the market moves against him. The contracts are marked to market at the end of each trading day and each trader must ensure that his initial margin is maintained at all times. Anyone who can't meet margin call has their contracts closed out by the clearing house , ie, not much risk of these contracts falling over.

The over the counter derivatives are the ones that are of concern at the moment. I think this is where this figure of 45 trillion is coming from.
Of course the 45 trillion is the notional value which is the figure that the scaremongers like to throw about - sure is an impressive number - more than three times US GDP. But when it comes to derivatives the notional value is meaningless- anyone who deals in derivatives will understand this.
Gains or losses is all that matters - and the gains/losses will only be a small fraction of the notional value of the derivatives
.

[_Michael]

Hate to bring more bad news but batten down the hatches fellow sharetraders, Europe just took a pretty major dive

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

:eek::(

[Seti]

Here's another one http://www.bloomberg.com/apps/news?pid=20601102&sid=asySstCMWgZE&refer=uk

U.K. Stocks Drop Most Since Sept 11. 2001, Led by BHP, Rio

"Global equities have stormed into bear territory and we are now in a short-term meltdown"

"Rio Tinto, the world's third-biggest mining company, fell 10 percent to 4,228 pence. "

"BHP dropped 10 percent to 1,235 pence."

Wow!

[JBmurc]

Come March/April sharetraders are going be boasting of there great buys in the current FEAR driving markets buying companys like BHP with soon to be sub P/E-10 is beyond belief

Sell if it makes you feel better about the massive market sell offs still if your invested for the longer term why sell at massive losses

[trendy]

JBMurc don't forget that the forward "e" in PE will drop as global demand drops due to recession. You need to project forward the PE.

[Halebop]

JBMurc don't forget that the forward "e" in PE will drop as global demand drops due to recession. You need to project forward the PE.

Agreed. If we head into a recession, the "E" will stand for "ephemeral". The market does not appear to be panicking to me, it is rationally correcting after reflecting on current risk and future reward.

The ASX (and other markets) have given a series of end of bull market signals - only a few shares took the index to its highs - most have been ranging or drifting gently down. It was struggling to make new highs and showing signs of both distribution and volatility. Cracks in credit risk were glossed over. Fund Managers and various cyclical financial companies were falling over themselves to go public.

[stevo1]

blood looks up to the top of my gumboots to me

[POSSUM THE CAT]

stevo1 Wait until it is up to your waste and then buy

[Phaedrus]

It's past his waste and is now nearly up to his waist!

[stevo1]

It's past his waste and is now nearly up to his waist!

hi Phaedrus how bout throwing us a lifeline of a chart or three .it wont be a waste and the gumboots are swamped

[STRAT]

The yanks were on holiday Monday so we are in for a double dose from them tonight. Ive decided to pretty much keep my money in my pocket today

[jke_brown]

wow -320 points and not showing any signs of recovery. I am all cashed up and put my money in the mesa account to offset mortgage interest.

I was very tempted to buy PSA today though.

Seems like Blue chips stocks haven't dropped much as the smaller and mid cap stocks. Blue chips a better investment on a bear market?

[fihr]

Looks like the brokers are beginning to take the view that our market is undervalued. The
Fin Review says Ausbil Dexia's Paul Xiradis says, ""We've seen our market come back to levels that I think are too low... and fear of a recession in the US is more than reflected in share prices globally".

I hope that this sort of thinking sees the market bottom out.

I am considering buying some calls on good quality stocks, a few months out, so I can buy them at today's prices when I have the money later on, but not risk too much capital now.

[Packersoldkidney]

Blue chips a better investment on a bear market?

Nothing is a 'better investment in a bear market'. Not gold, not silver, not oil, and definitely not stocks - blue chip or otherwise. Cash is king and even some of that should be put under your mattress.

This rout has been a long time coming and has a long way to play out yet.

[SEC]

Nothing is a 'better investment in a bear market'. Not gold, not silver, not oil, and definitely not stocks - blue chip or otherwise. Cash is king and even some of that should be put under your mattress.

This rout has been a long time coming and has a long way to play out yet.

Kidney! You're still alive! Welcome back.

SEC

[Packersoldkidney]

Kidney! You're still alive! Welcome back.

SEC

:)

Perhaps not the best day to re-post on, but that's the way it goes I guess.

[SEC]

:)

Perhaps not the best day to re-post on, but that's the way it goes I guess.

I reckon it's a sign. We at ST all thought that the Kidney had been reunited with its original owner.

SEC

[Mick100]

:)

Perhaps not the best day to re-post on, but that's the way it goes I guess.

Welcome back packers

Now I'v got three things to remember this day by:
Sir Ed Hillary's funeral
Packers return to ST
and my biggest ever one day loss in the markets

[Packersoldkidney]

Welcome back packers

Now I'v got three things to remember this day by:
Sir Ed Hillary's funeral
Packers return to ST
and my biggest ever one day loss in the markets

That's a trifecta right there!

[Huang Chung]

Read a lot of what Mr Kidney posted in the past.......your return is most welcome, Mr. Kidney. :)

[Packersoldkidney]

I reckon it's a sign. We at ST all thought that the Kidney had been reunited with its original owner.

SEC

Nah....TBH I was fully liquidated out of the market by this time last year and really had no need to post and for a lot of that time I wasn't near a computer anyway. I did have a health scare but things are back to normal for me on that front, touch wood.

The writing has been on the wall for some time as far as the market goes, I'm glad I'm not playing it at the moment either short or long. I hope everyone here doesn't get hit too hard by the current situation.

[Mick100]

I think the markets will put in a bottom either this week or early next week
- probably to coincide with the Bush state of the nation adress along with a decent sized cut in the fed funds and discount rate by the Bernanke Fed
which will both take place early next week

Looking at the long term charts ther is strong support for the DOW at 11,000 - 11500 range. Dow futures are trading at 11500 currently

http://charts3.barchart.com/chart.asp?jav=adv&vol=Y&grid=Y&divd=Y&org=stk&sym=ZDH8&data=H&code=BSTK&evnt=adv

[MadDoc]

As a longtime infrequent poster but well read lurker I would like to say 'Welcome back PSK!'

Unfortunatley I'm still well in the market but trying to ride out the 'perfect storm'.

Theory 524: The world still needs oil! So I've held for the medium term.

Thankfully I didn't leverage in. Best of luck to those that are suffering margin calls.

Looks like (at time of writing) the FTSE might go green

[Kookaburra]

Interesting about what date did you get out? What form of cash are you holding?

[tricha]

I wish I had your patience Packer

I guess a health scare re-focuses everything.:confused:

This is the most read thread on ASX Sharetrader.

I hope u continue on here, miss all your wise comments.

Cheers Tricha

[Packersoldkidney]

Interesting about what date did you get out? What form of cash are you holding?

Well before the market top, and I have to admit that it was my health that pushed me out. I knew that it couldn't go up forever and I knew that I was probably going to miss out on a fair bit, but I just couldn't keep tabs on it day to day. The run most of us had had up until then was sensational from around late 2003.....Jesse Livermore said something like it's always best to miss out on that last 10 or 15% than get thumped later for much of what you'd made in the bull run. It's probable that wisdom was forced on me by circumstance rather than by my own judiciousness.

However, at that time, some people I trust very much had told me that the poop would hit the fan regardless of whether the world economy was going strong or not - so I had to exit. The US debt situation said so, regardless of this current Sub-Prime thing that seems to have sparked this stratospheric plummet. (there are always reasons given for these types of things, most of them made up in hindsight; perhaps the best reason for a market fall of this type after the run its had is what goes up must eventually come back down, regardless of China, India or any other reason for why the rise must keep going)

As for types of cash, just basic insured accounts by and large. ;)

[Packersoldkidney]

I wish I had your patience Packer

I guess a health scare re-focuses everything.:confused:

This is the most read thread on ASX Sharetrader.

I hope u continue on here, miss all your wise comments.

Cheers Tricha

Thanks for the kind words. Can't say I'll be overactive here as I'm no longer trading.

[Huang Chung]

As a longtime infrequent poster but well read lurker I would like to say 'Welcome back PSK!'



MadDoc....I think you'll find its actually POK - Packers Old Kidney, not PSK - Packer Sold Kidney.

For ages, I thought it was 'Packer Sold Kidney' as well....but kept on thinking, the grumpy bugger needed a kidney, why would he sell one? Also, everyone referred to him as POK, which of course didn't make any sense at all.

Anyhow, one day the penny finally dropped......

[Huang Chung]

This is the most read thread on ASX Sharetrader.

I hope u continue on here, miss all your wise comments.

Cheers Tricha

I'll second Tricha's comments.

'Blood on the Floor' - 1657 posts and nearly 3 years running. Top thread POK....

Always welcome your thoughts.

[tommy]

Welcome back Packers, missed your wisdom for a long time here at ST. Even if you aren't holding any stocks, your comment/analysis is always welcome.

Hope you are in better health now, and I am sure you are happy you weren't in the market today!

[Packersoldkidney]

Thanks for the kind words, Huang and Tommy. I think my wisdom has been blown out of proportion a bit! Probably by not posting here day on day people have forgotten some of the stupid stuff I wrote and have lionised the good. None of us can see into the future, except perhaps Arco (!)....I'm glad to see this thread still going, but it has done so without my help and rather with the contribution of many here like yourselves. If people are sparked to write on this thread by it has now nothing to do with me, but rather people like you and your excellent contributions. Though it would be good if this thread fell into permanent disuse, to be honest, as most would prefer a world where markets had no blood on the floor at all.

[SEC]

Probably by not posting here day on day people have forgotten some of the stupid stuff I wrote and have lionised the good.

I missed the humour - your Porno Clip thread was a classic.

[Huang Chung]

BREAKING NEWS - Fed cuts both Fed Funds rate and Discount rate by 75 points.

Immediate improvement in the US futures, although still well in negative territory.

[whirly]

US Federal Reserve Cuts rates by 0.75 per cent to 4%

FTSE up 1.66%

Im going to bed.

[moimoi]

boomfa...up 6% at the open....

i wonder if the bankers calling clients yesterday to make margin calls are calling the same clients today offering to lend more...LOL.

[STRAT]

Bottom bounce or sucker rally?? What do you think people? Perhaps another poll Tommy:D Im going with the later for now. Congrads to the brave who bought yesterday

[spruik]

Bottom bounce or sucker rally?? What do you think people? Perhaps another poll Tommy:D Im going with the later for now. Congrads to the brave who bought yesterday

If we compare this to 1987 than this is a sucker rally for a day or two, then we move lower further.

[fihr]

I came pretty close to buying some stock yesterday (or April calls) but couldn't bring myself to do it.

I think that if there is any significant negative news out of the US, the market could fall again. Also, future earnings of Aussie stocks might be affected by a US recession, so even though current valuations look good, I think we might see some more lowering due to revised earnings forcasts. So I will be looking for opportunities, but think this could be just a bounce, even if it doesn't fall much further and goes flat for a bit.

Good luck to anyone who does buy, though.

[soulman]

US looking bad still but even if they drop 300 to 400 points, it should just be catch up losses to all other markets in the world.

Apple will be punished due to their poor result. Imagine if the Fed cutting more interest rate on Jan 30th? It would help the economy somewhat.

Our graph is actually still intact when you look at the 5 year chart. Oversold if you look at the 3 years. It may drop to about 5000 points and still be in the upward trend but barely.

[STRAT]

I see on the box tonight the FED are patting them selves on the back for saving the world and in Europe they are blaming the dive on trading bots :D:D:D

[tommy]

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm

Recession 2008: How bad it can get

Many economists are predicting a short, shallow recession. But there's also a significant risk of a more serious economic decline.


By Chris Isidore, CNNMoney.com senior writer
January 23 2008: 3:49 PM EST

NEW YORK (CNNMoney.com) -- The sputtering U.S. economy has gotten everyone from the financial markets to the Federal Reserve to Congress in a panic.

But here's a disheartening message for those already worried about economic growth -- it could get much worse.

Most economists who believe a recession is already here or at least near are looking for a relatively short and mild downturn, perhaps lasting only two or three quarters.

But many of those same economists say they also can envision a worse-case scenario where spending by consumers and businesses falls off sharply, unemployment heads higher than normal during a typical recession and housing and credit market problems worsen.

"I can easily imagine [the economy] going into a free fall," said Dean Baker, the chief economist for the Center for Economic and Policy Research. "The danger is that housing prices continue to tumble and accelerate, people's ability to pull out equity will evaporate, and you'll see a serious downturn in consumption."

We talked to three more leading economists to find out their biggest economic fears. Here's what they had to say.

Greenback blues David Wyss, chief economist with Standard & Poor's, said that among his biggest concerns is that overseas investors could pull back on investing in the dollar and other U.S. assets.

That could cause an even greater sense of fear among U.S. consumers and businesses, as stock prices fall and bond yields rise, which in turn would lift mortgage rates and be a bigger drag on the already battered housing market.

"Americans could just get scared by a barrage of bad news," Wyss said. "The stock market could continue going down because of foreigners pulling money out, and between that and home values going through the floor, it could lead to a real pullback of spending, particularly by Baby Boomers who are getting close to retirement."

Wyss said he's also concerned that oil prices could shoot higher, even if a recession cuts into global demand. He said supply disruptions in the Middle East could send oil prices up to $150 a barrel and help deepen any recession.

Wyss said that in his worst case scenario, the unemployment rate would climb to 7.5 percent by early 2009, up from its current level of 5 percent.

He also believes gross domestic product, the broad measure of the nation's economic activity, could wind up as much as 2 percent lower at the end of 2008 than it was at the end of 2007. That would be the biggest downturn since 1982. Many of those forecasting a recession this year are expecting GDP to show a slight gain by the end of the year.

House of pain. Edward McKelvey, senior economist at Goldman Sachs, agreed with Wyss that, in a worst case scenario, GDP could fall 2 percent this year..

His biggest fear is that home prices could fall much further in the coming months. In fact, Goldman and economists at Merrill Lynch have both predicted that home values could fall another 15 percent, on top of the 10 percent drop from earlier peaks that has already taken place.

McKelvey said further declines could cause much deeper problems for consumers and credit markets.

"One of the most likely candidates would be credit markets acting more violently than we thought, a tightening of the supply of credit to businesses and households," he said when asked what could bring about his worst case outlook.

"You could also see a more substantial response by businesses to the downturn through layoffs, cuts in their spending and business plans," he added.

Bank woes just beginning. Paul Kasriel, chief economist at Northern Trust, said he thinks there's a good chance that the economic pullback will be much steeper than now widely assumed. This weak forecast is based on his belief that the billions in dollars of writedowns already reported by Merrill Lynch (MER, Fortune 500), Citigroup (C, Fortune 500), JP Morgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and other big banks are just the beginning of the problem in the financial sector.

Kasriel said that if banks have to report more losses due to bad bets on subprime mortgages, they will be unwilling, or unable, to make large loans to businesses and consumers.

So even if the Fed keeps cutting interest rates, the impact of the cuts may be "less potent" than rate cuts in previous recessions since consumers and businesses may not be able to borrow enough to keep spending. That could make this recession more like the one in 1991-92 than the relatively short and mild recession of 2001.

"Historically, and not surprisingly, recessions accompanied by declines in consumer spending tend to be more severe. And people are going to be constrained from spending by the declines in housing," Kasriel said.

He added that state and local governments might have to cut back spending as a result of declining tax revenue. And that would be another sizable blow to the overall economy.

"People forget about state and local government spending, but it represents 11 percent of GDP," Kasriel said. To top of page

[_Michael]

Shanghai down more than 7% today, batten down hatches again...

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

[JBmurc]

Shanghai down more than 7% today, batten down hatches again...

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

Yeah with more to come ,good to see ASX up 5% very volatile markets atm

[TwinkleToes]

Yeah with more to come ,good to see ASX up 5% very volatile markets atm

They are closed today and the 5% is last Friday.


I'm hoping for a meltdown on Wall Street as soon as possible. A lot of bunny brokers have been putting their clients into stock in the last few days in NZ and I guess in the US. They haven't read enough economics books to understand what is happening.

[ratkin]

Im one of the few who thinks the worst is over.

Bad housing news today , europe down , rogue traders , massive negative sentiment yet the dow is up nearly 200 points.

That tells me the bad news is no longer sending stocks down , they are oversold and the only way is up. The weak have been shaken out as have the highly levereged , its all good in my opinion and a great time to pick up some bargains

[spruik]

Im one of the few who thinks the worst is over.

Bad housing news today , europe down , rogue traders , massive negative sentiment yet the dow is up nearly 200 points.

That tells me the bad news is no longer sending stocks down , they are oversold and the only way is up. The weak have been shaken out as have the highly levereged , its all good in my opinion and a great time to pick up some bargains

Attached chart with lines drawn on them by hardballgets and treggs from HC. If we follow the Dow (and go through 5870) the expectation on the chart will be defied and some shorters at Friday close may run for cover.


http://i235.photobucket.com/albums/ee236/treggs77/Triangles.png

[duncan macgregor]

Im one of the few who thinks the worst is over.

Bad housing news today , europe down , rogue traders , massive negative sentiment yet the dow is up nearly 200 points.

That tells me the bad news is no longer sending stocks down , they are oversold and the only way is up. The weak have been shaken out as have the highly levereged , its all good in my opinion and a great time to pick up some bargains You have it the wrong way round RATKIN. The weak have dithered about and gone down the people with the brains are sitting it out waiting on buy signals to jump back in and clean up the road kill. Its times like this TA investors have it all over the fundamentelists with buy and hold until you go under systems. Macdunk

[Snow Leopard]

Although I am quite happy to pick up a few irresistable bargains, I am currently of the opinion that there is more down than up over the next few months and that the majority of my money is better off in the bank than the share market.

I do wish I had bought UXC last week though :(

[spruik]

You have it the wrong way round RATKIN. The weak have dithered about and gone down the people with the brains are sitting it out waiting on buy signals to jump back in and clean up the road kill. Its times like this TA investors have it all over the fundamentelists with buy and hold until you go under systems. Macdunk

Ratkin may well be right. Today (Tuesday) the tech traders sold or shorted because that's what the charts suggested. Since the weak have dithered about and gone down, the tech traders must be in the majority (the strong ones have done enough selling before).

Nobody left wanting to sell anything. According to Bloomberg there is a lot of green. :cool:

[soulman]

PT, there's still a chance for UXC. I picked them up. Who knows, it might even go lower.

I wonder if the Fed are under the obligation to see that the market has fully factored in a 50 basis point rate cut on Wednesday. Anything less spells troubles for the equity market.

[STRAT]

FA - first in, first out
TA - second in, second out
Neither - last in, last out.
Aint that
FA - second in, average down
TA - third in second out
SM - First in, first out :D

[Halebop]

Now is the time to switch to FA, as its only when the FA guys get back into the market do they change the momentum swing that will provide the TA signals. So if you wait for the TA signal it will be too late, the FA guys will have already cleaned up :-)

"FA guys" regularly get value and risk wrong. Following them at the alleged bottom would have you buying shares in ION or sitting in no mans land with companies like RBD.

FA has its place but timing is not its strength. The top and the bottom is for the dumb lucky as it is beyond any replicable tactic.

[POSSUM THE CAT]

Halebop FA if used properly would have kept you out of both of these shares but most of you could not understand. That involves more than looking at figures it means looking in detail and thinking of the thinking about all the deals. Some of you look at a purchase as being good for the company others get the opinion that the seller is getting rid of a Dog. Have a look at some of the early posts against ION. I think it was Gerry that was all for it & Enigma that was rubbishing it. I would not have touched either of them with a bargepole with my FA.

[Hoop]

"FA guys" regularly get value and risk wrong. Following them at the alleged bottom would have you buying shares in ION or sitting in no mans land with companies like RBD.

FA has its place but timing is not its strength. The top and the bottom is for the dumb lucky as it is beyond any replicable tactic.

Agree with you Halebop.

Regards to timing..during an illogical sell off...TA has you sitting on the sidelines watching and FA may still have you in the market losing.

[Phaedrus]

FA - first in, first out
TA - second in, second out

Too simplistic KW, with too many dubious assumptions.

TA exponents each have their own system. They utilise many different indicators, different time periods and have different aims. They are most certainly NOT some homogenous group acting in concert!

Similarly, FA users each have their own approach and valuation model. It is only natural that they should come to widely varying estimates as to the "value" or "worth" of a particular stock. Consequently, they each have very different ideas as to when (or even if) a particular stock is worth buying. They certainly don't all suddenly buy at the bottom!

FA users may well be "first in", but don't make the mistake of thinking that they necessarily buy cheapest because of this. Stock prices generally overshoot their "true value" - downtrends tend to carry stocks well below their "real" value just as uptrends tend to run too high before correcting. To buy a falling stock at valuation means to buy first - and too soon. To sell a rising stock at valuation is to sell first - and too soon.

People often use both FA and TA, just as you do (for selling at least). Many studies have found that this combination gives better results that either method used alone.

I'm a little surprised that you only use TA to time your selling. To my mind, the same principles apply equally to buying. I presume that you decide to sell on fundamental grounds, then use trend indicators to time your exit. To me, buying is exactly the same. Identify stocks that represent fundamental value and use TA to time your entry.

The annals of ShareTrader are littered with examples of people prematurely buying into good stocks that are in downtrends - generally buying more and more (they call it "topping up") as the price falls, while bemoaning the stupidity and ignorance of the general market. I've never been able to understand what the hurry is!

[Halebop]

Halebop FA if used properly would have kept you out of both of these shares but most of you could not understand. That involves more than looking at figures it means looking in detail and thinking of the thinking about all the deals. Some of you look at a purchase as being good for the company others get the opinion that the seller is getting rid of a Dog. Have a look at some of the early posts against ION. I think it was Gerry that was all for it & Enigma that was rubbishing it. I would not have touched either of them with a bargepole with my FA.

Possum some of those posts on the ION and RBD threads are mine. I'm not the only one who "understood". While I didn't think ION would go bust my FA said the cash flow had been negative all along and the company was a barking dog. RBD is of course a star at the dog tracks too. ...All the while others fervantly argued the opposite. TA said stay out of both irrespective of the arguments and convenient interpretations. The point is that FA is a messy method of selecting a base entry price - not if FA can identify a good or bad investment. I rarely use either as a stand alone technique.

[Snow Leopard]

I have decided I am the smart money so that I can remain aloof from all this petty squabbling over technique.

And meanwhile back at the ASX, this morning's gain becomes this afternoon's loss as the herds worry about what BernieB and his Feds will play tonight.

may the system be with
Paper Tiger

[winner69]

DOW up 2%+ in the hour after the FED cut .... and then 2%+ doen the next hour ...... and the ASX takes the lead from the last hour on the DOW

Read somewhere that such activity is sometimes a precursor to the 'collapse' but the commentator suggested that they would avoid the collapse by just not opening the markets ....... nothing would surprise me

[soulman]

All factored in. Anticipated news came out. Half a percentage point cut. Muted response.

Aussie market falls again, making 3 near triple digit falls in 3 consecutive days while Wall Street have about a break even.

I suspect Wall Street might fall tonight.

[soulman]

That's the way to look into it KW.

The thing is, will it get cheaper? Because we all like to get them as cheaply as we can. The trend has broken on the All Ords graph so I don't know what to expect in the near future.

[Hommel]

That is basically my strategy, KW. I buy on fundamentals and have a 3 to 5 year view. Before all this sub-prime stuff started I sat down and looked at every stock in my portfolios and said "Do I want to keep this?" Any doubt and they would be sold. I found nothing that I did not want to own. Six months down the track my two portfolios are down about 14% from their peaks last year but if I take a look at the last 5 years I am still holding very good per annum returns. As cash becomes available during the year I will slowly add to some of my holdings. I know it is very hard to buy when it seems that the "market" is selling but my feeling is that the brave will be rewarded down the road a few years. If I was approaching retirement my strategy would be quite different as I would be much more concerned with capital protection. History has shown that it is very hard to pick tops and bottoms of the market so I am staying in the market but with about a 12% cash buffer at present.

[jdg]

another red floor day today. interestingly, i saw some hope in the news out of america this morning. a slight drop in jobless (although the trend remains up), more interest rate cuts in march (.5 points) are almost certain, and a much better than expected trade deficit. with some luck we may bounce into the second half of the year. how much further will we have to fall before we get there is the question.
best of luck with your picks.
-j

[winner69]

See S&P have a forecast 08 earnings of $71 for this which puts the S&P500 on a forward PE of about 19

Thats stretched eh ..... especially when you consider that this what 07 earnings actually were and that they also expect eranings decline in the first 2 quarters of 08 before all of a suuden the world is all OK and earnings all of a sudden go up 20%

Invariably earnings forecasts are always optimistic (The S&P forecasy for 07 this time last year was 20% higher) and as long as people use these forecasts the S&P and other markets will always appear to be cheap / undervalued or whatever term you want.

If we are in a bear market than the PE will reduce signiificantly from a current 19 for the S&P500 ....... and that is not taking into account reduced earnings that invariably occur during recessionary times (assuming that is actually the case)

Probably no +ve returns for the S&P500 over the next few years and even though some say that the world is decoupling form the US any bad S&P500 performance will have some impact on the markets in this part of the world

As always - many stocks will go up even thought he market might go down .... find those and keep a close eye on the charts

[patsy]

If we are in a bear market then the PE will reduce significantly from a current 19 for the S&P500 .......



This may not necessarily be entirely true. As interest rates decrease, P/E (as an average of the entire market) increases. The increase in P/E as a consequence of lower i-rates, may be balanced off by lower earnings as you suggest. However, regardless of whether this is/isn't a bear market, P/E are unlikely to decrease to any significant extent (as proven by every period of decreasing OCR).

[macduffy]

This may not necessarily be entirely true. As interest rates decrease, P/E (as an average of the entire market) increases. The increase in P/E as a consequence of lower i-rates, may be balanced off by lower earnings as you suggest. However, regardless of whether this is/isn't a bear market, P/E are unlikely to decrease to any significant extent (as proven by every period of decreasing OCR).

Can't say I follow your reasoning here.
P/E, being a function of shareprice divided by earnings per share will only change if one of those components changes. Which of these is affected by a decrease in interest rates ? Shareprice, because buyers are prepared to pay more for shares? Unlikely, I think. Earnings per share? Yes, to the extent that a company is paying interest on borrowed money which will be less, thereby boosting earnings. But this will lower P/E.
What am I missing here?

:confused:

[winner69]

Can't say I follow your reasoning here.
P/E, being a function of shareprice divided by earnings per share will only change if one of those components changes. Which of these is affected by a decrease in interest rates ? Shareprice, because buyers are prepared to pay more for shares? Unlikely, I think. Earnings per share? Yes, to the extent that a company is paying interest on borrowed money which will be less, thereby boosting earnings. But this will lower P/E.
What am I missing here?

:confused:

You answered your own question - Shareprice, because buyers are prepared to pay more for shares

Think of the inverse of the PE (called the earnings yield) as the return one gets --- like a PE of 20 is an earnings yield of 5%

As interest rates fall the earnings yield often falls in tandem (because as you say investors are prepared to pay more for the these earnings as yield expectations are lowered) .... and as such the PE increases ... and vice versa

[macduffy]

Thanks.
Agree as far as that goes. I just don't see buyers being prepared to increase prices in the present market just because interest decrease. I guess I see a protracted bear market that will take a lot more than a series of interest rate cuts to overcome.

[tricha]

R we ready to be slam dunked again tomorrow :confused:

[tricha]

or the opposite...

are you ready to pick up your favourite BUY listers at fantasic prices from the meek

I think I might wait to Tuesday, to see what transpires in the US overnight. :rolleyes:

[bermuda]

I think I might wait to Tuesday, to see what transpires in the US overnight. :rolleyes:


Tricha,
You must come to the next Sharetraders meeting.
Yes, I am very worried about this whole thing.
The USA is stuffed. Greenspan and Bush did it. They were far too arrogant to even know what was going on.

I wish everyone could see the ENRON tape. Still a long way to go and silly me convinced I can beat the market with Aussie CSG prospects.

Actually I have never been so comfortable with my portfolio and congratulate you on your Roma purchase and sale. But Tricha, I am a long term holder and I can just see you driving around in a Masaerati if you had held on.

Tricha, Get some more.
Cheers Andrew

[mark100]

Some humor I found on SS

http://www0.gsb.columbia.edu/everybreath/

[bermuda]

Some humor I found on SS

http://www0.gsb.columbia.edu/everybreath/

Mark,

Very very good!! Thanks...got the day off to a good chuckle.

[ruethewhirl]

Bermuda,

Agree with you that the US is stuffed. Big time. Check out these videos.

http://www.youtube.com/watch?v=fhAokoMgSDc

http://www.youtube.com/watch?v=airxvVmGnqc

Seems the only candidate for the forthcoming presidential elections with a fiscal clue isn't even going to get a look in, and the most likely candidate wants to continue that bull$$$hit war for 100 years!

With US debt increasing at 1 Trillion dollars every 15 months, it can't end well. The bottom line is unless there is a big turnaround, in very quick order, the US sharemarket is stuffed. The ASX is stuffed! Commodities are where it's at, and many commodity charts are already the mirror image of a lot of the depressing downtrends I see in the ASX 200.

[tone]

That war is such a disaster - for everyone. Reminds me of Sun Tzu's Art of War quotes about how to wage war. There are so many ways that they are doing the wrong thing to win this war:

http://www.sonshi.com/sun2.html

[tricha]

Tricha,
You must come to the next Sharetraders meeting.
Yes, I am very worried about this whole thing.
The USA is stuffed. Greenspan and Bush did it. They were far too arrogant to even know what was going on.

I wish everyone could see the ENRON tape. Still a long way to go and silly me convinced I can beat the market with Aussie CSG prospects.

Actually I have never been so comfortable with my portfolio and congratulate you on your Roma purchase and sale. But Tricha, I am a long term holder and I can just see you driving around in a Masaerati if you had held on.

Tricha, Get some more.
Cheers Andrew

I guess it is this Saturday Andrew, yep, great chance of making it.
Got any Gold yet, I have hedged my bets. This monster in the US is on track to self destruct and gold is a key indicator that all is not well.

SPOT MARKET IS OPEN
closes in 14 hrs. 32 mins.Mar 03, 2008 02:43 NY Time Bid/Ask983.60-984.40 Low/High980.70-985.80 Change (javascript:NewWindow('/glossary/LiveSpotGold.html#Change','LiveSpotGold','top=50,l eft=200,width=500,height=350,channelmode=0,dependa nt=1,fullscreen=0,resizable=no,toolbar=0,status=0, scrollbars=1,location=0,menubar=0,directories=0'); )+9.30 +0.95%30daychg (javascript:NewWindow('/glossary/LiveSpotGold.html#30day','LiveSpotGold','top=50,le ft=200,width=500,height=350,channelmode=0,dependan t=1,fullscreen=0,resizable=no,toolbar=0,status=0,s crollbars=1,location=0,menubar=0,directories=0');) +78.80 +8.71%1yearchg (javascript:NewWindow('/glossary/LiveSpotGold.html#1year','LiveSpotGold','top=50,le ft=200,width=500,height=350,channelmode=0,dependan t=1,fullscreen=0,resizable=no,toolbar=0,status=0,s crollbars=1,location=0,menubar=0,directories=0');) +342.80 +53.50%


Hey Shasta coming to ChCH ?

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


Asian markets fall on US worries

http://newsimg.bbc.co.uk/media/images/44419000/jpg/_44419575_tokyo_203b.jpg Traders in Tokyo fear the US may already be in recession

Asian stock markets have fallen sharply as investors continue to worry about a possible US recession.
The main indices followed the US markets where there were big falls on Wall Street on Friday.
Tokyo's Nikkei index closed down 4.5%, or 610.84 points at 12,992.18, its lowest level for six weeks.
The decline of the dollar against the yen also worried traders. Shares of big exporting companies such as Toyota and Honda suffered large falls.
The weakening dollar fell to its lowest level against the yen for three years, making exports more expensive. In early trading in Tokyo it was as low as 102.90 yen. It later recovered to 103.20 yen.
"What you have seen in Japan reflects in part the strength of the currency. When the currency goes up sharply in an exporting nation, that is pretty bad for the shares," Charlie Morris from HSBC Investments told the BBC.
Shares in car maker Honda fell 5.8% to 3,070 yen and rival Toyota's shares were 3.3% down at 5,560 yen.
Exports to the United States are important to Japan's largest corporations. "Investor fears of a US recession have strengthened. There is even a growing view that the US economy has already entered into a recession," said Ryohei Muramatsu of Commerzbank in Tokyo. Hong Kong's Hang Seng index was down 2.95%, or 717.17 points at 23,614.5.

[Huang Chung]

Just been watching Becky Quick's live interview with Warren Buffett (on CNBC).....he said that by any common sense measure, the US in already in recession....

[trendy]

Watch out.. FED is is major panic mode here. Huge activity here this Sunday. BearSterns taken under for $2/share by JPMorgan i.e. $200M lock, stock and barrel.

FED also has cut rate another 0.25% immediately i.e.. today Sunday. Expect more shoes and boots to fall next week.

http://www.federalreserve.gov/newsevents/press/monetary/20080316a.htm

Press Release
Release Date: March 16, 2008

For immediate release

The Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.

The Board also approved the financing arrangement announced by JPMorgan Chase & Co. and The Bear Stearns Companies Inc.

[trendy]

Translated into non finance lingo...

"We are in bloody panic mode.. we don't know what the f#$% to do so we thought another 0.25% would show we are trying something.....also we will accept any loan as collateral we prefer boats, cars and houses".

[trendy]

STOP PRESS: US dollar collapse in process.....USD.JPY below 97.....gold US$1020 and heading higher.....Black Monday coming.....


Thank god I cashed out.

[soulman]

STOP PRESS: US dollar collapse in process.....USD.JPY below 97.....gold US$1020 and heading higher.....Black Monday coming.....


Thank god I cashed out.

I can see the Black Monday coming but can you see that all other market in the world are dropping way more than the US. US market was steady last week yet the Australian were down 2%. US was down 2% at weeks end and we are down 3% today.

Are you based in the US Trendy?

[peat]

Are you based in the US Trendy?
its says he is! :rolleyes:

when things get really rough in the US it seems those movers and shakers sell their Antipodean assets. NZD and AUD down two cents today. This is what happened last time. (7 or 8 months ago)

[tricha]

Translated into non finance lingo...

"We are in bloody panic mode.. we don't know what the f#$% to do so we thought another 0.25% would show we are trying something.....also we will accept any loan as collateral we prefer boats, cars and houses".

Yep had my own panic attack today, sold out of ADY, this is for real and no prisioners taken.
Look to re-enter in gold or oil as soon as the market settles a bit,

Unfortunately Cash is trash as well and this is nigh the end of the once all mighty US dollar.

Think u are going to wake up tomorrow and it all will be better, only in your dreams :(

.................................................. .................................................. .
--According to banking analyst Richard Bove, of Punk Ziegel & Co, Bear has US$176bn worth of securities and $40bn in loans out to other companies. That all goes “whoosh” in a bankruptcy and leads to more selling. Bear’s remaining clients and the counter parties want their money or their assets back.

--Next question. Who’s next?

--Well, you might want to keep your eye on firms that have already been in trouble, like Citigroup (NYSE:C (http://finance.google.com/finance?q=NYSE%3AC)). Also keep an eye on earnings announcements from the Street this week. Bear itself announces fourth quarter earnings (or lack thereof) after Monday’s close. On Tuesday, Goldman Sachs (NYSE:GS (http://finance.google.com/finance?q=NYSE%3AGS&hl=en)) is expected to report a 50% fall in 1st quarter earnings and a write down of US$3 billion. Morgan Stanley (NYSE:MS (http://finance.google.com/finance?q=NYSE%3AMS&hl=en&meta=hl%3Den)) reports on Wednesday.

[trendy]

Watch out something is happening here.....huge cash flows into US T-Bills taking place rate is near 0.5% and dropping....TED Spread is also at 2.00%......massive selling/deleveraging of equity/commodity assets taking place. Also US markets closed this Friday, tomorrow is the last day of trading before long weekend.

Gold now $915/oz.....

[soulman]

Watch out something is happening here.....huge cash flows into US T-Bills taking place rate is near 0.5% and dropping....TED Spread is also at 2.00%......massive selling/deleveraging of equity/commodity assets taking place. Also US markets closed this Friday, tomorrow is the last day of trading before long weekend.

Gold now $915/oz.....

I think the market might have further to fall. In hindsight, the DOW and S&P are doing better than the Australian market by a fair margin and this is a US problem. Go figure.

Also, I see all the big stocks in Australia doing well today. A noted performance is QBE. The rest of the financials doing OK as well.

The blood lies in the mining/gold/oil sector.

[ratkin]

WHAT A DIFFERENCE TWO WEEKS MAKES

[frostyboy]

http://i166.photobucket.com/albums/u81/nz_andrewmorris/SPX500.png

the S&P500
there could be a big rally coming after options on thurs something like 1400, so will be most important if most people think its going down (so need more beers to get squeezed). i reckon it will be a good bet using 1325 as a pivotal point. this coming week will be a volatile one inflation and earnings to be reported. there is alot of support where the s&p is currently at, ie the short term uptrend since march 22 and the moving averages. moving averages on the chart are 20, 60, 200 sma. i think the primary trend is down based on fundamentals, trade like a vvhore

[winner69]

This written by an Aussie .... and heck he mentions that trillion word ... all 25 of them .... shucks

And good old NZ gets a mention



The Black Death of financial collapse
By James Cumes

http://www.atimes.com/atimes/Global_Economy/JD10Dj03.html

[frostyboy]

the S&P500
http://i166.photobucket.com/albums/u81/nz_andrewmorris/SPX500closeasof1648.png
As i posted on Saturday most people after GE on Friday thought the markets direction was down most people were worried, to many thought that for it to happen. GE’s made the markets expectation lower so if other stocks were to beat it they would rally, their price is probably higher than it would be say they were to meet the expectations they had on Thursday last week but the market probably wont care for maybe a few weeks. So as i suggested on Saturday the shorts could get squeezed and they did last night. My main entry point for this rally was a couple of points to low damit. The us markets rally are profiting from their currency revaluation at better rates. It has been quite a rally last night, tonight 50/50 chance it could pause (a ¼ % down does not matter) as it does have momentum. If it continues i am guessin a 70% chance it will hit the top line of the in the inverse head and shoulders and come back several points, after that watch for a break of that line at 1390 it probably will go to the 200 moving average at 1425 tomorrow is options x don’t know what will happen yet not going to add until that is decided

[ananda77]

...as far as American markets are concerned, the investment consensus always has been that this spring rally will most likely loose it's steam around the 12800/12950/13000 mark;

...therefore, better sell into this rally NOW before it is too late and people have to run for long- cover; the bulls will not rest till everybody will be LONG, and then the trap will shut without remorse

...the sad truth is that the so-called professional invetment advisors have been TRULY CAUGHT with THEIR PANTS DOWN and I will not go to any lenghth to the WHY that was...

...anyway for a reality check read:

Goldman Sachs and Wells Fargo warn 'delusional' investors on stocks

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:58am BST 15/04/2008

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/04/14/bcngold114.xml

...anyway: Happy Investing on the short side of life with

Kind Regards

[ananda77]

the S&P500
http://i166.photobucket.com/albums/u81/nz_andrewmorris/SPX500closeasof1648.png
As i posted on Saturday most people after GE on Friday thought the markets direction was down most people were worried, to many thought that for it to happen. GE’s made the markets expectation lower so if other stocks were to beat it they would rally, their price is probably higher than it would be say they were to meet the expectations they had on Thursday last week but the market probably wont care for maybe a few weeks. So as i suggested on Saturday the shorts could get squeezed and they did last night. My main entry point for this rally was a couple of points to low damit. The us markets rally are profiting from their currency revaluation at better rates. It has been quite a rally last night, tonight 50/50 chance it could pause (a ¼ % down does not matter) as it does have momentum. If it continues i am guessin a 70% chance it will hit the top line of the in the inverse head and shoulders and come back several points, after that watch for a break of that line at 1390 it probably will go to the 200 moving average at 1425 tomorrow is options x don’t know what will happen yet not going to add until that is decided

...and sure enough, the inverse HS was good enough to spark the current rally in the American markets, but was intermediate from the word GO

...but please!!!do me a favor and rally the Aussie REAL HARD on Monday

Kind Regards

[SEC]

...anyway for a reality check read:

Goldman Sachs and Wells Fargo warn 'delusional' investors on stocks

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:58am BST 15/04/2008

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/04/14/bcngold114.xml


That article was outdated even before you posted it.

"Although only a few firms have reported first quarter results, early signs are awful. We expect a swath of lowered profit guidance," he said in a research note published today, entitled 'Fasten Seatbelts'."

Since Tuesday most of the large co's (and DOW components in particular) have either met or exceeded expectations.

SEC

[Dr_Who]

When the institutions tell you guys to SELL, it is a good sign to BUY. If you listen to these so call "professionals" all the time, you will get negative returns. You just only have to look at how many trillions they have lost in the sub-prime market to know they are full of shiat. Also have a look at the brokers pick, all in the negative.

[spruik]

Some investors think we are still in a Bull Market, others think we are in a Bear Market.

Which is it?

Below is a 14 year Monthly chart of the S&P 500. It clearly shows the past Bull and Bear market periods.

In each Bear Market, our red trend line dipped below the blue, and in each Bull Market the red trend line rose above the blue trend line. It is a pretty clear and easy picture to decipher.

So where are we now?

The red trend line is clearly below the blue trend line depicting a Bear Market condition.

There are 3 other confirming indicators on the chart below.

In the last Bear Market, the MACD showed a down trending condition with the red MACD line below the blue. We have the same condition now.

The last Bear Market had the MACD Histogram simultaneously in negative territory. We have that condition now.

And ... the last Bear Market had our monthly Stochastic Oscillator trending down and below a level of 50. And ... we have that condition now.

Conclusion: We are in a Bear Market.

On a shorter term basis, there are times during a Bear Market when the S&P moves up for awhile or sideways for months ... and then resumes its Bear Market drop. This occurs when the monthly (black) bar rises above the red trend line. As of yesterday, we had that condition. With 6 trading days left in the month, if the bar closes above the red trend line, then we will have a pausing condition where we could see more short term up movement.

http://www.stocktiming.com/images/2008/APRIL/23%20Wednesday/bull.png

[ananda77]

...a few more April days left and for the Dow one more high to challenge...the MA200 target -12081-

...the nature of a trap is, that it is concealed and hidden in ways undetectable for the unsuspecting person

Kind Regards

[frostyboy]

the s&p am also expecting one more move up, i wont be taking a long position on it though, way to extended. am thinking it could go to round 1410 on light volume and then slowly go down.
am also looking at the 200ma I reckon this has about a 40% chance of happening, where it will go there on big volume in its final blow off of this big move. a trap could be like 2 days close above this line whilst the big guys have been selling their stock to the suckers in this last push. apart from the unexpected am not expecting continued big drops like we have had in the past but a slow drop faster than the first thought above.
recently such light volume on anticipation of feds decision, for fun i am thinking .25 of a cut and them signalling cuts are coming to an end and dollar strengthens further. dont know how the market will react to that though, guess will depend on their statement, also US employment situation out their friday morning

[JBmurc]

the s&p am also expecting one more move up, i wont be taking a long position on it though, way to extended. am thinking it could go to round 1410 on light volume and then slowly go down.
am also looking at the 200ma I reckon this has about a 40% chance of happening, where it will go there on big volume in its final blow off of this big move. a trap could be like 2 days close above this line whilst the big guys have been selling their stock to the suckers in this last push. apart from the unexpected am not expecting continued big drops like we have had in the past but a slow drop faster than the first thought above.
recently such light volume on anticipation of feds decision, for fun i am thinking .25 of a cut and them signalling cuts are coming to an end and dollar strengthens further. dont know how the market will react to that though, guess will depend on their statement, also US employment situation out their friday morning

Personal like to get a BEAR DOW warrant high as possible (14000) before friday IMHO US employment going be very grim as will these high oil prices on the broader US econmony

[Dr_Who]

The US now in deep doo doo. Possible high inflation with very low GDP growth and a huge foreign debt and trade deficit! OUCH!!!

I wouldnt want to be invested in the US market right now. I see further downside to the US dollar in the long run.

[frostyboy]

http://i166.photobucket.com/albums/u81/nz_andrewmorris/SPX500-1.jpg



s&p
now safe to go short i reckon. tomorrow may rally but don’t think it will go beyond 1400 now, but its really not important if looking at a 5% correction on the s&p happening over the first half of this month am guessing will accelerate friday/mon maybe tues breaking 1380. One chart reason for why this rally has topped is that after each rise the consolidation has become less volatile (the pink I forgot to put one on the bit after bear stears, that was volatile). I don’t have volume on this chart but it has been light in this rally, something like 2/3 of the previous 1-2 months

[winner69]

The US now in deep doo doo. Possible high inflation with very low GDP growth and a huge foreign debt and trade deficit! OUCH!!!

I wouldnt want to be invested in the US market right now. I see further downside to the US dollar in the long run.

Sounds like the situation in NZ

[frostyboy]

commentary - what to look out for in going short
alot of people seem to think we are near the top, may need another slight push up to get out the weak shorts. dont know if this will happen though. if ya take that to much into consideration the trade may be missed. tomorrow there is manufacturing data that could push it up. on friday there is jobs report, it is expected to be ugly. a few days ago i thought this could be the catalyst for down, now it may even be up as their is such low expectations for it - easy to beat?

[bermuda]

commentary - what to look out for in going short
alot of people seem to think we are near the top, may need another slight push up to get out the weak shorts. dont know if this will happen though. if ya take that to much into consideration the trade may be missed. tomorrow there is manufacturing data that could push it up. on friday there is jobs report, it is expected to be ugly. a few days ago i thought this could be the catalyst for down, now it may even be up as their is such low expectations for it - easy to beat?

Well if you want my opinion the next few days might be okay but the good old USA is going to really get spooked. Huge debt and importing 60 % of their energy. Inflation going sky high too despite weakening house prices.

Their dollar goes weaker and that's why Iran is now trading Euros.

[Dr_Who]

This is the latest US National Debt. :eek:

Outstanding public debt $9.4 Trillion

Population 304 million

Debt per person $30,900.00

Debt increase average of $1.5 billion per day

:eek::eek::eek:

[trendy]

It's getting worse every day. FED will take any crap debt to swap for treasuries. Banks haven't lowered mortgage i-rates at all. Banks now borrowing at 2% and lending at 6% and using FED to help them improve balance sheets. Problem is foreclosures are increasing faster than profit from i-rate differential. FED now having to lend even more dollars..........

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSsExY4o_fhM&refer=home

Fed Revs Up Lending in Latest Jolt to Credit Market (Update9)

By Scott Lanman

May 2 (Bloomberg) -- The Federal Reserve, seeking to prevent a deeper economic slowdown, took another stab at coaxing banks into lending at lower rates.

The Fed boosted its biweekly Term Auction Facility sales of cash to banks by 50 percent to $75 billion and expanded the collateral it takes from bond dealers through loans of Treasury securities. It also raised the amount of dollars it makes available to the European Central Bank and Swiss National Bank through swap lines to a combined $62 billion from $36 billion.

Borrowing costs for banks have risen as much as 0.38 percentage point in the past six weeks, an increase that blunted the impact of the cash injections that began in December. The strains threatened to further impair mortgage markets, worsening an economy where growth has already stalled.

``The world is awash in liquidity, it just isn't reaching the right financial borrowers,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Today's action from the central banks is another strong dose of medicine that will help cure what ails the credit markets.''

Fed officials also expanded the collateral they accept under the Term Securities Lending Facility to include AAA rated asset- backed investments. About 95 percent of outstanding student-loan securities are AAA, according to the American Securitization Forum. Democrats in Congress had pushed Chairman Ben S. Bernanke to take student-loan bonds on the central bank's balance sheet.

Focus on Libor

Policy makers and economists have cited the rise in the London interbank offered rate for dollars as evidence of banks' and investors' concerns about lending to counterparts. Eric Rosengren, president of the Boston Fed, said in a speech last month that Libor has ``been elevated since the onset of financial problems'' in July.

A gauge of bank funding costs, the premium on Libor over the overnight indexed swap rate, which is a measure of what traders expect for the Fed's benchmark rate, reached 87 basis points on April 21. That was the highest since the Fed announced the TAF on Dec. 12.

The Libor rate itself fell to 2.77 percent today from 2.78 percent yesterday, putting the spread at 0.77 percentage point.

The Fed created the TAF and two other programs to reverse a decline in liquidity that began last year with the collapse in the market for subprime mortgages. Today's announcement may reduce loan payments for some companies and homeowners with variable-rate mortgages.

`Persistent Liquidity Pressures'

Today's actions were taken ``in view of the persistent liquidity pressures in some term funding markets,'' the Fed said in a statement.

Speculation had risen among Fed watchers this week that the central bank would increase the size of the TAF operations after borrowing costs increased. Some had also anticipated an extension in the term of the loans beyond 28 days.

``It was a relatively conservative measure'' because the duration remains unchanged, Richard Iley, senior economist at BNP Paribas SA in New York, said in an interview with Bloomberg Television. ``Evidence thus far is that these auctions have had very limited impact in bringing down these still-elevated credit spreads. There still remains a tremendous reluctance on the part of financial institutions to lend to one another.''

Today's decision comes two days after the Fed's interest- rate setting Open Market Committee lowered its benchmark rate for a seventh time since September, while signaling it's ready to hold off on further cuts.

`Downside' Risks

In its statement, the Fed removed a previous reference to ``downside'' risks to growth, while noting that past federal funds rate reductions and ``ongoing'' liquidity measures should help spur a recovery in economic growth.

Separately, a Labor Department report today showed employers cut fewer workers than forecast in April, and the unemployment rate unexpectedly dropped to 5 percent.

``They're looking for ways to provide liquidity other than through cutting the federal funds rate,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. With today's actions, ``they're trying to prevent the strains from building up,'' he added.

The TAF, which provides 28-day loans to commercial banks, will sell $75 billion in auctions every two weeks, starting with the May 5 operation, the Fed said in the statement. The decision will increase the amount outstanding under the auctions to $150 billion from $100 billion.

Today's increase may not be the last. Lehman Brothers Holdings Inc. senior economist Drew Matus said he expects another expansion, to a total of $200 billion, over the next two months.

Third Expansion

It's the third increase since the program started in December at $40 billion per month.

The expanded collateral under the TSLF will take effect with the sale to be announced May 7 and settle on May 9, the Fed said. The Fed announced the program in March, auctioning as much as $200 billion in Treasuries. In several of the sales, the Fed has failed to attract enough bids to cover the securities at auction.

The Fed already accepts residential and commercial mortgage- backed securities and agency collateralized mortgage obligations through the TSLF.

``The wider pool of collateral should promote improved financing conditions in a broader range of financial markets,'' the Fed said.

The Bank of England and Bank of Canada, which took part in the original TAF announcement, didn't participate today. The U.K. central bank ``did not see a need'' to participate, while it is ``supportive of the efforts of other central banks in the money markets,'' an official said.

Bear Rescue

In Canada, markets and institutions ``have not been affected in the same way nor to the same extent as elsewhere,'' Philippe Metz, a spokesman for the Ottawa-based central bank, said in an e-mailed statement.

Along with the TAF and TSLF, the Fed in March started direct lending to investment banks at the same rate as to commercial banks, currently a premium of a quarter-point over the benchmark federal funds rate. The central bank also provided $29 billion of financing to secure JPMorgan Chase & Co.'s takeover of Bear Stearns Cos.

Investors have responded, buying a record $45.3 billion of corporate bonds last week and spurring a rebound in the Standard & Poor's 500 stock index from the year's low in March.

Today's decision comes after criticism from Stanford University economist John Taylor, who wrote in a study last month that there is ``no empirical evidence'' the TAF has reduced the premium that banks charge each other to lend cash for three months.

Fed Governor Frederic Mishkin said in a Feb. 15 speech that there was ``some evidence that the TAF may have had significant beneficial effects on financial markets.'' Mishkin included the caveat that ``isolating the impact of the TAF on financial markets is not easy.''

[trendy]

Fannie Mae this song says it all!!!!

http://www.youtube.com/watch?v=r7dq9pB_Tz8
__________________
The trend is your friend.

[Dr_Who]

Peter Schiff Says America On Brink of Economic Collapse

http://www.youtube.com/watch?v=iR_ssZzQyYQ&feature=related

[ananda77]

...decision time in the markets

...by the way, about 100 banks in the States are in trouble and nearly half of them will go under -not mainstream yet but will hit the news any time soon

...remember Goldman Sachs advice about "delusional investors"

...gold/silver 's good, no matter what the Wall Street bull**** artist are piping from the roofs

Kind Regards

[Dr_Who]

...remember Goldman Sachs advice about "delusional investors"

Kind Regards

LOL... yeah Goldman Sachs NZ brokers pick is down more than -18%! There ya go, that tells you alot about these jokers.

It is bye bye Miss American pie. Those that think US market is cheap and the US dollar will bounce soon should go back to dreaming. Most of the investment banks are only interested in talking up their own book.

[JackSprat]

Which beggars the $64 million dollar question. To invest or not to invest or more specifically to invest in such things as commodities out of Ozz?? Gas, oil, uranium, coal. I mean if the great economic american titanic is about to sink will the undertow drag everyone else with it or will there be enough flotation from the emerging giants China, India, etc??? to keep the world economy bouyant??:confused:

[tricha]

Which beggars the $64 million dollar question. To invest or not to invest or more specifically to invest in such things as commodities out of Ozz?? Gas, oil, uranium, coal. I mean if the great economic american titanic is about to sink will the undertow drag everyone else with it or will there be enough flotation from the emerging giants China, India, etc??? to keep the world economy bouyant??:confused:

U have got it Jack, Energy, Energy, Energy and more Energy.

Nothing can move without it and we have peaked on Oil.

Gas, Oil, Coal or Uranium, just do the research carefully and buy the right ones.;)

[JBmurc]

U have got it Jack, Energy, Energy, Energy and more Energy.

Nothing can move without it and we have peaked on Oil.

Gas, Oil, Coal or Uranium, just do the research carefully and buy the right ones.;)

the one eyed energy head now- tricha

been that way myself for the last couple yrs

still can't see nickel,copper falling more

[Dr_Who]

Yeah me too.

I am long on GAS and OIL!

[tricha]

the one eyed energy head now- tricha

been that way myself for the last couple yrs

still can't see nickel,copper falling more

Absolutely JB, where else can you find a commodity that is once used is gone forever, unlike most metals which can go around and around.
On this new journey I have erred quite a few times, but things seem to have come around with a major change in strategy.

[shasta]

Absolutely JB, where else can you find a commodity that is once used is gone forever, unlike most metals which can go around and around.
On this new journey I have erred quite a few times, but things seem to have come around with a major change in strategy.

Ive started looking into Alternative Energy to compliment my Energy interests...

There are some interesting AE companies out there...

Energy in one form or another is the sector to be in :cool:

[Dr_Who]

Shasta, do you have a list of alternative energy stocks?

[shasta]

Shasta, do you have a list of alternative energy stocks?

Yes i do, for the benefit of all refer the VIR thread...

[bear]

Shasta, do you have a list of alternative energy stocks?

Dr Who

here is a link to some hot rock technology companies and other alternative energy companies. Some of the info is a little old but a reasonable base to start with.

http://www.aussiehotrocks.com/

I think you will find that some of the R & D expenditure of the big energy companies will find its way into this area (or a few buy outs will occur).

Bear

[tricha]

MARKET DATA - 11:04 UK (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/overview/default.stm)

FTSE 100 (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/3/default.stm)5952.6down
-105.10Dax (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/18/default.stm)6916.3down
-102.80Cac 40 (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/1/default.stm)4883.6down
-100.15Dow Jones (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/2/default.stm)12402.9down
-100.97Nasdaq (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/12122/default.stm)2480.5down
-11.05S&P 500 (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/11826/default.stm)1377.7down
-8.02BBC Global 30 (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/29954/default.stm)5697.4up
4.04http://newsimg.bbc.co.uk/nol/shared/img/v3/md_open.gif Marketwatch ticker (javascript:popUpPage('http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/ticker/markets/default.stm', 'toolbar=0,scrollbars=0,location=0,statusbar=0,men ubar=0,directories=no,resizable=0,width=450,height =507,left=300,top=100','marketwatch'))

http://newsimg.bbc.co.uk/shared/img/o.gif

[Bilo]

Balanced on a knife edge tricha.
Some chartists on HC think the US could drop big time.
Others seem to suggest that there could be a major turning point.
Price of July oil is down to 123.60 as I write but a bounce up with POO could bring the house down:eek:
Only bright point as I see it was that Japan was showing some strength (they seem to be the only honest market - all the others cheat - how about OZ preaching tough times expecting GDP of 0.3% or less and turning in 0.6%!
Let's hope for the best any way. No one will win if the markets turn sharply south from here, so sanity should reign.:)

[Bilo]

US employment index 40 versus expected -10
It looks like we may end this the same way we started it with the dubious employment data...:)

[ananda77]

...decision time in the markets

...by the way, about 100 banks in the States are in trouble and nearly half of them will go under -not mainstream yet but will hit the news any time soon

...remember Goldman Sachs advice about "delusional investors"

...gold/silver 's good, no matter what the Wall Street bull**** artist are piping from the roofs

Kind Regards

...anymore questions???

everyone to the exits on Mondayafter Friday night's disaster...

Kind Regards

[ScrappyO]

...anymore questions???

everyone to the exits on Mondayafter Friday night's disaster...

Kind Regards

ASX closed on monday for holiday ?

[winner69]

ASX closed on monday for holiday ?

Queens Birthday a public holiday Monday ..... WA don't have it but spose that doesn't count

[spruik]

Queens Birthday a public holiday Monday ..... WA don't have it but spose that doesn't count

WA must be a republican state... :rolleyes:

[soulman]

We had our public holiday last week (Foundation Day) but of course, the ASX keeps running. So now you Eastern States have your public holiday and have the ASX shut on Monday. Good thing too but the massacre will still start on Tuesday and unless the DOW rally 300 points on Monday, watch for blood on the floor.

The ASX should close for the whole week.

[Dr_Who]

The US is looking very ugly. Funny how the fed is trying to talk up their dollar. They know they are in a sticky situation and cant afford to raise rates when the economy is so weak yet inflation is out of control.

[tommy]

Or bring your looting sack, there will be a few bargains under all that rubble.

AA

mmm, don't want to go shopping too early, I'd rather wait until total capitulation takes place... if All Ords respect support at 5200, then that might be the bottom but if it doesn't, it's time to go bungee jumping :-P

In any case, the world is at the mercy of DOW... and crude oil.

If BNB goes belly up (share price soooooo cheap now !!! but won't touch it with a ten meter pole) then that should create panic in All Ords... but looks like it might get away with it.
That said, most people won't understand the complex structure of financing arrangements between financial institutions (given limited disclosure and accounting magic), so it's better to stay away from financials and stick to iron, gas, oil and agri sectors for the foreseeable future.

[COLIN]

The main driver of the Dow these days seems to be the see-sawing oil price - too "high" a price and recession fears kick in. The global "Credit Crunch" influence seems to be waning. (Aussie investors wouldn't agree with this, though, given the likes of today's falls in BNB, MQG, and the on-going "intensive care status" of AFG, CNP, MFS, etc.)
I see that the Footsie is in green territory tonight, and heading up (well, it was when I last looked) following a little easing in the Asian oil market apparently, and I suspect that there could be a bit of a bounce upwards on the Dow.
Isn't it strange that when the oil price moves down by $3 on one day, after climbing a total of $16 in the two preceding days, so many commentators publicly claim "it was only a bubble, chaps!" and there is a collective sigh of relief. "Wow, oil could be down to $120 soon!" Remind me again, what was it at the beginning of the year?

Later Update: FTSE still climbing, apparently helped by the large oil companies - "due to the price of oil holding above US$135." Wall Street futures are also up.
This kind of negates the view (above) that the Dow is currently moving in opposite directions to the price of oil.
What to make of all this? Choose your own interpretation!

[ananda77]

...SELL INTO RALLEYS...!!!!!!

Central bank body warns of Great Depression
by Gill Montia
http://www.bankingtimes.co.uk/09062008-central-bank-body-warns-of-great-depression/


Credit crunch: RBS boss says more turmoil ahead
by Julia Kollewe
http://www.guardian.co.uk/business/2008/jun/11/royalbankofscotlandgroup.creditcrunch


We face longest era of turmoil in memory, says Bank boss
by Edmund Conway Economics Editor
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/11/nking111.xml

Kind Regards

[ananda77]

...again, a warm welcome to the short side of investing

RBS issues global stock and credit crash alert
By Ambrose Evans-Pritchard, International Business Editor
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml

Morgan Stanley warns of 'catastrophic event' as ECB fights Federal Reserve
By Ambrose Evans-Pritchard, International Business Editor
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/16/bcnecb116.xml&CMP=ILC-mostviewedbox

Kind Regards

[tricha]

...SELL INTO RALLEYS...!!!!!!

Central bank body warns of Great Depression
by Gill Montia
http://www.bankingtimes.co.uk/09062008-central-bank-body-warns-of-great-depression/


Credit crunch: RBS boss says more turmoil ahead
by Julia Kollewe
http://www.guardian.co.uk/business/2008/jun/11/royalbankofscotlandgroup.creditcrunch


We face longest era of turmoil in memory, says Bank boss
by Edmund Conway Economics Editor
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/11/nking111.xml

Kind Regards

Ananda

Things are certainly looking worse, the Great Depression began in 1929 and Wall Street did not bottom till 1933.
All the news coming out of late is all bad.:(

Looks like the only way u would have preserved cash in this market was to be in the energy index.:p The all ords is :(


All Ordinaries



http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=4&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4
S&P ASX 200 Energy Index
http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=5&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4

[ananda77]

Trisha

yes, energy has been a valid strategy to this point and considering the big slosh of liquidity hit into the markets overnight, the BKS close to a 6-year support, and the VIX falling to the lower border of it's up-channel, we might see a market wide up-move starting shortly after markets bouncing off respective support levels (at present, playing the markets both ways -a good idea- until direction becomes clear or be cashed up)

...as far as the RBS and Morgan Stanley (et. al.) warnings are concerned, I guess, if the BKS brakes 6-year support, then we will have the FINANCIAL BIG BANG with catastrophic consequences for the world economy; in this case cash or precious = way to go (personally prefer solid things)

Kind Regards

[MrDevine]

Ananda, do you own ANYTHING? I like the doom and gloom posts though. If there is a 'financial big bang' cash won't be all that useful, I suppose you have a lot of gold buried in the garden?

Mr D.

[Lizard]

Bags of rice stored in the attic would sound more useful! :D

(in association with a little rat poison!)

[Packersoldkidney]

Ananda, do you own ANYTHING? I like the doom and gloom posts though. If there is a 'financial big bang' cash won't be all that useful, I suppose you have a lot of gold buried in the garden?

Mr D.


Have to admit I am waiting for a capitulation washout as well - I'm not a noted doom and gloomer around here, but any understanding of the cyclical nature of booms and busts would tell you the bust we are currently undergoing will spread to the commodity sector as well.

[Halebop]

I'm with you Mr Kidney.

While I'm still in the long term secular cycle commodity bull camp, there will be dips and troughs along the way.

This debt funded binge has to unwind before the market can regain an even footing. There is also a lot of hot money in commodities. This speculative element has a habit of running at the first sign of trouble. Economic growth troubles are also only just on the horizon. Wait for those negative quarterly growth numbers to start coming through. The US is trying to hide theirs with a debt funded retail spend up - kind of like "curing" the drug addict with a shot of heroin.

If we had the guts to take our proper medicine, the boom would restart pretty fast - those baby boomers still have money to burn. But while we try to fight gravity, we just prolong the uncertainty.

[ananda77]

Bags of rice stored in the attic would sound more useful! :D

(in association with a little rat poison!)

...you can buy 2 kg of vacuum-packed brown rice cheaper than 2 kg of normal packed brown rice in the Mt. Albert Pack n'Save...as long as stocks last...

Kind Regards

[Hoop]

Bags of rice stored in the attic would sound more useful! :D

(in association with a little rat poison!)

Hmmmm....rice gone up 2.4 times in this last year and my soyabeans gone up only double (x2.0)

LIz wanna swap ...your rice (+ rat poison) for my beans?

[lakedaemonian]

I'm with you Mr Kidney.

While I'm still in the long term secular cycle commodity bull camp, there will be dips and troughs along the way.

This debt funded binge has to unwind before the market can regain an even footing. There is also a lot of hot money in commodities. This speculative element has a habit of running at the first sign of trouble. Economic growth troubles are also only just on the horizon. Wait for those negative quarterly growth numbers to start coming through. The US is trying to hide theirs with a debt funded retail spend up - kind of like "curing" the drug addict with a shot of heroin.

If we had the guts to take our proper medicine, the boom would restart pretty fast - those baby boomers still have money to burn. But while we try to fight gravity, we just prolong the uncertainty.


Well said.......

I'm a long-boom commodities bull as well...but I'm half expecting some big haircuts in commodities over the next 12-ish months.......

Over the next 3-5+ years...I doubt we've even made it to Everest Base Camp yet with commodities.....but I wouldn't bet on a summit in the short-term :)

The sooner the massive rot is removed from the system, the sooner trust, visibility, and some truth can be restored and we can get back to "normal".

[redzone]

The rot has only just begun....as far as the NZ market goes....it will take years to come back..like 87....and the Cullen fund and Kiwi saver..what a joke ...negitive returns for years to come...talk about a perfect storm coming into an election..

[STRAT]

The rot has only just begun....as far as the NZ market goes....it will take years to come back..like 87....and the Cullen fund and Kiwi saver..what a joke ...negitive returns for years to come...talk about a perfect storm coming into an election..Yup, Kiwisaver was a joke from the onset. The commie state of Helengrad pushing those who can only afford to survive ( maybe not even that now ) to save money they havent got. Another idea with half ****d good intentions badly planned and exicuted:rolleyes:

[corporateraider]

Kiwi Saver is voluntary. How can you be pushed into it?

Sometimes we have to put our political bias to one side and just think things through

[STRAT]

Kiwi Saver is voluntary. How can you be pushed into it?

Sometimes we have to put our political bias to one side and just think things throughFair call as I am biased, but by push I mean push as apposed to force. In any case and correct me if Im wrong but wasnt there talk of it becoming compulsary further down the track? Not likely now I suspect.

[redzone]

if I employ a new employee I HAVE to enrol them....

[Thumpa]

if I employ a new employee I HAVE to enrol them....

True....... First a KS-1 to enrole then a KS-10 to pull-out.

I checked with a few providers to get a feel of performance since Kiwisaver started. It was mission impossible. Everyone I rang didn't know how to access unit price etc. Sometimes they are buried deep in obscure pulldown tabs on their website , but was surprised the person on the end of the phone trying to sell you Kiwisaver had no idea of the performance. For the record , three providers I surveyed were all around -15% to -18% down , so every dollar put in to Kiwisaver is now worth around 85 cents.

What bugs me is that 5% of peoples wages are now locked away instead of flowing around the economy...........5% has been sucked out never to be spent on goods and services at a time when business desperately need people to continue spending and keep the money going around. Its dead out there and getting tougher.

[Yossarian]

For the record , three providers I surveyed were all around -15% to -18% down , so every dollar put in to Kiwisaver is now worth around 85 cents.


That's a bit misleading. Only true if you bought all your units at $1. Almost every member would have bought plenty of units at 85-90c as the market's been in the toilet since January.

[Halebop]

I was assisting a friend's mother with her investments and amongst the papers was a Kiwisaver statement from her provider, ASB. In the time she had been invested to the end of March 2008, she was fractionally up - maybe around 0.3% off the top of my head. She was however inadvertently assisted by IRD and their slow processing - much of the gain was due to interest accruals. Her share of the balanced fund itself was fractionally down - maybe around -0.1%.

In a market where asset values have dropped, coming out even after fees wasn't too bad. Wonder what the next score card will look like though?...

[JackSprat]

Can't quite see the problemo. I'm a thousand bucks ahead the moment I joined up.:D

[ananda77]

...the ratio of call to put options (25th.July) on the BKS = 4.8 (big, upside expectation on financial stocks -the SPX500 comes to mind-
...by 25th.July, will be going to full cash in the Kiwisaver (-that's probably the best I can do in the face of a possible market crash -pity the ........ will not allow to invest in a precious metal ETF or am I with the wrong crowd being the ASB crowd??)

Kind Regards

[AMR]

This image from Traderfeed sums it up.
http://bp2.blogger.com/_7VHLCUlm_9o/SFxAMuO2TFI/AAAAAAAAA-0/I0NV2yQLR6Y/s1600-h/International062008.gif

[AMR]

ok, that didn't work. The surprise is, Japan has been the best performing market so far internationally. Even ahead of Australia. The worst have been Hong Kong and China.

[Lizard]

This image from Traderfeed sums it up.
http://bp2.blogger.com/_7VHLCUlm_9o/SFxAMuO2TFI/AAAAAAAAA-0/I0NV2yQLR6Y/s1600-h/International062008.gif

Try this:
http://www.sharetrader.co.nz/picture.php?albumid=2&pictureid=24

[tricha]

I expect another bad day on the market tomorrow, all the news seems one way traffic.
Any company that has debt is now in doubt, with the oil price eating into every ones wallets, retail problems will be next I suspect.

We could also be close to another round of marginal lending induced selling ,on top of tax loss selling, so all in all, an interesting week ahead.


A write-down of up to $400 million in Mirvac yesterday gave investors a taste of things to come this reporting season as companies come to terms with dramatically changed fortunes.

[soulman]

I still reckon all it takes is another tilt of M & A activity (we have seen FKP and today possibly MCC). A counter or improved offer for SGB will also give the market a boost.

A stinker today in PPT. The management need to come out and comment on this. I would suggest a speeding ticket might be in order here.

Market fallen in the 4800 to 5000 zone short term would not suprise me but long-term is long-term.

[tricha]

It would be nice to see an update after todays carnage :eek: And to see where NZ fits in the picture.


Try this:
http://www.sharetrader.co.nz/picture.php?albumid=2&pictureid=24

[tricha]

June 26, 2008 6:11 P.M.ET
BULLETIN
Blood runs down the Street (http://www.marketwatch.com/news/story/us-stocks-plunge-worst-june/story.aspx?guid=%7BD2B0CDC8%2D4960%2D45F2%2D87E5%2 D8BA7DE058EFF%7D) http://i.mktw.net/newsimages/util/pixel.gifMarket slammed by higher crude, weak tech outlooks and woes in financials. Dow has lost more than 1,100 points so far in June.
• Oil futures barrel past $140 (http://www.marketwatch.com/News/Story/Story.aspx?column=Futures+Movers) | Fed puts dollar under pressure (http://www.marketwatch.com/news/story/dollar-under-pressure-post-fed-disappointment/story.aspx?guid=%7B99389EAF%2D1499%2D4DE8%2D89C8%2 D5E35B6AFD46D%7D)
'One thing is for certain: If crude continues to rally, stocks are dead.'— Dale Doelling, Trends In Commodities

[redzone]

not EOR.V FROM WHERE I STAND

[trendy]

June 26, 2008 6:11 P.M.ET
BULLETIN
Blood runs down the Street (http://www.marketwatch.com/news/story/us-stocks-plunge-worst-june/story.aspx?guid=%7BD2B0CDC8%2D4960%2D45F2%2D87E5%2 D8BA7DE058EFF%7D) http://i.mktw.net/newsimages/util/pixel.gifMarket slammed by higher crude, weak tech outlooks and woes in financials. Dow has lost more than 1,100 points so far in June.
• Oil futures barrel past $140 (http://www.marketwatch.com/News/Story/Story.aspx?column=Futures+Movers) | Fed puts dollar under pressure (http://www.marketwatch.com/news/story/dollar-under-pressure-post-fed-disappointment/story.aspx?guid=%7B99389EAF%2D1499%2D4DE8%2D89C8%2 D5E35B6AFD46D%7D)
'One thing is for certain: If crude continues to rally, stocks are dead.'— Dale Doelling, Trends In Commodities

Ya haven't seen anything yet. Expect some of the big auto's to go under Ford, GM or Chrysler - sales have collapsed for pickups and SUVs. They are so desperate they are now offering 6 years interest (0%) free...no kidding, I'm waiting for them to pay folks to take the vehicles off the lot.

Freakin Bank of America is technically insolvent and now holding Countrywide H-bomb. In fact many banks here are insolvent.

USA debt built consumer economy is now coming home to roost.

[Dr_Who]

WOOT! :)

Nothing like being cashed up with a few oil/gas stocks in the portfolio.

I say the world will eventually go into recession.

[lakedaemonian]

WOOT! :)

Nothing like being cashed up with a few oil/gas stocks in the portfolio.

I say the world will eventually go into recession.

I started shedding all corporate debt 2 years ago to get ready for this.....but was always hoping it would pass easily and quickly....I'm no longer confident of that.

I agree with cash...in terms of "cash-like" I've always liked Oil futures, Natural Gas futures, Gold, and Silver. I'm starting to think Uranium is a bargain "cash-like" substance at current levels.

[Packersoldkidney]

I started shedding all corporate debt 2 years ago to get ready for this.....but was always hoping it would pass easily and quickly....I'm no longer confident of that.

I agree with cash...in terms of "cash-like" I've always liked Oil futures, Natural Gas futures, Gold, and Silver. I'm starting to think Uranium is a bargain "cash-like" substance at current levels.

Uranium is a fair bet for next year I reckon.

What has been stopping a larger blood flow from the Aussie markets has been the resource sector. Without resource companies doing comparatively well in this environment, the All ords would probably be down to around the 4500 - 4700 area, possibly lower.

The question is can resources hold up their end of the bargain in a world that is looking straight in the face of a nasty recession.

My answer is no; the question is how long before the resource sector turns, and when I say turns I mean truly gets thumped.

[Packersoldkidney]

Great to see you posting again Packersoldkidney, I agree that with a likely recession looming it might take the shine off the ASX and resource sector, but currently Its hard to believe the amount of money that can be made at the moment, certain market sectors are on fire. I guess the money has to run somewhere, I guess even in a bear market( are we really in one? ) there is money to be made.

Sipping on some Wolf Blass Tawny Port whist it rains outside, dreading the fact that I might have to get a real job if this market turns really bad.

Hope you have some OMH POK, Total winner. (Sadly got stopped out of FMS today, has been a nice run, would like to re-enter at some stage.... rules allowing)

AA

Thanks for the kind words.

Haven't been invested in any way apart from cash for quite a time - had to let it go for a while due to health reasons. Congratulations on OMH; that's quite a chart.

I don't actually think there is a great deal of money out there, when you take debt into consideration - the over-leveraging of the last few years that has led to the phenomenal run in commodities, but the rises are in many ways ephemeral, as we will soon find out.

Medium/long term I think there are a few commodities that are interesting plays because of supply/demand issues, uranium being one and zinc another.

[steve fleming]

Interesting to see that amongst all the doom and gloom, Macquarie remain pretty positive.

From their morning briefing this morning:

Still not 2001 redux
Summary



Second-tier data releases in the US showed that the economy is still defying forecasts of a nasty recession. There is really no comparison with 2001.




One of the most crucial developments is the absence so far of inventory destocking by the manufacturing sector. There are certainly some risks of production cutbacks, mainly in the auto industry. Yet when non-durable goods are taken into account, the pressure for inventory-related production cuts does not look that high.




That was certainly the message in the June ISM survey. The pop in the inventory index in that survey was consistent with economic strength, not weakness.





It doesn’t matter whether the timeframe is medium or long term: The ISM inventory index does not rise at the early stages of a recession. Rather, it rises once a recession is near an end.




]To some extent there is also an important difference in the labour market. Layoff announcements have not followed the normal season pattern by falling over the first half of 2008. So there is genuine weakness in the labour market, which is not a surprise to anyone.




Yet the level of the job cuts bears no comparison to 2001. Indeed, the June 2008 level was actually below the level of June 2005. It is worth recalling that the FOMC was busily tightening monetary policy at that time.




Tonight’s US payroll data for June should still show a significant employment drop. There will be just as much interest in the unemployment rate after the massive rise in May. It is unlikely that there will be any good news in these data and this will keep alive fears of a very weak economy.




These fears will probably not be helped if the European Central Bank follows through with its threat and tightens monetary policy tonight.





Still, the data so far are not following the 2001 script of severe weakness. Just a few more months of similar results should be enough to convince financial markets that the disaster scenario has been avoided.

[Halebop]

I may have to dust off my FA-Fu... A trend line from way back has been making an appearance on my charts. Personally my hunch is the ASX will test somewhere between 4600 and 4800 (the greed in me would say 4,200 but that might need some sort of kicker to achieve). Although I'm nervous of the financial and property sectors, a short recession/slow growth era seems both likely (and preferable!) to me. ...Funny how it takes the sweet lament of gloom to bring out the optimist in me.

http://img112.imageshack.us/img112/4893/xaojpglz0.jpg

[Huang Chung]

When Wall Street started to crumble half a year ago, I remember of of the traders on CNBC (can't remember which one) saying that the market will initially react to every piece of bad news, but eventually, the bad news will have little effect, which will signal we're probably bottoming.

So last night we had the combination of a worse than expected jobs report, continuing high oil prices, continuing crisis in the credit markets, sabre rattling with Iran, and a long weekend in the US, and the DOW went up.

Interesting. :rolleyes:

[JBmurc]

When Wall Street started to crumble half a year ago, I remember of of the traders on CNBC (can't remember which one) saying that the market will initially react to every piece of bad news, but eventually, the bad news will have little effect, which will signal we're probably bottoming.

So last night we had the combination of a worse than expected jobs report, continuing high oil prices, continuing crisis in the credit markets, sabre rattling with Iran, and a long weekend in the US, and the DOW went up.

Interesting. :rolleyes:

I agree just when most investors are selling out in droves because of the impending world market crash is about the right time to buy -Most investors are sheep
IMHO Oil is the #1 driver of alot of the market sentiment so if we see oil say pull back to the 100-120 range early 09 after its been hitting all time highs 150+ late 08 we will also see a strength come back to world sharemarket with sentiment once again turning more bullish -(as holding mostly energy stock why sell? now )
-Most bear markets last between 12-14 months

[Footsie]

actually the average bear market is only 10 months

[lakedaemonian]

Uranium is a fair bet for next year I reckon.

What has been stopping a larger blood flow from the Aussie markets has been the resource sector. Without resource companies doing comparatively well in this environment, the All ords would probably be down to around the 4500 - 4700 area, possibly lower.

The question is can resources hold up their end of the bargain in a world that is looking straight in the face of a nasty recession.

My answer is no; the question is how long before the resource sector turns, and when I say turns I mean truly gets thumped.

I agree that the resource sector is due for a bit of a thumping.......I'm not keen to raise my dollar cost average at this stage....on anything


I'm towing the Jim Rogers line in the belief that everything will take a hit going forward....but commodities will take less of a hit overall, will recover more quickly, and achieve higher gains in the medium to long term than any other alternative.

With the exception of performing some due dilgence on the best way for me to invest in Uranium prices, I'm sitting back and waiting for commodities to come off the boil to load up more.

The problem I've been having recently has been setting price targets for Silver/Gold in recent months for further purchases on price weakness...and I've set my targets a BIT too conservatively.

At this stage I think I will be accumulating in bigger chunks on more shallow price weakness for gold/silver.

For energy.......At this stage I'm a buyer below $120, a bigger buyer below $110, and backing up the truck below $100...but I don't think we'll see below $100 anytime soon.

I'm becoming increasingly skeptical of commodity/resource shares, preferring the underlying commodity itself......I think wage/overhead/energy input inflation is going to choke a large chunk of gains due to underlying commodity price gains.

For me, commodities are the new currencies....in particular energy, silver, gold, and ag

[Packersoldkidney]

Bear markets are great if you are trading, as are obviously bull markets.

By far the worst markets are the 'sideways' ones, where nothing happens much and there is no trend discernable - after this bear market is through that is where I suspect the Dow is headed - a sideways market where nothing much happens.

[lakedaemonian]

I agree just when most investors are selling out in droves because of the impending world market crash is about the right time to buy -Most investors are sheep
IMHO Oil is the #1 driver of alot of the market sentiment so if we see oil say pull back to the 100-120 range early 09 after its been hitting all time highs 150+ late 08 we will also see a strength come back to world sharemarket with sentiment once again turning more bullish -(as holding mostly energy stock why sell? now )
-Most bear markets last between 12-14 months

I think I'm in agreement with your short-term high and mid-term low for oil.

Where I think I disagree is in what happens after that.

My thoughts are that we may see short-term improvement in global sharemarkets that may be quite lucrative for traders...but for long-term investors I'm kinda thinking it could be the last stop on the sharemarket gravy train for QUITE some time...I think equities markets will be dead money, in most cases, for quite a few years.

I'm thinking that once we see a sharp hit to commodities sometime over the next 1-12 months it will be an excellent opportunity to reload, add-to an existing position, or make initial entry for those late to the commodity party.

I think that wherever oil drops to......and I'm thinking along the 100-120 range like you, it will be a steady, unending, upwards crawl for oil......with natural gas, silver, gold, uranium, and ag following along a similiar trajectory to a greater or lesser degree.

So I agree with your timeframe, and your short-term high and mid-term low for oil, as well as a boost to equity markets......but I think after that we differ.......substantially

[lakedaemonian]

Bear markets are great if you are trading, as are obviously bull markets.

By far the worst markets are the 'sideways' ones, where nothing happens much and there is no trend discernable - after this bear market is through that is where I suspect the Dow is headed - a sideways market where nothing much happens.

With the exception of a possible boost due to a potential commodity price correction, I think AT BEST sharemarket participants can expect over the next 1-5+ years is "sideways".

My guess as to the LIKELY future market "recipe" is:

30 cups of sideways
10 parts down
3 pieces up

[tricha]

Footsie - as you know, some have lasted for long, long periods. Why won't this one?

It takes a good while for base inflation to work its way through the system. We haven't even seen high interest rates yet, but they're a comin'.

Exactly, when Wall Street crashed in 1929, it did not bottom tilll 1933.

And this is not the usual Bear Market, this is about sustained high oil prices, the lifeblood of the USA and the USA can not afford to pay for their take.

Lets just hope BRIC will save the day to a degree. As far as the USA, its time for them to pay their dues.
And maybe us as well :confused:

[Dr_Who]

Exactly, when Wall Street crashed in 1929, it did not bottom tilll 1933.

And this is not the usual Bear Market, this is about sustained high oil prices, the lifeblood of the USA and the USA can not afford to pay for their take.

Lets just hope BRIC will save the day to a degree. As far as the USA, its time for them to pay their dues.
And maybe us as well :confused:

I agree with you Tricha.

Here are the reasons why I think the US market will not bottom anytime soon.

1. High oil prices
2. Huge foreign and real debt.
3. War in Iraq and large defence force
4. Sub Prime and property market crash
5. Financial and banking sector rot

Anythine else I have missed out?

[Financially dependant]

I agree with you Tricha.

Here are the reasons why I think the US market will not bottom anytime soon.

1. High oil prices
2. Huge foreign and real debt.
3. War in Iraq and large defence force
4. Sub Prime and property market crash
5. Financial and banking sector rot

Anythine else I have missed out?

Pride and ego!

[redzone]

So, if not soon, however long that is-then when? Or has it been?

10,100 on the Dow should be very close to the bottom with a rise to 15000 by the middle of next year

[shasta]

10,100 on the Dow should be very close to the bottom with a rise to 15000 by the middle of next year

I'm afraid the bears have only just come out of hibernation, i wouldn't bet against them hanging around for a while yet. :confused:

[tricha]

I'm afraid the bears have only just come out of hibernation, i wouldn't bet against them hanging around for a while yet. :confused:


Stage set for mini Opes Prime drama






Font Size: Decrease (http://www.theaustralian.news.com.au/story/0,25197,23978088-30538,00.html#) Increase (http://www.theaustralian.news.com.au/story/0,25197,23978088-30538,00.html#)
Print Page: Print (javascript:print();)


Adele Ferguson | July 07, 2008

THE decision by ANZ's Mike Smith to pull the pin on Chimaera's securities lending business and seize control of a $260 million portfolio of shares and property could create a mini Opes Prime disaster, triggering legal action, margin calls and hedge fund attacks as the bank systematically liquidates about $200 million worth of illiquid small and mid-cap shares.
The move to put Chimaera into receivership is expected to wreak havoc on the small to mid-cap sector over the next few weeks as ANZ retrieves its money by liquidating stock in a $365 million portfolio of Australian shares filled with stocks including Luminus, Water Wheel, UXC, IDT Australia, Cabcharge, Bill Express and Octaviar.
It is not known who Chimaera has these securities loans with but any directors of companies that have margin loans out will need to come forward and declare their margin-loan exposure.
Any stockbrokers who have been dealing with Chimaera will also need to alert the ASX to any potential breaches of liquidity requirements that might be caused by the ANZ's decision to throw receivers into the company.
An examination of a statement put out by ANZ in May outlines all the securities ANZ had a relevant interest in as a result of transactions under securities lending agreements with Opes Prime, Tricom and Chimaera. This list of 90 companies suggests that many of the stocks in Chimaera's share portfolio are in the lower end of the market.
This does not bode well for the sort of money ANZ will get for them. This partly explains why ANZ is anticipating a $50 million loss on its $260 million security.
Chimaera used a similar stock-lending model to Opes Prime and Tricom Securities, in which the legal title to securities lodged as collateral is transferred from the clients (lenders) to the broker. In turn, the title then passes from the broker to their financiers, which in all three cases was ANZ.
The behind-the-scenes saga at Chimaera is nothing short of flabbergasting and highlights another botched handling by ANZ, which is expected to result in legal action against the bank and further damage to its already tarnished image.
Sources close to Chimaera date the sorry tale back to January when MFS shares collapsed, reducing Chimaera's stock value by about $240 million and exposing ANZ to the tune of $165 million.
The result: ANZ could have paid Chimaera $165 million or enter an agreement to take security over Chimaera's assets in return for a co-operation deed that included a moratorium and certain conditions.
The timing of this arrangement coincides with trouble in other brokers that specialise in securities lending, including Tricom and Opes Prime. In all cases, ANZ was involved.
ANZ appointed Khorda Mentha to do due diligence on Chimaera and last Monday the bank put out a statement saying: "By media release dated 23 April, Chimaera said ANZ was expected to invest $55 million following the completion of due diligence. ANZ today announced that following the completion of the due diligence review, it has decided not to proceed with any investment in Chimaera." However, a Chimaera client said he had been told by representatives at Chimaera that Khorda Mentha had completed the due diligence successfully. A source close to Chimaera confirmed that in May, independent due diligence advisers made positive recommendations to ANZ.
A source also alleges that at the same time as ditching its rescue plan, ANZ issued a margin call for $3.4 million. "Chimaera disputed the margin call, Chimaera personnel believe that the correct position is $3.6 million in surplus. ANZ advises that all accounts must now be brought into credit immediately." Whatever the case, it indicates that Chimaera was either in margin call or close to it.
A spokeswoman for ANZ said at the weekend that one of the main reasons ANZ decided to appoint receivers to Chimaera was due to the deterioration of the market in the past seven days. "A lot of this has to do with the movements in the market," she said. "The options they were coming up with, we didn't think they could come up with the cash," she said.
Discussions between Chimaera principals and ANZ went to the highest levels at ANZ. This can only mean that Mike Smith was actively involved in this and cannot hide behind the shield of "I'm new and know nothing about this terrible securities lending business".
Receivers were appointed to Chimaera on Friday afternoon, resulting in two companies, Luminus Systems and Blue Energy, calling for an immediate trading halt in their shares.
Others are expected to follow suit.
The reason is simple: Chimaera's portfolio includes a lot of small to mid-cap stocks, so much of the securities lending it did was in the less liquid end of the sector, where most damage can be caused when hedge funds short the stock.
It is not known who, ultimately, owns these shares but if it is the directors of companies, they will need to put out statements to the ASX immediately alerting the market that they have margin loans.
Brokers expect there will be a lot of "bargains" in the small-cap sector in the next two weeks as ANZ cuts and runs.
This will add to the volatility in the stock market and no doubt trigger more margin calls on these types of stocks.
There is also expected to be a lot favouritism given to ANZ's clients who will be given opportunities to buy shares at a discount in off-market transactions, similar to what it did with its liquidation of stocks held over Opes Prime.
Others who have accounts with ANZ will try to do deals to try and get their money back. A few Chimaera clients with substantial sums of money are planning to see if they can pay ANZ money and get their securities lending accounts back. ANZ is understood to have already spoken to a few saying they will be "looked after".
ANZ's decision to put Chimaera's stock-lending business into receivership after spending more than two months doing due diligence on the company raises big questions about the sudden change of mind.
That such a big decision was made while its chief executive Mike Smith was away raises even more questions.
A source close to Chimaera said the past week had been nothing short of bizarre. "Senior executives at ANZ abandoned Chimaera, with no notice," he said.
A few of the bigger clients are understood to be talking to their lawyers about taking out an injunction against ANZ to stop it selling shares. Injunctions rarely succeed, so other courses of action are also being considered.
One client said he stuck with Chimaera because he believed even though ANZ was not pursuing its rescue package, Chimaera had a recapitalisation plan in place. "This is now in doubt due to ANZ's decision to put it into receivership," he said.
"We were told that a recapitalisation plan was in place with two Asian banks interested in injecting capital. On Wednesday, we started to put together a syndicate to pay out our loan. That syndicate is formed and we had hoped to put it to the ANZ this week but if they start selling shares, we will be in a terrible situation and face big losses."
The problems at Chimaera continue to highlight the need for regulation of the securities lending industry in Australia, which has one of the deepest lending markets in the world because stock lending is so cheap. For a few basis points, super funds were able to lend their shares out to the likes of Chimaera and Opes Prime, who then on-lend to the hedge funds, who use the borrowed stock to short it, and decimate the very funds that super funds are meant to manage for Australians.

[Dr_Who]

OUCH!

Who's next on the block?

How many margin lending firms are there in Aussie? Abit like our finance Co's falling over one by one.

[JBmurc]

just like mortgagee sale more cheap small-mid caps for the savy investor's
esp. the energy,oil,gold sectors
helping a mate invest 500k over the next couple weeks in the ASX
will be looking at some cheap-PPP,STX,IPM,ROC,TAP,OGC,CXC,PEN,PSA......

[Dr_Who]

just like mortgagee sale more cheap small-mid caps for the savy investor's
esp. the energy,oil,gold sectors
helping a mate invest 500k over the next couple weeks in the ASX
will be looking at some cheap-PPP,STX,IPM,ROC,TAP,OGC,CXC,PEN,PSA......

You are right mate. I have PPP and IPM on your list. :)

I ve got cash to pick up more if things go pear shape. Cant go wrong with buying good quality stock in a trendy sector.

[Hoop]

I'm afraid the bears have only just come out of hibernation, i wouldn't bet against them hanging around for a while yet. :confused:

Shasta
It is now officially an equity bear market........now that the bear has been officially established it can backdated to when it began which was in October 2007 for the Dow. The bear market is therefore 8 months old, and is entering into it's next phase.
So far this bear market cycle is playing out according to theory. It is following the text book script nicely, and so far investors with a good knowledge of history will be making (made) plenty of money out of this bear...so far...

[Footsie]

Hoop
bang on

I guess that means we go to 4,700-4,800 before putting in another rally.

or perhaps 5,000 might hold before a grind to 5,500.

I think if we go to 4,800 in the next few weeks it will be resources lead. ... and that the next bear rally wil be financials led

[Packersoldkidney]

just like mortgagee sale more cheap small-mid caps for the savy investor's
esp. the energy,oil,gold sectors
helping a mate invest 500k over the next couple weeks in the ASX
will be looking at some cheap-PPP,STX,IPM,ROC,TAP,OGC,CXC,PEN,PSA......

Have to admit I think investing on the long side in the ASX in any stock in the next few weeks is absolute craziness.

[Dr_Who]

Have to admit I think investing on the long side in the ASX in any stock in the next few weeks is absolute craziness.

A number of oilers have factored into a correction of oil in their numbers. Most analysis on oilers are done based on oil at around $100bbl. Hence oilers have not gone up as much as the oil price.

I must say it is looking very ugly out there.

[Footsie]

everyone is bearish... even me

must be another short term bottom coming

i'd say expect a bounce ...... BECAUSE NOBODY EXPECTS IT

[bermuda]

Big talk up on Walmart. Sales are exceeding expectations.

As the recession bites the upper end of the market are changing their buying habits and starting to shop at lower priced Walmart stores.

And over 80% of Walmart goods are from China. So the world will continue to go round and China will get stronger.

We are in for a doozie of a recession. Batten down the hatches. Retail is going to get killed.

[Dr_Who]

i'd say expect a bounce ...... BECAUSE NOBODY EXPECTS IT

I really cant see a bounce as long as oil price stays high.

[winner69]

Stagflation Underway

so says NZIER from the Survey of Business Opinion
http://www.nzier.org.nz/includes/download.aspx?ID=95667

[lakedaemonian]

I agree with you Tricha.

Here are the reasons why I think the US market will not bottom anytime soon.

1. High oil prices
2. Huge foreign and real debt.
3. War in Iraq and large defence force
4. Sub Prime and property market crash
5. Financial and banking sector rot

Anythine else I have missed out?

Yes!

Pension fund chaos........pension funds particularly those involving public servants of local and state government in the US, have FAR, FAR overpromised what they will be far, far underdelivering on for quite some time.

Imagine for a second, a bunch of elected and non-elected US local/state government employees handing out increasingly generous pension payout and benefit packages to each other ALL BASED on impossible to achieve investment return percentages allowing people in their 40's to retire on 100% of their overinflated 6 figure incomes WITH expensive health care coverage for life.

Multiply by thousands and just add water........

That gigantic sucking sound will be the sound of money being sucked OUT of US markets as well as more sucked out of US taxpayer pockets to fund it.......OR the pension plans go bankrupt and the US government has to print more paper to cover pension liabilities.

It's a gigantic hot potato....one that's not on the radar as of yet due to all the other hot potatoes being tossed about like live hand grenades.

And that's not even including other gigantic bowling balls to be swallowed like far under-funded social security and drug benefit programs.

[trendy]

Yes!

Pension fund chaos........pension funds particularly those involving public servants of local and state government in the US, have FAR, FAR overpromised what they will be far, far underdelivering on for quite some time.

Imagine for a second, a bunch of elected and non-elected US local/state government employees handing out increasingly generous pension payout and benefit packages to each other ALL BASED on impossible to achieve investment return percentages allowing people in their 40's to retire on 100% of their overinflated 6 figure incomes WITH expensive health care coverage for life.

Multiply by thousands and just add water........

That gigantic sucking sound will be the sound of money being sucked OUT of US markets as well as more sucked out of US taxpayer pockets to fund it.......OR the pension plans go bankrupt and the US government has to print more paper to cover pension liabilities.

It's a gigantic hot potato....one that's not on the radar as of yet due to all the other hot potatoes being tossed about like live hand grenades.

And that's not even including other gigantic bowling balls to be swallowed like far under-funded social security and drug benefit programs.

Lakey...you even have me worried. My company has me vested in their pension scheme and full medical insurance on retirement....at this rate I'll have to retire back in NZ.

[trendy]

Yes!

Pension fund chaos........pension funds particularly those involving public servants of local and state government in the US, have FAR, FAR overpromised what they will be far, far underdelivering on for quite some time.

Imagine for a second, a bunch of elected and non-elected US local/state government employees handing out increasingly generous pension payout and benefit packages to each other ALL BASED on impossible to achieve investment return percentages allowing people in their 40's to retire on 100% of their overinflated 6 figure incomes WITH expensive health care coverage for life.

Multiply by thousands and just add water........

That gigantic sucking sound will be the sound of money being sucked OUT of US markets as well as more sucked out of US taxpayer pockets to fund it.......OR the pension plans go bankrupt and the US government has to print more paper to cover pension liabilities.

It's a gigantic hot potato....one that's not on the radar as of yet due to all the other hot potatoes being tossed about like live hand grenades.

And that's not even including other gigantic bowling balls to be swallowed like far under-funded social security and drug benefit programs.

Lakey...you even have me worried. My company has me vested in their pension scheme and full medical insurance on retirement....at this rate I'll have to retire back in NZ.

[lakedaemonian]

Lakey...you even have me worried. My company has me vested in their pension scheme and full medical insurance on retirement....at this rate I'll have to retire back in NZ.

I don't mean to cause alarm.

BUT I would strongly encourage you to perform some SERIOUS due dilgence on your pension scheme.

Local and state governments have been playing with overly generous pension and benefit schemes based on overly optomistic investment returns.

Same applies to companies.......what's the BEST way for a company to reduce it's pension funding contribution? Manipulating assumptions or taking onboard increased risk...in things like CDOs...that have turned to custard.

I think of it as similiar to the way airlines occasionally devalue their airmile programs to "find" cash....but in reverse. Companies can put less cash into pension plans when the expected returns are 15% instead of 5% or -5%.

Speaking of airlines......they are the companies that have been trying the hardest to offload their pension obligations on the government.

Just do a Google for underfunded pensions and get to know the Pension Benefit Guaranty Corporation.

Just my 0.02c and I hope it's of use to you.

[Dr_Who]

Looks like a few panic sellers out there. Either that or margin calls. A few more bad days and time to maybe pick up some cheap stocks.