Imminent and severe market correction

Whiskers said:

Good post... and point, Seaking.

No reflection on Wayne... is there!

'Tis all getting a bit boring now, all this economic woes.

The counter wave of all the gloom and doom... a bit of a return to favour of the USD should smooth things out in the next month or so.

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Are you stirring, or honestly believe there is any value in the Fed play money.

On then trend that has been in progress since about 2001 and steepening down this last year the US dollar will be 10% lower in a month or two on the doom and gloom emanating now. The bit of rubbish coming out of Wall Street the last few days to cover the bad stuff will soon peel away. But that's just my opinion.

explod said:

Are you stirring, or honestly believe there is any value in the Fed play money.

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A bit of both, explod. The ever circling nesting magpie didn't waste any time swooping to protect his turf. :

Consider the doom and gloom indicator like a blood pressure monitor... it has gone a bit off the scale at times.

D&G has taken on the guise of reality for many. A point I make is... as the hysteria of the raging bull waned the D&G meter counteracted similarly.

The market should come back to more 'normality' in the coming month or so... ie the US is still an economic basket case, but it has been for a decade or two now. Lets just say, using the above analogy, whereas people thought all there xmas's had come at once in 06-07, people now will realise they will live a normal life and die some other day... just not tomorrow or the day after.

But seriously, I do think a rebound of the USD is the order of the short to medium term... and that will do a lot to settle all markets for awhile and give ours a bit of a leg up once the asset class juggling has settled.

btw, I thought you had gone off to give away some of your winnings to Crown.

You traders are an unsavoury lot(oh,well,some).In The Times online tonight you have been branded as malicious and price rigging(as in the following headlines)-

Malicious traders attempt to topple major bank(HBOS) &
Price rigging traders hit Credit Suisse profits.

The relevant overseeing authorities must be on holidays when these transactions are going on.
Is it a new spin for the blame of some of the problems in the credit markets?

Finally,the crisis is over-

``This is the time to go back into the equity markets, particularly the U.S. market,'' said Komal Sri-Kumar, who oversees $147.2 billion as chief global strategist of TCW Group. ``The U.S. equity market will outperform the rest of the world.''
Other banks and brokerage firms also advanced after Punk Ziegel & Co. analyst Richard Bove wrote in a research note that ``the financial crisis is over'' and it is a ``once in a generation opportunity to buy."
http://www.bloomberg.com/apps/news?pid=20601057&sid=atXXRRBJI.QA&refer=futures

But on the other hand-

"There's a lot of things cooking in this market," said James Park, managing director with Rodman & Renshaw. "I think right now people are still digesting all the recent news. There's still a lot of malaise on the Street. With this kind of volatility, it's very difficult to really have conviction, especially when you're seeing your stocks move up and down on a daily basis."

Robert Pavlik, chief investment officer with Oaktree Asset Management, said the rally could merely be the effect of people buying into the prior session's dip, but he also believes that much of the upward pressure and volatility stemmed from the expiration of options and futures.

Park concurred. "The Fed actions seem to have put a Band-Aid on the market, at least for the time being," he said, noting that a great deal of short-covering also is in play. "This is the last day of the week, and a lot of people have been dealing with a lot of bad news. I would say this kind of strength was expected."
http://www.thestreet.com/story/10408635/1/data-cheer-up-market.html

sassa said:

This is the time to go back into the equity markets, particularly the U.S. market,'' said Komal Sri-Kumar, who oversees $147.2 billion as chief global strategist of TCW Group.

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Perhaps that because Komal has a pile of stocks he wants to sell off at reasonable prices...

GP

And here is someone who really "loves" CNBC-

I know, I know, the market was up big today with Options Expiration. Its all ok, and you should buy bank stocks. All of them. So says Dick Bove, and lots of people are today, with all of them up 5%, 10% or more.

You did not hear the truth about the Treasury complex on CNBC today, not even from Rick Santelli. Why not?

The Truth: The people with a working brain in their head know what's coming and that it is going to be extraordinarily ugly. They are prepared for it and have moved their billions of dollars into cash where they know they will get it back - the short end of the US Treasury Curve.

The Truth: In the last recession at the depths of it in the summer of 2003, just before the market turned, the lowest the 13-week bill yield reached was 0.774%. We are now trading at 30-50% below that level.

The Truth: People who know this for a fact including CNBC won't tell YOU because it is critically important to them that they get through the door before the fire starts burning the curtains, as the door is only so wide and there are a lot of people in the room. If you don't get your butt through the door your financial assets will be consumed in what's coming.

The Truth: CNBC should be SHUT DOWN as NOTHING MORE THAN A CONDUIT FOR INSIDER TRADING AND ILLEGAL MARKET MANIPULATION. Their "commentators" from various funds who are almost certainly trying to unload shares they are stuck with into YOUR HANDS should be locked up and/or sued into oblivion AS THEY ARE WELL AWARE OF WHAT IS GOING ON AND ARE USING CNBC AS NOTHING MORE THAN A WAY TO SCREW YOU WHILE THEY PROFIT. THERE IS NO BALANCE AND NO DISCLOSURE BY THESE COMMENTATORS OF THEIR POSITIONS, INCLUDING PIMCO, BOVE AND OTHERS. CRAMER IS THE WORST OF ALL OF THEM, telling people to leave money at Bear Stearns (if you believe that was about "deposits" when Bear isn't a Deposit Bank, you're dumber than a rock) and alternating between a "Caution" sign when we're down 300 and then "BUY EVERYTHING" when we're up 400 - only to see you lose 3/4 of the gains the next day! We do not have "financial TV" in this country. We have blatant market manipulation in the guise of "news" on a daily basis, 12 hours a day, AND THE SEC DOESN'T GIVE A DAMN.
http://market-ticker.denninger.net/2008/03/fed-will-do-whatever-it-wants-and-raise.html

phew! take that
you make some excellent observations,
but i sense your car wont start to take you away for easter holidays

Are Lehman Brothers being honest about their balance sheet?

"After the collapse(BSC), Wall Street’s attention naturally turned to the other investment banks, especially Lehman Brothers, perceived as the most vulnerable. So, investors were thrilled when Lehman topped earnings expectations on Tuesday””as the firm took pains to reassure the markets that it has plenty of cash to ride out the turbulence.

Yet aside from a smattering of attention here and there, investors and the media mostly overlooked the balance sheet. In other words, they forgot what happened mere hours earlier with Bear Stearns. Wall Street’s short-term memory is notoriously lousy, but this must set a record. (Could Jimmy Cayne be sharing his stash with his hedge fund buddies?)

What actually happened to Lehman’s balance sheet in the first quarter? Assets rose. Leverage rose. Write-downs were suspiciously minuscule. And the company fiddled with the way it defines a key measure of the firm’s net worth. Let’s look at the cautionary flags."
And the flags are here-
http://www.portfolio.com/news-markets/top-5/2008/03/20/Lehmans-Debt-Shuffle

sassa said:

Are Lehman Brothers being honest about their balance sheet?

"After the collapse(BSC), Wall Street’s attention naturally turned to the other investment banks, especially Lehman Brothers, perceived as the most vulnerable. So, investors were thrilled when Lehman topped earnings expectations on Tuesday””as the firm took pains to reassure the markets that it has plenty of cash to ride out the turbulence.

Yet aside from a smattering of attention here and there, investors and the media mostly overlooked the balance sheet. In other words, they forgot what happened mere hours earlier with Bear Stearns. Wall Street’s short-term memory is notoriously lousy, but this must set a record. (Could Jimmy Cayne be sharing his stash with his hedge fund buddies?)

What actually happened to Lehman’s balance sheet in the first quarter? Assets rose. Leverage rose. Write-downs were suspiciously minuscule. And the company fiddled with the way it defines a key measure of the firm’s net worth. Let’s look at the cautionary flags."
And the flags are here-
http://www.portfolio.com/news-markets/top-5/2008/03/20/Lehmans-Debt-Shuffle

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The use of debt as part of equity has been part of the game for years. I have noted this before on ASF. I picked it up first in a book by Prechter Jr, Conquer the Crash 2002. This bloke was out with his timing on the crash itself but not the overall warning of fundamentals. Many on here boo-hood me big time so I went into my shell on it.

When some of us have been accused of being doomsayers we close up. It is good to see the sceptics now come on board.

Price earnings ratio's on Wall Street are worthless. Macquarie and others here in my view may be in a similar situation. Not things I measure but others may have a view.

Will be interesting to see what pans out.

Noises coming from almost every central bank head, who's currency appreciation against the USD has increasingly made their economies less competitive, (even recessionary), indicating/hinting that some sort of intervention should be used to stop the rot and start manipulating the USD higher.

So it has started, the rotation back to equities being paid for with the special repo's amendments & the artificial support for the USD. By George I think they may have pulled this one off. Not. The money shuffling can play this out for a while but when the real economy finally catches up with the shufflers, or to the point that no amount of spin can ignore the real facts of the real economy eg the global housing depression, the start of the end game will begin in earnest?

Much is being said lately about treasuries and this person has a very valid concern.
"The stock market might not be reflecting a state of panic out there. But Treasury bills sure are. Three-month T-bills are now yielding roughly 52 basis points. Yes, I mean roughly one-half of one percent ... against a federal funds rate of 2.25%. Bloomberg calls today's low yield (0.387%) the lowest going all the way back to at least 1954. That means we have undercut the "deflation scare lows" from 2003.
Now, if you want to see a REALLY scary chart, check out this one juxtaposing 3-month T-bill yields against S&P futures. Bill yields are the white line ... S&Ps the red. If bill yields are a leading indicator of stock prices on the way down, like they were on the way up (notice how bill yields topped out before stocks did in the recent rally off the 2002-2003 bear market low), we're in BIG trouble."
Chart is at-
http://www.interestrateroundup.blogspot.com/

These guys got the recession call right back in 2001 whilst the Wall Street lemmings were looking through their rose-coloured glasses.

Leading index shows US economy in recession, ECRI says

The United States is "unambiguously" in a recession, a New York-based forecasting group said on Thursday, citing a nine-month decline in its weekly measure of the economy.

The Economic Cycle Research Institute, which correctly predicted the 2001 recession at a time when many on Wall Street still maintained a rosy outlook, said their numbers indicate the economic contraction is already under way.

Extending its weakening trend, the firm's Weekly Leading Index fell to 130.8 in the week of March 14 from 132.1 in the prior week, revised down from 132.2.

"It is exhibiting a pronounced, pervasive and persistent decline that is unambiguously recessionary," said Lakshman Achuthan, managing director at ECRI.

At last glance, the WLI's drop due to unfavorable moves in most of its components including lower stock prices, higher jobless claims and interest rates, and weaker housing, said Achuthan. The index's annualized growth rate was steady at minus 10.4 percent.

The recession call puts ECRI in line with a growing number of economists who believe the U.S. is already in recession, with some citing December as the likely start date of the downturn.

Martin Feldstein, who heads the highly-regarded National Bureau of Economic Research, has said not only that contraction is under way but also that it could be severe.

"The risks are that it could get very bad," he said last Friday.

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Hi,

I first posted in this forum several weeks ago, around the bottom for the financials, with the following...

Hi all,

Thanks for the warm welcome.

Let's see if there is any argument with the following examples.

Will ANZ bank will make $1.6B less this year than last year?

Likewise for each of the other banks.

That is what the market is currently pricing in.

All it would take is for the Fed in the US to drop rates a little more than expected, as well as increasing liquidity in tandem with other CB's and you have the recipe for a rally. Taken with short covering, and those who are looking for a bargain, when it comes it will be explosive.

I may be a new poster on this forum, but I first traded share and commodities in 1981. This gloom and doom stuff that is portrayed here has been talked about for a year now, with subprime problems being known about since then.

The downward momentum in prices is declining, yet the news and the D+G get worse. Come to your own conclusions, I'm just stating my opinion.

bye

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Just as markets do not go straight down for extended periods very often, the same can be said for rises. Hence I will be taking profits of about 20% in only 2 weeks.

bye

PS good luck to those permabears who thought I would lose all my money as well as my marbles. I hope they have not suddenly turned into bulls today.

brty

brty said:

Just as markets do not go straight down for extended periods very often, the same can be said for rises. Hence I will be taking profits of about 20% in only 2 weeks.

bye

PS good luck to those permabears who thought I would lose all my money as well as my marbles. I hope they have not suddenly turned into bulls today.

brty

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Great brty your the man.
So you have got a bounce but the point that you are dumping them just highlights what many people hear think. No bear who is actual in the market expects them to go straight down. There will be plenty of rips higher but risk to the down side remain. If you aren't concerned with all the D & G why are you selling??

Gold,grain futures up.Dollar falling.
http://futuresource.quote.com/
DJIA,S & P and Nasdaq futures in the red slightly.
http://www.bloomberg.com/markets/stocks/futures.html
Change tonight?

Hi,

TH

If you aren't concerned with all the D & G why are you selling??

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er, because my short term signals have indicated time to take profit and move on to the next opportunity?

There is likely to be some type of pullback and further opportunities to go long. This market could go sideways to up for a couple of months, but still be bearish overall. It is just not going to be straight oneway traffic, it virtually never is.

bye

brty

brty said:

Hi,

I first posted in this forum several weeks ago, around the bottom for the financials, with the following...



Just as markets do not go straight down for extended periods very often, the same can be said for rises. Hence I will be taking profits of about 20% in only 2 weeks.

bye

PS good luck to those permabears who thought I would lose all my money as well as my marbles. I hope they have not suddenly turned into bulls today.

brty

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Actually as I remember it everyone basically agreed that we would get a rally as we always do in bear markets. Are you claiming some kind of amazing insight into market direction by pointing out the obvious?

Also in relation to your claim that:

Let's see if there is any argument with the following examples.

Will ANZ bank will make $1.6B less this year than last year?

Likewise for each of the other banks.

That is what the market is currently pricing in.

Click to expand...

I posted the following response:

I would be interested to see how you arrive at that calculation

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I'm still waiting for that one.

Read this as a comment to a article on the daily telegraph.. i wonder if its true?

a)Bear Stearns was the only major Wall Street Investment Bank not to contribute to the bail-out fund of Long-Term Capital Management..

There are some long hard memories in Wall Street, and what satisfaction there must be in some quarters to witness their fall.

b) Bear Stearns was practically the Daddy of sub-prime (cradle to grave of getting it started and sold on).

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If true then it suggests they may have been a target..

???

FYI

From The Economist

Executive confidence
Free fall

Mar 25th 2008
From Economist.com

“A LONG, ugly, deep recession.” That was how Chrysler's chief financial officer Jerry York described his outlook for America's economy at a recent gathering of fellow finance executives. The latest poll of over 1,000 chief financial officers conducted by Duke University, Tilburg University and CFO, a sister publication of The Economist, largely supports this view. In America economic confidence is in short supply, with pessimists outnumbering optimists by a nine-to-one margin in the first quarter of 2008. In Europe, pessimists outnumber optimists by six to one. And to add to the gloom, finance chiefs in Asia are now more pessimistic than optimistic for the first time in five years.

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