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  1. #41
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    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. #42
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    2.2%, no wait 2.36% down now. The Close I guess is however what is important.

  3. #43
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    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.
    The trend is your friend.

  4. #44
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    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

  5. #45
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    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
    Last edited by Xerof; 25-07-2008 at 03:57 PM.

  6. #46
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    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

  7. #47
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    i think your a few minutes short of the qualifying mark for beijing , malcolm

    were conditions bad when you did your time ?

  8. #48
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    Quote Originally Posted by absolut-advance View Post
    Can you do it Naked...?
    Only with CFD's these days...

  9. #49
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    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!

  10. #50
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    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....

  11. #51
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    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 ; )

  12. #52
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    "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.''
    The trend is your friend.

  13. #53
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    Wall St down 2%..... next day up 2%

    Are you confused about this irrational bear market behaviour..........????

    Perhaps this explains what really happened

    Kevin Kallaugher, a.k.a. KAL
    http://www.kaltoons.com/walters.html

  14. #54
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    LOL I haven't seen that carton in years. Sames up the current daily swings aye.
    The trend is your friend.

  15. #55
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    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.
    Last edited by trendy; 31-07-2008 at 11:09 AM.
    The trend is your friend.

  16. #56
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    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?

  17. #57
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    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.
    The trend is your friend.

  18. #58
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    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.
    For clarity, nothing I say is advice....

  19. #59
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    The person's credit rating is destroyed...but nothing that can't be restored in 6-7yrs time.
    Disclaimer: Do not take my posts seriously. They are only opinions.

    AMR has sold all shares and is pursuing property.

  20. #60
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    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

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