Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.
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Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.
DOW down 220 points & DOW Futures down 200 points on Friday = very ugly day on ASX tomorrow.
Watch for the panic selling, followed by the recoup on Tuesday...
My stocks dont seem to get catch up with the general market sentiment.
Probably cos they never go up on green days!
Margin buyers........I think many have come back into this scheme over the last few months- as things appear to have become more stable.
With the Dow again on the skids.............look for some stocks to drop 3-10% as Margineers gets squeezed.
What about all the NZOers on Margin loans......could get ugly?
Hawke.
THE USD is also acting a bit indecisive too...
Well, both the ASX and NZX shugged that off, for today at least.
The Dow is getting close to its primary support level of 11750.
Indications are, it has a better than average chance of falling below that support. If it does the TA target is 11000
see Colin Twiggs Diary,
I would be surprised if the Dow didn't rally from around here: as you say, around a key support level right now. I think we may be around a low for the year in terms of the Dow - time will tell. A Dow chart from around the start of the decade and in particular the levels reached in 2002 tell a story as to where things might spring off in the near future.
So much for my prediction: Dow tanking tonight along with the Naz.
Financials getting hammered - tech stocks getting pasted - gold and oil up, US $ down.
I have to admit that I am surprised that many, if not all, are saying the US is going to be in for a 'mild' recession - when all indicators point to a very long and very deep recession.
Thing is, in relation to the Dow, the reality of a recession hasn't even hit yet, let alone one that could be much nastier than anything in living memory - what is going to happen to the Dow if the USA really does fall into more than a 'mild' recession?
I was expecting a bear market rally off support, but clearly my call was wrong. The Dow will go much lower from here one would expect.
re Dow fall: on the upside, gold bounces nicely ; )
So it appears the Fed has run out of room to move. No more interest rate cuts = bad news for equities over the next two months?
Yes I watch Closing Bell and Fast Money in the mornings on CNBC
Malcolm usually Fast Money is entertaining and funny with the traders joking away and taking the mickey out of their counterparts when they have a bad day...but this morning they didn't crack one joke..they were all rather subdued.
First time I've noticed this. I think this is a very bad bad sign.
Independance day was a breaker this/last week. Watching with interest, next. Maybe a few good buys will flow through into the NZ and AUS markets - bit of spare cash is handy to have ATM.
OMG what a day. The carnage was amazing - look at the LEH volume 260% of normal daily volume. At this rate the LEH mid-year bonus will see staff own all of LEH. **** next staff salary will be simply be in stock bought daily from salary budget.
As for FNM and FRE they are dust - FRE down 22% today alone. THEY ARE BOTH INSOLVENT/BANKRUPT AS THEIR LIABILITIES EXCEED ASSETS(CAPITAL).
If the US government steps in to guarantee them the US WILL BE DOWNGRADED. T-BONDS will be dumped in mass. US i-rates will head up.
If this isn't the prelude to worse to come nothing is.
http://www.telegraph.co.uk/money/mai...cnspain111.xml
Spain pulls bond sale amid economic crisis
By Ambrose Evans-Pritchard
Last Updated: 10:21pm BST 10/07/2008
Spain has suspended an auction of sovereign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis.
Spain has suspended an auction of sovreign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis
Spanish government officials have been shocked by the intensity of the downturn
The treasury pulled an expected sale of 15-year bonds after probing the market informally, saying it would wait until credit conditions began to calm down. "We are not facing financing problems. We placed a successful three-year note on Wednesday," said a spokesman.
Government officials have been shocked by the intensity of the downturn now engulfing the country. Car sales fell 31pc in June, industrial production has fallen 5.5pc over the past year and the collapsing property sector is shedding almost 100,000 jobs a month.
Miguel Sebastian, the industry minister, said the economy had ground to a halt in the second quarter and was now in "virtual recession"
More doom and gloom...
http://www.telegraph.co.uk/money/mai...cnmoney111.xml
The money tap turns off, leaving the world in short supply
Last Updated: 12:33am BST 11/07/2008
The lifeblood of countries' economies is draining away - with grim consequences for us all, writes Ambrose Evans-Pritchard
The money supply data from the US, Britain, and now Europe, has begun to flash warning signals of a potential crunch. Monetarists are increasingly worried that the entire economic system of the North Atlantic could tip into debt deflation over the next two years if the authorities misjudge the risk.
The key measures of US cash, checking accounts, and time deposits - M1 and M2 - have been contracting in real terms for several months. A dramatic slowdown in Britain's broader M4 aggregates is setting off alarm bells here.
Money data - a leading indicator - is telling a very different story from the daily headlines on inflation, now 4.1pc in the US, 3.7pc in Europe, and 3.3pc in Britain.
# Read more by Ambrose Evans Pritchard
# More on economics
Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc.
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"The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.
Leigh Skene from Lombard Street Research said the lending conditions in the US were now the worst since the Great Depression. "Credit liquidation has begun," he said.
The Fed's awful predicament does indeed have echoes of the early 1930s when the bank felt constrained to tighten into the Slump in order to halt bullion loss under the Gold Standard. Investors - notably foreigners - dictated a perverse policy. Over 4,000 US banks collapsed. This time a de facto "Oil Standard" is boxing in Ben Bernanke. Benign neglect of the dollar has started to backfire. It is pushing up crude, with multiple leverage.
The monetary picture is highly complex. The different measures - M1, M2, M3, M4 - have all given false signals in the past. Each tells a different tale, and monetarists fight like alley cats among themselves.
The Federal Reserve stopped paying much attention to the data a long time ago. It has abolished M3 altogether. The US economic consensus is New-Keynesian (dynamic stochastic general equilibrium model). Delving into the money entrails is derided as little better than soothsaying.
That attitude, retort monetarists, is the root cause of the credit bubble. The money supply almost always gives advance warning of big economic shifts. Those who track the data are now calling on central banks to move with extreme caution. If the rate-setters overreact to an inflation spike caused by oil and food - or confuse today's climate with the early 1970s - they may set off an ugly chain of events.
"The data is pretty worrying," said Paul Ashworth, US economist at Capital Economics. "US lending is shrinking dramatically in real terms, and we know from the Fed's survey that banks want to tighten further. People are clamouring for higher rates but we think deflation is now the biggest threat. The idea that the Fed should tighten with unemployment soaring is preposterous," he said. The jobless rate jumped from 5pc to 5.5pc in May.
In Britain, the Shadow Monetary Policy Committee - hosted by the Institute for Economic Affairs, and a refuge for UK monetarists - issued its own alert this week. The focus is on "adjusted M4", which covers loans to "private non-financial corporations" and may offer the best insight into the health of British business.
The growth rate has dropped from 16.1pc a year ago to minus 0.5pc in April. It is the suddenness of the decline that matters most. The data reeks of recession. Professor Patrick Minford from Cardiff Business School called for an immediate rate cut, arguing that the credit crunch is a more powerful and long-lasting force than the oil inflation.
Professor Tim Congdon from the London School of Economics said the UK was lurching from boom to bust. "Real money growth is virtually nil. The British economy is taking a thrashing and it is going to get worse. Corporate money balances have contracted 3pc over the last three months, which is double digits on an annualised basis. This is a serious squeeze for companies," he said.
Mr Congdon warned three years ago that surging M4 would lead to a "dangerous" bubble, which is what occurred. He now fears the MPC will react too late as the process goes into reverse.
Roger Bootle from Capital Economics said Britain could be facing a "real economic crisis and a financial collapse. The MPC does not have the luxury of waiting until all is absolutely crystal clear. By that time the bird will have flown."
The eurozone is at a later stage of the credit cycle. Even so, house prices are collapsing in Spain, and falling in Germany and France. German industrial orders have dropped for the last six months in a row. A joint IFO-INSEE survey said eurozone growth had stalled to zero in the second quarter.
"Consumer lending has fallen off a cliff. It is contracting in real terms," said Hans Redeker, currency chief at BNP Paribas. Core inflation has fallen from 1.9pc to 1.7pc over the last year.
Unlike the Fed, the European Central Bank keeps a close eye on money data (though not on real M1, now shrinking). It looks at the broader M3 figures. There is a raging debate in Europe over the signals now being sent by this indicator.
The M3 growth is still 10.5pc, down from 11.5pc in January. However, the data has been badly distorted by the closure of the capital markets. Firms have been forced to draw down existing credit lines from banks, which shows up as M3 growth. (It is the same story with America's M3 since the collapse of the Commercial Paper market).
"The credit lines are expiring. Companies cannot roll over loans. We are going to see the entire private credit multiplier go into a slowdown," said Mr Redeker.
Jean-Claude Trichet, the ECB's president, said last week that the M3 data "overstates the underlying pace of monetary expansion". The ECB nevertheless pressed ahead with a rate rise to 4.25pc, setting off a storm of protest. This may go down as one of the most unwise monetary decisions of modern times.
The strain on eurozone banks is growing by the day. They bid a record $85bn (£43bn) at the ECB's last auction for dollars. Only $25bn was available. The spreads on Euribor interbank lending are still at extreme stress levels.
Few disputes that "global inflation" is taking off. Over 50 countries now face double-digit price rises. Ukraine (29pc), Vietnam (27pc), and the Gulf states are out of control, with Russia (15pc), and India (11pc) close behind. China (7.1pc) is on the cusp. Interest rates are still below inflation across much of the emerging world. This is the driving force behind spiralling commodity prices.
The oil spike is already squeezing real wages in the Atlantic region. The debate is whether the Fed, Bank of England, and ECB should squeeze them further, trying to off-set energy rises with a deflationary bust in the rest of the economy. If and when oil peaks in this cycle, they may find inflation crashing faster than they dare to imagine.
The 9th Circle in Dante's Inferno - starring Judas and Brutus - is a frozen lake. Cold can be more frightful than heat. "Blue pinch'd and shrined in ice the spirits stood," (Canto XXXIII). Such awaits the victims of debt deflation.
FTSE and CAC taken a hit today (more than 2% down). Oil up and then DOW tomorrow...
yip - would make 4 an interesting market open on Monday, here.
There seems to be a bit of a recovery due to Bernake basically sayign "They're too big to fail so we'll open the discount window a bit wider".
The volatility this morning is pretty spectacular! Any bets on the close? I'll call 11147.
European markets look like they took another hammering last night - much more than the DOW. As M says, cash is king in such times. Note gold and oil both up sharply.
STOP PRESS.......IndyMac fails....taken over by the FDIC.
http://www.bloomberg.com/apps/news?p...T7U&refer=home
IndyMac Seized by U.S. Regulators Amid Cash Crunch (Update2)
By Ari Levy and David Mildenberg
July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.
The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mail today. Customers will have access to funds this weekend via automated teller machines.
The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.
``Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,'' Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines.
IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC.
The lender racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.
Needed `Common Sense'
Had IndyMac ``applied some common sense and changed their approach to underwriting as the housing market peaked, they might have lived to see the next cycle,'' Horey said.
After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time today.
IndyMac came under fire last month from U.S. Senator Charles Schumer, who said lax lending standards and deposits purchased from third parties left it on the brink of failure. In the 11 business days after Schumer explained his concerns in a June 26 letter, depositors withdrew more than $1.3 billion, the OTS said.
``This institution failed due to a liquidity crisis,'' OTS Director John Reich said in the statement. ``Although this institution was already in distress, I am troubled by any interference in the regulatory process.''
IndyMac announced on July 7 that it was firing half its employees. The lender agreed to sell most of its retail mortgage branches to Prospect Mortgage, giving the Northbrook, Illinois based-company more than 60 branch offices with 750 employees. IndyMac also has a retail bank network with 33 branches and $18 billion in deposits, mostly insured by the FDIC.
http://www.telegraph.co.uk/money/mai...2/cndow112.xml
....The fears of a banking crisis gripped Wall Street, Lehman Brothers shares fell 22pc. Investors have been spooked by a filing this week showing that the bank still has $41bn of mortgage debt and other "toxic" Level III assets.
Lehman now risks the same spiralling loss of confidence that engulfed Bear Stearns, though the Federal Reserve's emergency lending window for broker-dealers offers a lifeline.
The credit default swaps on Lehman debt leapt 55 basis points to 380, flashing an extreme stress signal.
The implosion of Fannie and Freddie is disturbing. Neither has exposure to sub-prime loans.
"The situation is far more serious than Bear Stearns," said Bill King, chief strategist at Ramsey King Securities.
Under the US stimulus plan the pair have been deployed as lenders of last resort to the housing market, carrying out a quasi-official rescue mission on behalf of Congress since March. Now the rescuers themselves need rescuing.
Charles Schumer, chair of the Senate banking committee, said: "Fannie Mae and Freddie Mac are too important to go under. If they need additional support, Congress will act quickly."
If Washington does take on the liabilities of the two, this would double the US Treasury's outstanding debt load at a stroke and raise serious concerns about the triple-A sovereign rating of the US itself.
There may be no choice. Bill Gross, head of the bond giant Pimco, said a default by the two agencies would set off a "firestorm of intolerable proportions".
Standard and Poor's said in a recent report that Fannie and Freddie posed "a large contingent fiscal risk: if the risks were to translate into increased government debt, they could hurt US credit standing".
The markets have already begun to sense danger. The cost of insuring against default on 10-year US Treasury bonds surged from 8 basis points to 15 at one stage yesterday.
"America's 'AAA' rating has become a joke," said Peter Schiff, head of EuroPacific Capital.
"I believe the losses from Fannie and Freddie alone could reach $500bn to $1 trillion dollars.
'' The US government will not be able to meet repayments on its debt once interest rates rise," he said.
Mr Schiff said a big chunk of the agency debt is held by foreigners. A collapse of confidence could set off a dollar exodus.
It is unclear if Mr Paulson can delay a state bail-out for long. "There is concern that Fannie, Freddie, and Lehman will not be around on Monday," said one analyst.
Ironically, Fannie and Freddie shares, having halved in value at one stage, recovered slightly after Mr Paulson's comments. Investors were relieved the agencies might yet be spared a state seizure aimed at limiting "moral hazard".
This is what occurred in the Nordic financial rescues of the early 1990s, which left shareholders with nothing.
Fannie and Freddie make up somewhere around 70% (give or take a bit) of US residential mortgage secondary market.
Something like $5-7 TRILLION dollars US.
The Fed are insisting that if any bailout happens it should not benefit shareholders. Pity the only ones holding are the buy-and-hold types, the management probably cashed out their options long ago.
No worries. The US government is going to print some more US$$$ to bailout Fannie Mae and Freddie Mac. Essentially nationalizing the mortgage companies here. They are getting desperate it seems they have to cobble together another bailout package every other weekend now. remember BSC last March.
http://www.bloomberg.com/apps/news?p...Y9I&refer=home
Paulson Seeks Authority to Shore Up Fannie, Freddie (Update2)
By Brendan Murray and Dawn Kopecki
Enlarge Image/Details
July 13 (Bloomberg) -- Treasury Secretary Henry Paulson swung the weight of the federal government behind Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages.
Paulson, speaking on the steps of the Treasury facing the White House, asked Congress for authority to buy unlimited stakes in and lend to the companies, aiming to stem a collapse in confidence. The Federal Reserve separately authorized the firms to borrow directly from the central bank.
The announcement followed crisis talks between the firms, government officials, lawmakers and regulators, after Fannie Mae and Freddie Mac lost about half their value last week. Paulson and Fed Chairman Ben S. Bernanke are trying to prevent a collapse in the companies that would exacerbate the worst housing recession in 25 years and deepen the economic slowdown.
Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt. The two shareholder-owned companies are government-sponsored enterprises, giving investors the indication of an implicit federal backing.
Making `Explicit'
``It is time to recognize that the GSEs were always dependent upon government support and now we must make the implicit explicit,'' said Christopher Whalen, co-founder of independent research firm Institutional Risk Analytics in Torrance, California.
Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity ``if needed'' in the firms, and to increase their lines of credit with the department from $2.25 billion each. The temporary authority may be for 18 months, a Treasury official told reporters on a conference call on condition of anonymity.
As lenders retreated from the housing market, Washington- based Fannie Mae and McLean, Virginia-based Freddie Mac have grown to account for more than 80 percent of the home loans packaged into securities.
Freddie Mac is scheduled to sell $3 billion in short-term notes tomorrow, and Paulson's comments indicate a concern about a collapse in private investors' willingness to fund the firms. The companies issue debt to raise money for their purchases of mortgage securities.
Bond Sale
``This will shore up that debt offering,'' said Paul Miller, an equity analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. ``They need to make sure that that debt offering goes well and goes very well and they couldn't risk waking up tomorrow and having that offering go poorly.''
The dollar pared losses after Paulson's statement. The dollar traded at $1.5925 per euro at 7:19 a.m. in Tokyo from a low of $1.5971 and from $1.5938 in late New York on July 11. It bought 106.30 yen, little changed from 106.28 yen at the end of last week.
Preferred securities tumbled in Asian trading as investors questioned if Freddie and Fannie will be able to continue to pay dividends. Freddie Mac's 5.57 percent preferred lost 39 percent this year and Fannie Mae's 5.5 percent preferred dropped 31 percent.
President George W. Bush, in a statement, said ``it is crucial that Congress quickly works to enact this legislation.''
Democratic Lawmaker
Senator Charles Schumer, a Democrat from New York who chairs the Joint Economic Committee of Congress, praised Paulson's plan, saying it ``is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers.''
The plan would give Paulson power to buy an unspecified amount of stock in Fannie Mae and Freddie Mac, the official said. He also said he didn't recall any time in the past when the government has taken an equity stake in either company.
``We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital market,'' Fannie Mae Chief Executive Officer Daniel Mudd said in a statement today. ``Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market.''
Paulson also proposed that the Fed get a ``consultative role'' overseeing the companies' capital requirements. The Fed said in a separate statement that the New York Fed was approved to make direct loans to Fannie Mae and Freddie Mac at the discount rate, currently 2.25 percent, charged to commercial banks.
Echoes of Rubin
The last Treasury secretary to make a statement from the steps of the department was Robert Rubin, who sought to calm investors after the Dow Jones Industrial Average fell 554 points on Oct. 27, 1997.
Debt sold by Fannie Mae and Freddie Mac ``is held by financial institutions around the world,'' Paulson said today. ``Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets.''
Paulson sought to ease concerns that taxpayers would foot the bill for a bailout. ``Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer,'' he said.
Freddie Mac shares tumbled 47 percent in New York Stock Exchange composite trading last week and Washington-based Fannie Mae lost 45 percent of its value, forcing Paulson two days ago to issue a statement of support for the companies in their ``current form.''
Capital Raised
The companies have already raised $20 billion to cover losses amid the highest delinquency rates in at least 29 years. Freddie Mac said earlier this month it planned to sell $5.5 billion of equity after it reports earnings next month.
The cost to protect against a default on the companies' subordinated debt jumped last week. Credit-default swaps linked to Freddie's bonds rose to 251 basis points last week, while contracts on Fannie's increased to 246 basis points, according to CMA Datavision. On July 4, both were at 177 basis point and they started the year at 77. A basis point is 0.01 percentage point.
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.
Credit Ratings
Senior debt of both companies trades as if they were rated A3 instead of Aaa by Moody's Investors Service, according to data from the rankings firm's credit strategy group.
Five years ago, Fannie Mae and Freddie Mac paid about 45 basis points more than yields on 10-year Treasuries to borrow, while other corporations paid an average of 119 basis points, the Merrill Lynch & Co. U.S. Corporate Master index shows. Last week, the yield on Freddie Mac's $1 billion of 4.5 percent notes maturing in 2013 rose as high as 102 basis points more than Treasuries, according to data compiled by Bloomberg.
I agree trendy
Ben is bringing out the helicopter with Paulson flying shotgun. The end of the USD is just beginning.
I agree, the DOW seems to be finding a little support around the 11000 mark but with a lot of earnings reports this week that will probably be not that flash, I think it will fall further.
I just don't think anybody has got any good news left out there to bolster confidence in the market.
Bit of a quagmire the US finds itself in, print more money to prop everything up, which lowers it's value even further, and so the oil producers need more worthless US dollars for their black gold.
I was fairly sceptical about the oil price, however if there is no good news out of the US I think we will see $150 oil by the end of the week... Gold will continue its rapid climb...
...at this point in time it's prudent to be out of the market unless you feel the need for some cardiac work-out; in that case a bit of day-trading will do...the easier way of course is to be invested precious...
...in case the Fedheads will come up with more fairy tale stuff about their ability to control/solve the crisis, look for a spike down in US markets on fairy tale announcements -the down spike in the US markets commonly in tune with the VIX spiking up to 40+- before going into the market intermediate
...medium to long, it's a complete "on the brink" situation with huge up-or down side...and before the direction becomes clear (no hurry in the meantime), it's just plain suicidal to think one way or the other as a given; however,
!!!!BE WARNED!!!! THE ODDS (GENERAL EXPECTATIONS) ARE CRASH and a fairly good indication of it happening for sure, is the NASDAQ100 falling through 1724 confirmed (oil, oil, oil)
Kind Regards
We have a full fledged panic starting here. They are going to ban naked short-selling, which by the way is already illegal but never enforced.....due to the fox guading the hen house...GS..
http://www.bloomberg.com/apps/news?p...m2E&refer=home
They are also going to print a few more hundred billions dollars and give those to use again for more stimulas.
http://www.bloomberg.com/apps/news?p...QA0&refer=home
Are Weighing More Tax Rebates, Pelosi Says (Update1)
By Laura Litvan
July 15 (Bloomberg) -- House Democrats are weighing plans for another round of tax rebates as part of a legislative package to boost the economy this fall, House Speaker Nancy Pelosi said.
``We will be proceeding with another stimulus package, and we once again hope we will work in a bipartisan way,'' she said after House Democratic leaders met with a group of economists to discuss the spreading housing crisis and rising energy prices.
Pelosi and other House Democrats said a second stimulus package would probably include more spending for roads and other infrastructure, expanded unemployment benefits, home-heating assistance for low-income families and some aid for states struggling with budget deficits.
Plans for the stimulus legislation are taking shape as Democrats are also racing to approve the Bush administration's proposed rescue plan for Fannie Mae and Freddie Mac by early next week.
``This is a serious situation,'' said former Treasury Secretary Larry Summers, who attended the meeting with Democrats. ``We are in much more danger of responding inefficiently than in responding excessively.''
In February, Congress sent Bush a $168 billion economic stimulus measure that included tax rebates to 111 million households beginning in May. Rebate checks in the legislation were as high as $600 for individuals.
Pelosi said Democrats will need to work with President George W. Bush to determine the timing of a second stimulus package. Bush said today he would prefer to wait to see how the earlier rebates affect the economy.
`Rolling Financial Crises'
``We're always open minded to things, but we'll see how this one works,'' he said.
Alan Blinder, a former vice chairman of the Federal Reserve and a Princeton University economist, said the U.S. is experiencing a series of ``rolling financial crises'' and that the impact of the earlier round of tax rebates has been ``swallowed up'' by rising energy prices.
``The U.S. economy is in a recession that is probably getting worse,'' said Alan Sinai, chief global economist at Decision Economics Inc., who, like Blinder, attended the meeting with Democrats.
I've been clearly in the "doom and gloom" camp for approximately a year now based on my post history, and while I prefer to NOT fan the flames further, and continue to hope the bottom isn't as far down as I think it may wind up, there are a few things to consider going forward:
*Off Balance sheet antics have NOT yet been fully disclosed by many of the remaining big players...HOW can anyone make an investment based on such stupidity? "Here's our assets, here's our liabilities, and we have a big, big secret behind door number 3......how many shares do you want?"
*Pension Funds with hundreds of billions of risky market exposure, chasing the extra return like NZ Mom & Dad going after the extra 0.5% with failed finance company debentures, with expectations of far above average returns going forward to pay for excessive pension entitlements, are at risk of detonating like the death star and taking many, many American retirees with them.....it could make the 24 finance companies in 24 months(approximate) here in NZ looks like sunshine and rainbows.
*Derivatives........their growth seems almost parabolic.......I understand basic derivatives and their very useful hedging roles in insurance and business......but complex derivatives? I have absolutely no idea.....and I doubt more than a few do......Warren Buffett called them Weapons of Mass Destruction for a reason....it reminds me of those conversations everyone has in life where a complex topic is being covered that is FAR over the heads of the audience, but everyone is too afraid to say, "I don't understand because I'm afraid I'll look stupid." I'm stupid and many derivatives scare me enough to want to buy a bunker and some guns.
I think of them as Neutron Derivatives........they will kill off everything....but leave a lot of empty building ni their wake.
Yeah I was eyeing up that up movement and asking myself are we seeing an early conception of the next bear market rally...
...you know the old saying the early bird catches the worm....and all that:)
However after watcing CNBC this morning I will reserve my judgement...
....WOW ...it has turned totally ulgy in the NASDAQ after hours trading currently down 2.46% Apple down 11% on a not that bad profit report. Texas instruments taking a hiding as well (-11%). Elsewhere away from the NASDAQ, The after hours in the financials American Express is being whipped (-11%).Freddie Mac (-3.6%)
Can view the list here
Odds on, tommorrow may not be a good day for Uncle Sam.:(
I reckon the Dow still has quite a lot more to lose. At a general level, another 12 months of down and another 3000 points knocked off seems quite conceivable.
FTSE down also 1.41% in early trading. Time for the next round with that big Bear?
Dow saved by oil. Gold down a little too. It will be interesting to see how the ASX fairs today then.
Ouch, gold and oil hits again - wall street balances out, flat. Sucker punch coming for DOW? DOW now at 11,600; more than a 600 pt rise from recent low...
hitting a key level on dow me thinks time for a down day or two before rally resumes
Good call. If the Dow closes over 2% (down) the movement might gain legs and roll on tomorrow - if worry turns to fear. Malcolm's negative earnings results are in. The question and I guess the obvious driver for any "next Dow sell-off" will be how large/un-expected are such down grades.
2.2%, no wait 2.36% down now. The Close I guess is however what is important.
DOW update. Last few days short squeeze over. Trend is now back down. The SEC naked short sell rules are now baked into the market. Worse to come as the foreclosure tsunami is 100ft high and 1/2 mile from shore......we won't be able to outrun this monster wave. Many will drown.
i would tend to disagree
this rally has not run high enough to generate the bullish sentiment needed for
the next leg lower
last nights drop into a pivot support should allow rally to get back on track
im picking early august before market turns for a run to new lows
Hey DA,
could be right - looks wave 4-ish at a glance, but NAB might have put the cat amongst the pigeons with their 90% writedown of US CDO portfolio...
I think this guy has hit the button:
The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.
We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.
http://www.businessspectator.com.au/...cument&src=sph
55% is ballpark - the secondary market here is trading at abt 65 cents in the dollar
Sorry to bring fundamentals into the frame
hi xerof , how is it going in the states along way from havelock north
and did you set up the "Fund of Funds"
i reckon the key to that statement is
"when they understand the repercussions "
still possibilty of an irrational rally to greater heights in fact i think its a high probability
before they work it out
i think your a few minutes short of the qualifying mark for beijing , malcolm
were conditions bad when you did your time ?
Thanks Xerof, the full read is rather chilling. Just on that, sounds like a next wave of sell-offs is approaching quickly then. As others note, be interesting to see how quickly the Dow reacts. I guess it really hits the fan when the 1st US bank does an NAB and comes clean. If they are in the same position, it must be soon. Thanks again for the heads up!
Friday closed with a whimper, although Financials are the only sector in the red (with an hour to go)
DA, actually I leave for Godzone tomorrow. With no Visa, I have to get out of here every 90 days for at least 10.
I saw Qantas had a bit of a mare flight out of HK this morning - I'll make sure I bolt myself to my sleeper....
ASX taking a hard hit - the banks, it seems. One assumes Wall Street/US banks and therefore the Dow are likely to be next, unless of coarse they have already been 100% honest to date ; )
"Holy atomic pile, Batman!" - Robin
Budget has blown out by 53% or $59B and we need another $171B this quarter alone.
Seriously though at the macro level the economy has a massive problem ahead of it. The US will have to increase taxation, cut government expenditure drastically and will also need to raise treasury rates to attract foreign investment. Sorry to say but 2009 will be even worse for the economy, pay back for years of loose spending in the good times.
http://www.bloomberg.com/apps/news?...rYns&refer=home
U.S. Borrowing to Rise to $171 Billion This Quarter (Update1)
By John Brinsley and Rebecca Christie
July 28 (Bloomberg) -- The U.S. Treasury predicted it would borrow 53 percent more this quarter than initially forecast as increases in spending and sluggish economic growth swell the budget deficit.
Borrowing needs will rise to $171 billion in the three months to Sept. 30, $59 billion more than predicted in April, the Treasury said in a statement in Washington. That total, if realized, would be the second-largest ever after a record $244 billion was borrowed in the first three months of this year.
After improving for three straight years, the U.S. budget is deteriorating as a slowing economy hurts tax revenue and spending increases. The Bush administration, which entered office in 2001 with a $127 billion budget surplus, earlier today predicted the next president faces a record deficit totaling $482 billion in 2009.
``The economic slowdown and increased expenditures associated with slower growth and with the stimulus has had an effect on the federal budget,'' Phillip Swagel, the Treasury's assistant secretary for economic policy, said in a statement.
In the final three months of the year, the Treasury said borrowing would reach $142 billion.
The Treasury predicted three months ago it would pay down $35 billion in marketable debt in the April-June quarter and have a cash balance June 30 of $45 billion. While the government often runs a surplus in the second quarter as individuals pay annual income taxes by the April 15 deadline, that didn't happen this year.
Tax Rebates
The Treasury said the reasons for more borrowing were the $168 billion fiscal stimulus program enacted earlier this year, the redemption of $151 billion in securities by the Federal Reserve, and a decline in debt issued by state and local governments.
``Treasury is going to have revisit their borrowing needs,'' said Joseph Brusuelas, chief economist at Merk Investments LLC in Palo Alto, California. ``They are definitely going to have to borrow more.''
Today, the department said it borrowed $13 billion in the second quarter and the cash balance at the end of the period was $53 billion. ``The increase in borrowing was primarily the result of lower receipts, higher outlays, redemptions of portfolio holdings by the Federal Reserve System and adjustments to cash balances,'' the Treasury said.
Lower Forecasts
Three months ago, the department predicted a cash balance of $45 billion Sept. 30 -- the last month of the government's fiscal year -- and today left that estimate unchanged. The cash balance will be $40 billion on Dec. 31, the Treasury said.
The department estimated total marketable borrowing in fiscal 2008 would total $555 billion. So far this fiscal year, the Fed has redeemed $151 billion in U.S. government securities from its System Open Market Account, which the Treasury said were excluded from the marketable borrowing estimates.
In a series of charts accompanying the announcement, the Treasury said ``credit market conditions and ongoing liquidity initiatives add uncertainty to borrowing requirements.'' In addition, ``volatility in projected receipts and outlays as well as reduced non-marketable debt issuance could also lead to increased near-term marketable financing needs.''
The White House earlier this year said the budget shortfall would rise to $389 billion for fiscal 2008 from $163 billion in 2007 and $482 billion in 2009.
Debt Issuance
Before Treasury's announcement, analysts were already predicting the government would need to brace for more red ink. The borrowing needs are likely to show the first signs of the shortfall to come, said Louis Crandall, chief economist at Wrightson ICAP LLC, a Jersey City, New Jersey-based research firm.
``Those will be very large,'' Crandall said. ``I'm looking for $165 billion in the current quarter and something not much smaller in the October to December quarter.''
The Treasury's borrowing forecast comes two days before details on the size of the Treasury's quarterly refunding of longer-term debt. The department will announce July 30 the amount of 10- and 30-year debt it plans to auction next week, and any other changes to financing plans.
The U.S. will likely sell $16 billion in 10-year notes and $9 billion in 30-year bonds in August, according to the median estimate of five economists.
Bond dealers also are watching to see if the Treasury indicates plans to bring back the three-year note or increase the number of 10 year note auctions. The department announced in May 2007 that it was suspending sales of three-year notes, when tax receipts were rising and the deficit was shrinking.
Rising Deficit
Even if there are no changes this quarter, there may be a borrowing expansion in the months ahead.
``We do not believe the Treasury needs to reintroduce the three-year or seven-year note at this time, and think that there is still room for increases in short-term debt issuance in fiscal year 2009,'' said Lehman Brothers economist Zach Pandl, in an interview before today's announcement. ``However, the medium-term budget outlook is deteriorating quickly, and risks to our supply forecasts are likely to the upside.''
Wall St down 2%..... next day up 2%
Are you confused about this irrational bear market behaviour..........????
Perhaps this explains what really happened :D:D
Kevin Kallaugher, a.k.a. KAL
http://www.kaltoons.com/walters.html
LOL I haven't seen that carton in years. Sames up the current daily swings aye.
Don't believe that is getting better here. It is actually going to get worse and the FED are preparing for it.
They have extended the lending programs for the 4th time in 5 months and increased it to any crappy loans that the banks have.
http://www.bloomberg.com/apps/news?p...Np0&refer=home
``The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system,'' said Allen Sinai, chief global economist at Decision Economics in Boston. ``There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system.''
http://www.federalreserve.gov/newsev.../20080730a.htm
The Federal Reserve today announced several steps to enhance the effectiveness of its existing liquidity facilities, including the introduction of longer terms to maturity in its Term Auction Facility. In association with this change, the European Central Bank and the Swiss National Bank are adapting the maturity of their operations.
Federal Reserve Actions
Actions taken by the Federal Reserve include:
* Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.
* The introduction of auctions of options on $50 billion of draws on the TSLF.
* The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.
* An increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.
These actions are described in detail below.
Extension of the PDCF and TSLF
In light of continued fragile circumstances in financial markets, the Board has extended the PDCF through January 30, 2009, and the Board and the Federal Open Market Committee (FOMC) have extended the TSLF through that same date. These facilities would be withdrawn should the Board determine that conditions in financial markets are no longer unusual and exigent.
The PDCF provides discount window loans to primary dealers, collateralized by investment-grade securities. The interest rate charged is the primary credit rate (discount rate) of the Federal Reserve Bank of New York. Under the TSLF, the Federal Reserve Bank of New York conducts weekly auctions of 28-day loans of Treasury securities to primary dealers. Loans under the TSLF are collateralized by a range of government and private securities.
Auctions of TSLF Options
The FOMC has authorized the Federal Reserve Bank of New York to auction options for primary dealers to borrow Treasury securities from the TSLF. The Federal Reserve intends to offer such options for exercise in advance of periods that are typically characterized by elevated stress in financial markets, such as quarter ends. Under the options program, up to $50 billion of draws on the TSLF using options may be outstanding at any time. This amount is in addition to the $200 billion of Treasury securities that may be offered through the regular TSLF auctions. Draws on the TSLF through exercise of these options may be collateralized by the full range of TSLF Schedule 2 collateral. (Schedule 2 collateral includes Treasury securities, federal agency debt securities, mortgage-backed securities issued or guaranteed by federal agencies, and AAA/Aaa-rated private-label residential mortgage-backed, commercial mortgage-backed, and asset-backed securities.) Additional details of this program will be announced once consultations with the primary dealer community have been completed.
Eighty-four-day Term Auction Facility Loans
Beginning on August 11, the Federal Reserve will auction 84-day TAF loans while continuing to auction 28-day TAF funds. Specifically, the Federal Reserve will conduct biweekly TAF auctions, alternating between auctions of $75 billion of 28-day credit and auctions of $25 billion of 84-day credit. Currently, the Federal Reserve auctions $75 billion of 28-day funds every two weeks. During a transition period, the amount of 28-day credit being auctioned will be reduced to keep the amount of TAF credit outstanding at $150 billion. A schedule of TAF auctions and applicable terms and conditions can be found at http://www.federalreserve.gov/.
Under the TAF, the Federal Reserve auctions term funds to depository institutions, secured by a wide variety of collateral. All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank are eligible to participate in TAF auctions.
Increase in Swap Line with European Central Bank
The European Central Bank (ECB) and the Swiss National Bank (SNB) have informed the Federal Reserve that, in association with the lengthening of the maturity of the Federal Reserve's TAF loans, these central banks will also make 84-day funds, as well as 28-day funds, available at their dollar auctions. The FOMC has authorized an increase in its dollar swap line with the ECB to $55 billion from $50 billion in order to accommodate a temporary increase in the ECB’s dollar auctions as the ECB shifts some of its auctions to 84-day terms. The size of the SNB’s swap line remains at $12 billion. These swap lines are authorized through January 30, 2009.
Per RNZ this morning. Californians who CAN AFFORD to pay their mortgages are now seriously also considering walking away from rising interest costs and negative equity. This apparently is an emerging NEW pattern - as Californian law prevent banks seeking redress for any amount over the sale proceeds of the re-possessed house. This is often several hundred K less than what is still owed. If this mindset spreads, I wonder if more and larger write-downs are coming... next dow trigger?
Jess9...Yeah I read that article here - may have been in the WSJ.
Basically, folks with good credit are doing the numbers and saying I have so much negative equity in my home now due to the collapse in prices from the subprime fall out why should I keep paying the mortgage. They basically hand their home back to the bank and have no further debt obligation. Yes, they take a hit on their credit rating for a year or two but at least can start to build equity up again.
We are talking about white collar folks doing this, there is concern if this trend catches on the banks will be buried in foreclosures. Even now some folks haven't paid their mortgages in 12 months and the banks still haven't called them. The banks are now pushing out the period for declaring foreclosures from 120 to 180 days, anything so the bank doesn't have to recognize the bad debt on the books. It won't be long and 365 days of no payment will be OK.
There is discussion to change the foreclosure law so that the owner always has a future obligation of the debt if they go into foreclosure.
amazing! America seems to have mastered the concept of gain with no risk. sweet I'll borrow against my equity in a rising market and walk away when it goes sour.
me scratches head
thinks - there must be a catch.
The person's credit rating is destroyed...but nothing that can't be restored in 6-7yrs time.
Trendy says :
There is discussion to change the foreclosure law so that the owner always has a future obligation of the debt if they go into foreclosure.[/QUOTE]
Trendy, are you saying that there is no personal covenant/liability attaching to US mortgages ?
zacman
Dow certainly looking lofty - with little good news to support it. Perfect situation for a good drop, and a little punishment.
Demand for oil drops off because the economy is faltering so the sharemarket rises... Am I missing something?
Only if your not cashed up.
US housing slump discussed on RNZ at 6.55pm, about half way through and greater loss in value now expected. Freddy or Fanny have posted losses 3 times greater than analysts expectations.
Good job I was short the dow then...
My opinion is that the recent bounce in the Dow is due to the short-term drop in energy prices.
I can actually see the Dow continue it's dead cat bounce in an inverse relationship with any further energy price drops.
But when energy price turn north again it's my opinion that the Dow will revert to a long, slow, and excrutiating downward spiral of stagnation.
With the exception of the very rare equity in the bunch(a la Microsoft which listed in 86 prior to the 87 hit), I wouldn't think about touching anything in the Dow or the index itself for years.
Commodities are the new equities and the new reserve currencies! :)
My thoughts exactly. Go short on the bounces...
http://www.lowrisk.com/image/dow87weekly.gif
This weekly chart gives a great overview. You can see that the crash took the market back down to levels last seen a year before, in October 1996. You can also see the start of the recovery, as the Dow started to move higher in a choppy style.
http://www.lowrisk.com/image/dow87daily.gif
This daily chart gives a great feel for how quickly the Crash came after the market top in late August, and just how precipitous the decline was. You can also see how the Dow retested the October lows in early December.
http://www.lowrisk.com/image/dow87hourly.gif
This hourly chart shows the market deteriorating right into October 19th, and how the selling intensified on the19th right into the close.
The 1987 sharemarket crash, and 1929 crashes are well worth studying...This time around the markets have had a soft landing through government intervention which diverted a big crash, but has put us in a steady downtrend... which is so much more important...
The single most important factor of these two crashes (and why this time is different is evident)....
If you look at the two charts you will notice that the Markets crash is at the peak, or very close to it...
We are lucky...at this stage (unless when have a big rally up to 13,000 on the DOW) id say there wont be a crash... just a bear market down trending to 10k on the DOW and perhaps below...
its good to see the markets down a hundie points...
:cool:
.^sc
Warning - word on the street here is that Lehman's will declare themselves bankrupt tonight. Bank of America looking to buy Merrill Lynch now.
Yep people are having kittens over on some USA boards, they are expecting a massive drop tomorrow on the dow. Im guessing that will effect the asx and the nzx also?
DOW 10K not far off now...........I wish I was wrong :(
I believe the Dow heading to 8k and then will turn. 8k is the support level on the long-term linear growth charts. Last 10 years of exponential growth are over. We will not pull out of recession until 2010 at the earliest.
Guys you wouldn't believe the level of personal debt Americans hold. It makes Kiwi's personal debt levels look like a drop in the ocean.
We know some people earning US$300k who are maxed out on all credit lines....it takes years of easy and low cost credit to get a culture in this position.
It's all coming home to roost now.
:)
Hi folks,
Posted 08072008:
http://forum.incrediblecharts.com/me...8/1634477.html
"2909-07102008 ... DOW likely to be strongly negative here"
... as per post above, DOW negativity takes its cue, right on time ..... :)
-----
... and to add a little more for the next couple of months:-
DOW ..... if you think it is bad now, just wait until Jupiter gets
in on the act, 17-27102008 !~! (New Moon 28102008)
And more negative time cycles, just in time for the US elections:
..... be watching for the Saturn/Uranus opposition,
as it becomes exact and is triggered yet again, by:
Venus 03112008
Sun 11112008 (Full moon 13112008)
Jupiter 03-19112008
have a great day
paul
:)
=====
A bounce in between would be nice, maybe today?
Euro markets out of the block and up 3%+. If the Mighty RBNZ also announces its .75-1.00% rate cut tomorrow, we may get a double whammy bounce and see the NZX finish the week rather nicely : )
I just watch the DOW jump up 750 points in 45 minutes!
Someone must have said somethig???
Bounced off 8000 but jump off 8100 to 8850 and still open. should make an interesting candle.
That had all the markings of government intervention. Look's like they are starting to use the $700B and buying the index.
As tempting as it may be to cite "the Invisible Hand" as the reason for the late rally, don't be tempted.....the stock market is their least concern right now....credit markets must be thawed urgently. If the credit freeze starts to feed through to the corporate sector, there will be no stock market - it would take very little time for companies to collapse if debtors stopped paying their Accounts Payable, especially if the Receiver cannot borrow credit to fill the gap, which is highly possible given the Bank situation.
If corporate creditors stop paying their bills, others quickly do the same, and the money flow in the Corporate sector comes to a complete standstill.
You can see why the focus is on restoring interbank money markets.....
In my view the 1000 pip decline on Friday was continued hedge fund forced liquidation - the 850 pip rally was real money entering the market from the sidelines, in anticipation of G7, G20 coming up with the goods over the weekend
Monday will tell us if Fridays action was a (imperfect) key day reversal........the last half hour spoiled the perfect set-up
Anecdotal evidence of massive private investor selling via 401k and IRA accounts - . People are exchanging assets in their accounts from equity to treasury money market. This is further increasing demand on short dated treasury hence next to zero yields on 3 month t bills. Treasury is having to issue more treasury bills to meet demand.
http://www.bloomberg.com/apps/news?p...xIM&refer=home
DOW up 936 piparoonies......think we have a bottom in place guys and galsQuote:
In my view the 1000 pip decline on Friday was continued hedge fund forced liquidation - the 850 pip rally was real money entering the market from the sidelines, in anticipation of G7, G20 coming up with the goods over the weekend
Monday will tell us if Fridays action was a (imperfect) key day reversal........the last half hour spoiled the perfect set-up
Don't bet on it just yet. Deep recession coming market will grind down...even if gov spend $1trillion on injecting capital into banks.
Why is it, everytime the DOW drops xHundred amount of points they come out with a headline:
Stocks slump on recession fears
I mean, we already, have already , constantly already know this , All the time and its like a groundhog day everyday over there with the same news which obviously is not good, but the Norm is becoming the same story each time over and over.
To me, it is lack of Journalism or words to write about so they just repeat what the obvious is.
its the realisation that the current 'crisis' is more than subprime and the credit crisis .... its the realisation that fundamantally the us and other economies are stuffed and that earnings will be down ...... can't be many say ..... in denial last week so when the dow falls again thats the reason ..... recession fears went away last week now back in existence .... you and i might know it but most don't yet drillfix so dont be surprised when yiou read the same headline next week as well
I've been as clear as I can about how I think things will continue to unfold.
The markets and the economy will continue to spiral downward.....regardless of what the empty headed "experts" would have us believe on CNBS...er CNBC
Wait until layoffs/redundancies/unemployment figures sky(relatively speaking, many 1st world countries have near 20,30,40 year low unemployment using newer skewed to the positive statistics)
Wait until the US private/public pension underfunding/insolvency problem rears it's ugly head.
In my opinion, the US and to a lesser extent the global economy, is in a "flat spin".
Market drops accelerate
Bailouts accelerate in frequency and scale
Bankruptcy/Insolvency/Receiverships will accelerate in frequency and scale
Redundancies/Unemployment will accelerate in frequency and scale
Leading to forced liquidations of personal/corporate assets
Until we either hit the ground(complete financial implosion which I strongly doubt) or regain control via reinflation and aerodynamic lift from the denser air and far more appealing low altitude valuations.
Allowing us to once again achieve stable flight and SLOWLY climb to cruising altitude.
Personally, I think we've only seen the first few spin rotations.....there's lots more nauseating spinning and screaming, and screaming and spinning before we get low enough for the reinflation rudder and the screaming bargain ailerons to bite.
Just my personal 0.02c.....hopefully I haven't offended any pilots or aviation fans.
try this one
Bush blames the Economic down turn on the President of the US
Dumb SOB and **** for brains W. Bubba Bush ,blames all this **** on Dick Chaney, he says.
He told the FWWE news that all was OK until that SOB (Chaney), decided to do some crazy deals with his Buddies(ENRON & OTHERS), or Homies as he calls them.
He washes his hands of any blame,he claims extreme stupidity and utter ignorance mixed with his mongoloid communication skills plus his desire to be the worst President ever in History, for all that has happened, in this past 84-86 month.
In a related note,Laura Bush declare her Husband an embarrassment to the mongoloids of the world, when compared to them,and also a useless moron with an peanut shell for brain.
She added that even in bed he his clueless and if it was not for all those very handsome and virile Secret Service Guys, that screwed her with gusto all this YEARS she would of killed his stupid ass, she added.
or
Dow Drops 666; McCain Claims Obama is the Anti-Christ!
Watch the following PBS video on "foreclosure alley". Sobering.
http://www.kcet.org/socal/2008/09/fo...ure-alley.html
I think any "Obama Effect" will be temporary at best.
Trading opportunities sure, investing opportunities, no.....I'm clearly putting my money where my mouth is and staying away
There will be no (relatively speaking) quick and easy "Morning in America"...this is going to take YEARS to even BEGIN to fix.
And in the meantime......consumer spending related corporate earnings will spiral downwards which will push up P/Es, push down share prices.
And that's all BEFORE the pending public/private pension disaster rears it's ugly head.
Any company sailing in such stormy seas will also have to deal with wind in their face, rather than wind at their back......with likely long-term net withdrawals due to demographics/hardship.
"Stuff" may not offer dividends, but "stuff" will likely weather this storm better than other options once inflation kicks off again.
Oops... only 0.5% rate cut when the market wanted 1.0%... down they lurch again...:rolleyes:
triple bottom on the daily?
who knows.
but triples are more meaningful than doubles and it marks a clear line for determining risk
Down to 7552.
How low can it go????
below 7000?
Surly not?
...most likely, a short, devastating intraday capitulation spike down to 6700 for the DJI and 670 for the SP500 still ahead and not too far into the future;
Kind Regards
Hats off to Obama for his pick.
...yes, one intraday spike...
...because if it turns out that way as THE FLOOR, it is only a floor of some serious kind, if the market consequently makes a higher high and a higher low (today the market made a lower low before a bit of a rally, therefore what we saw on Thursday was not the floor);
...and I think, given the serious state of market oversoldness, that in case of a floor, the higher low will be some 15 - 30 (%) higher than the previous low; and I do not want to miss out on the potential 15 - 30 (%) off the floor;
...ergo, fully invested now, but with a capital hedge
...otherwise the market will seriously crash in oversold territory
Kind Regards
I beg too differ as this is not going to be a clearly defined V bottom, we are in for a multi-year grind downwards and at best slow flat lining before trending back up. Bottom is not in.
More bad news to come in this deflationary environment. Bank lending here has slowed/stopped as they desperately try to hoard cash to protect balance sheet. Citigroup is another catastrophe that other banks will be redoubling efforts to avoid. Banks are so in need of cash they are now offering i-rates of greater than 4% for retail term deposits at a time when the FED is giving cash away at near 1%. Credit is evaporating for many businesses.
The FED is using everything they have to try and inflate the economy but unless credit can flow to the consumer it is as good as useless.
Trendy:
...basically agree with your sentiment, more bad news, more crunch, more market down momentum, etc, etc, but stick to my floor outline nevertheless, if we finally see THE FLOOR.
...at current levels (Friday's intraday low/SP 500) the market has priced in a 'recession', but it looks like the world is going to get a 'severe one', possibly most severe. Consequently, trading levels down to 600 or even 500 are possible, even likely.
Kind Regards