Imminent and severe market correction

[Kauri]

It seems that Bears were right after all... they are not under pressure liquidity-wise..... not now anyways... seeing as JPM Chase and the Fed Bank of NY have decided to give them some financing...
Cheers
..........Kauri

 

[dhukka]

Funny, Schartz was on CNBC the other day saying everything was just fine and dandy.

 

[chops_a_must]

I think this is what Paulson called "industry cooperatives".

Well... it looks like I'll be off to the Gulags tomorrow!

Ahahahaha!

And Rick Santelli aka God, said we might as well put a hammer and sickle on the flag.

I've been saying we should do that since I was 16!

But anyone with any understanding of Marxism must be having a not so quiet chuckle right about now. All of a sudden Marxists are the experts on economics! I might have to get out my Che shirt and start giving lectures.

The new communists have just been shorting capitalism. I wonder who is winning?

It seems that Bears were right after all... they are not under pressure liquidity-wise..... not now anyways... seeing as JPM Chase and the Fed Bank of NY have decided to give them some financing...
Cheers
..........Kauri

I just love the audacity of the Bear Stearns management in them saying things were fine. You would be packing yourself if you were long this. Totally rooted credibility in the industry... but... was there any left anyway?

And the fed has made it pretty clear. "We're just gonna bail everyone out!"

But effectively, BS, not only full of BS, is trading insolvent today. And congrats to Dhu for picking this some time ago. Puts on BSC are trading at an absurd premium today. May be the first in many many investment bank blow ups. I have eventual targets for MacBank below $10 and BNB below 0. Crazy... but true.

I just love it how the free markets love communism to begin with. And who would have thunk it, neo-cons becoming the biggest socialist state in the world? Start a revolution today... vote republican.

Cheers.

P.S. BSC now down close to 25%, and you'd have to think people are trading this into bankruptcy. And rightly so.

 

[wayneL]

Check our Bear's option IVs:

AHAHAHAHAHA!

 

[chops_a_must]

Check our Bear's option IVs:

AHAHAHAHAHA!

Thanks for putting them up for me Wayne.

Absolute classic.

Have you ever seen the volatility like that?

Would it be worth writing calls in this instance?

Hilarious.

 

[dhukka]

I just love the audacity of the Bear Stearns management in them saying things were fine. You would be packing yourself if you were long this. Totally rooted credibility in the industry... but... was there any left anyway?

And the fed has made it pretty clear. "We're just gonna bail everyone out!"

But effectively, BS, not only full of BS, is trading insolvent today. And congrats to Dhu for picking this some time ago. Puts on BSC are trading at an absurd premium today. May be the first in many many investment bank blow ups. I have eventual targets for MacBank below $10 and BNB below 0. Crazy... but true.

I just love it how the free markets love communism to begin with. And who would have thunk it, neo-cons becoming the biggest socialist state in the world? Start a revolution today... vote republican.

Cheers.

P.S. BSC now down close to 25%, and you'd have to think people are trading this into bankruptcy. And rightly so.

Seems Dick Bove of Punk Zeigel was on the money with his comment that the Fed's actions on Tuesday were to bail out BSC

Bove: Fed Rescue for Bear

"The Federal Reserve's actions today may have been strongly influenced by Bear Stearns' problem."
-Dick Bove, Punk Ziegel & Co.



Go figure: This morning's announcement by the Fed seemed to be designed to help the brokers and their fixed-income hedge fund clients who were struggling -- so said Brad Hintz, Bernstein Research covering the Financials. (we noted similar sentiment here)

He's not the only one. Influential Bank/Broker analyst Dick Bove of Punk Ziegel (quoted above) specifically mentioned Beat Stearns (BSC) as the beneficiary of the Fed's largesse.

According to Marketwatch: "Bear's stock dropped 11% on Monday on concern that its borrowing costs are rising. For a brokerage firm, which relies on steady access to financing, such disruptions can restrain its businesses and leave it at a disadvantage to financially stronger rivals."

Pretty wild stuff -- $200 Billion in Fed lending against junk paper, to bail out one mid-size investment bank.

And the market's reaction: Dow up 3.55% (417 points), Nasdaq +4% or more than 86 points, S&P500 up 3.7% or 47 points

Ain't Socialism grand?

Of course Schwartz will say none of these problems were evident when he gave his rosy interview to CNBC just 24 hours earlier. You just can't trust anything management says with these large financial companies.

 

[Kauri]

some pretty heavy (and irrational) rumours doing the rounds... prompted by Bears.... later maybe when it's in the press.. meantime a nice little rebound play on the Yen on the back of them, true or not.....
Cheering
...........Kauri

 

[wayneL]

Thanks for putting them up for me Wayne.

Absolute classic.

Have you ever seen the volatility like that?

Would it be worth writing calls in this instance?

Hilarious.

Not on a "blue chip" I haven't. The interesting thing is that IVs are staying high after the gap. That means the market is expecting massive volatility into the near future.

The rewards are there, but they are signalling RISK in superbold capitals.

Don't quite know how I'd play this yet, but short vega appeals.

 

[Sean K]

Watching GWB give a speach on the economy at the moment on CNN and gee he's inspiring.

Surprised the DJI isn't tumbling with every word...

Embarrassing really.

 

[Kauri]

Not on a "blue chip" I haven't. The interesting thing is that IVs are staying high after the gap. That means the market is expecting massive volatility into the near future.

The rewards are there, but they are signalling RISK in superbold capitals.

Don't quite know how I'd play this yet, but short vega appeals.

the VIX agrees..
CCCCCCCCCCCC
......................KKKKKKKKKK

 

[treefrog]

Deja vu

liked the post on another thread that its stupid to attempt to predict the future - how true, but nevertheless, just had a play with the S&P500 over the last couple of decades and; well, a picture is worth a thousand words so;

notes:
1. momentum indicates we still have a way to go before relative (over this period) oversold conditions materialise - only one seriously o/s and one o/b apparent
2. the bull run of the 90's ended with a very distinct topping pattern - king crown
3. the 90's correction's first major bounce was at 38% (blue) fib level - we are at that point now 38% (white) fib on the current correction (green arrows)
4. The correction ended at 62% fib area with a clear inverted H&S
5. should the current correction (started from a distinct H&S) also dip to 62% of the recent bull run, we are looking at june 2009 for the end of this correction assuming we retace at a similar rate (which I have assumed)
6. the current downer is amazingly similar to Y2000 (well so far)
7. cyclitologists and wavepickerologists may have some input on this

 

[treefrog]

Thoughts from the Frontline Weekly Newsletter
by John Mauldin
March 14, 2008

The Muddle Through Economy:
The Future of the Market and Your Investments

It is increasingly widely agreed that we are now in a recession as I predicted this time last year. The good news is that much of the underlying economy is not in that bad a shape, but it has had two serious body blows administered by the twin collapsing bubbles of the housing market and the credit crisis.

My position is that the recession will be rather long and relatively shallow, and the inevitable recovery will be longer and more drawn out than is typical, resulting in what I call The Muddle Through Economy for a period of several years. I define a Muddle Through Economy as one which grows below normal trend GDP growth of 3% for a period of time, typically in the 2% range.

So, one of the key questions is: "When does the recovery start and how long will it take to get back to 3% GDP?"

I think the answer is that it will not be before the latter half of the year and will take at least two years to get back to trend growth. The reason for such a drawn out recovery is simple. The twin causes (housing and the credit crisis) will take at least two years and possibly longer to normalize, and that process is going to negatively effect several other sectors of the economy.

But then I am an optimist. Duke University released a survey yesterday of Chief Financial Officers of major corporations. This is a gloomy bunch. 54% think we are already in a recession. My friend Duke Professor Campbell Harvey said: "In contrast, 90 percent of the CFOs do not believe the economy will turn the corner in 2008. Indeed, many of them believe it will be late 2009 before a recovery takes hold."

full letter available free - link is:
http://www.accreditedinvestor.ws/

 

[mayk]

Kauri, are you talking about these rumors..

http://www.marketwatch.com/news/sto...x?guid={22EBF3B7-9A31-4255-818F-90F7BE776BC5}

Scales tip toward big Fed cut this week
Experts see three-quarters percentage point, massive 1% drop not ruled out

 

[explod]

Sorry Treefrog, but I think that Mauldin is way out. As Kauri says we are looking at a .75 or 1 point drop in the Fed rate this week. GWB's PPt get together this week to stave off disaster for the Dow and a huge surge in the gold Price and as the Privateer Newsletter concludes this week, "they have got their job cut out for them"

The US economy is facing absolute disaster and the $us is headed for the scrap heap. Manufacturing is down, unemployment is up, forclosures on housing increasing exponentially and is now into the leveraged financial sector, and on, and on ,and on.

They are done and it will hurt us all

 

[Aussiejeff]

Sorry Treefrog, but I think that Mauldin is way out. As Kauri says we are looking at a .75 or 1 point drop in the Fed rate this week. GWB's PPt get together this week to stave off disaster for the Dow and a huge surge in the gold Price and as the Privateer Newsletter concludes this week, "they have got their job cut out for them"

The US economy is facing absolute disaster and the $us is headed for the scrap heap. Manufacturing is down, unemployment is up, forclosures on housing increasing exponentially and is now into the leveraged financial sector, and on, and on ,and on.

They are done and it will hurt us all

Each further step they take towards 0% interest rate is certainly one small step for a recovery and one giant leap towards the abyss.

Actually, GWB and his trusty Feds remind me of King Canute and his minions, trying to turn back the sea tide...... atm there seems to be just as much hope of success.

Will this be a good news week?



AJ

 

[prawn_86]

The deeper and deeper it gets, the more im just wanting it to happen.

Personally a crash now and a real harsh but quick 2 yr recession would suit me, because then i will be coming out of uni

There are so many hypocritical situations, but what do you expect with politics...

Lets just have a recession and get it over with

 

[Bushman]

I

I have eventual targets for MacBank below $10 and BNB below 0. Crazy... but true.

.

BNB below $0? Impossible comes to mind given limited shareholder liability.

So you are expecting the motherships to run out of fuel with BNB crashing to earth. I would be interested to hear your assumptions in those valuations. What is a given is that BNB and MQC will get hammered today as the Australian listed entities most likely to 'do a Bear Stearns'.

 

[treefrog]

Sorry Treefrog, but I think that Mauldin is way out. As Kauri says we are looking at a .75 or 1 point drop in the Fed rate this week. GWB's PPt get together this week to stave off disaster for the Dow and a huge surge in the gold Price and as the Privateer Newsletter concludes this week, "they have got their job cut out for them"

The US economy is facing absolute disaster and the $us is headed for the scrap heap. Manufacturing is down, unemployment is up, forclosures on housing increasing exponentially and is now into the leveraged financial sector, and on, and on ,and on.

They are done and it will hurt us all

do think in this article he has turned very optimistic after an interesting track record so far
also his current predictions give me the impression he has made a few runs on the board but now is more concerned how to maintain the record and so picks the middle road - brings to mind a banker brother in law of mine who was invited to some hi-powered financial advisor's workshop 15 years ago with all attending having to call several financial parameters at the end of the two weeks (A$, inflation, sector growths etc etc) for 3 years hence with many fancy prizes on offer - won it, photo on front of glossy oz fin mag and article etc etc 3 years later after getting >80% right: but never gave any more projections. I asked him why after being so good - replied "If I do, I am on a hiding to nothing; it is almost pure chance; horoscope stuff"

 

[treefrog]

BNB below $0? Impossible comes to mind given limited shareholder liability.

So you are expecting the motherships to run out of fuel with BNB crashing to earth. I would be interested to hear your assumptions in those valuations. What is a given is that BNB and MQC will get hammered today as the Australian listed entities most likely to 'do a Bear Stearns'.

I understand you chops - chart projection values based on prior - got a few of those myself where zero on the Y axis bobs up before your line finishes - share tries hard to complete the line sometimes

 

[sassa]

Fed has cut rate by 25 basis points efffective immediately.J P Morgan to buy bear stearns at $2 a share.
Futures go from -25 to plus +136 in 23 minutes in America.