Imminent and severe market correction

[Kauri]

something that my imsoniac acrophobiac budgie just whispered to me... hedge funds buying bonds today, accounting for the bond market rally, and buying puts on financial stocks, which is behind the pressure on those stocks and decline in the DJIA. Combined, it points to continued credit concerns .
Cheers
.........Kauri

 

[Kauri]

keeping a lazy eye on the $US index... far too early yet but possibly the makings of another coily... in EW ...after the last big coily which looks like a large W4.. we would be getting close to a 5th of a 5th... if it forms up .

Just thinking allouwd... and looking beyond the tetragon

Cheers
........Kauri

 

[sassa]

http://www.bonddad.blogspot.com/
"market sold-off hard at the end. End of the day sales are never a good thing. It means traders are taking money off the table at the end of the day, or they are nervous that a bad overnight event could hit the markets."

 

[RichKid]

Here is a rather excellent article written by Todd Harrison of Minyanville.com regarding the "privatize profits and socialize losses" policy of the current Fed.

Chasing liberty
Commentary: Facing a critical juncture in financial engineering
http://www.marketwatch.com/news/sto...x?guid={22E814E7-51D9-430C-A955-89A3287BD009}

It's an excellent article in that it not only dovetails neatly with the views of the more sober bears on this site, but also it contains rare balance for an article written by an American.

Worth following this chap. IMO

Thanks Wayne, great views as usual.

Below are some comments by Colin Twiggs on this topic from his newsletter:

Trading Diary-
Don't Blame The Free Market

By Colin Twiggs
March 27, 2008 2:00 a.m. ET (6:00 p.m. AET)
http://www.incrediblecharts.com/free/trading_diary/trading_diary.htm
These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.

Free Market

The Financial Times features an article pronouncing the end of a three decade move towards market-driven financial systems and quotes Joseph Ackermann as saying: "I no longer believe in the market's self-healing power". The Deutsche Bank CEO appears to have forgotten that financial markets are the exact opposite of a free market. Instead of allowing the market to establish its own equilibrium rate of interest, matching supply of credit with demand, the Fed and other central banks impose artificial rates for political ends.

The current financial crisis was wrought by the Fed imposing just such an artificially low rate. The resulting mis-match between supply of credit and demand encouraged poor lending practices and fuelled a housing bubble of epic proportions. Financial markets require greater policing, but precisely because they are not free — and there is no market mechanism to prevent the resulting excesses.

 

[RichKid]

Along the same lines, this article from Jeff Randall of the UK Telegraph takes a more cynical, though no less accurate look at the bankers obnoxious duplicity.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/ccjeff126.xml

This quote, alluded to in the article, was ascribed to Harry S Truman, 33rd US President, 1884-1972:
It's a recession when your neighbor loses his job; it's a depression when you lose yours.

 

[sam76]

2331 GMT [Dow Jones] S&P/ASX 200 feels like its seen its bottom, so institutions will soon come back in buying, with many holding "obscene" amounts of cash, says Goldman Sachs JBWere afternoon report. Says if markets can withstand more subprime losses, tight credit markets, downgrading of U.S. EPS estimates, plus U.S. recession signs, that will confirm bottom, says broker. ""When all the instos feel a bit more comfortable, the mother of all rallies will hit and we'll see the upper end of the trading band reached fairly quickly." Tips trading band range of 5000 to 5500-5800. Index last 5301.7. (DWR)


Well duhhhhhhhhh

 

[Aussiejeff]

2331 GMT [Dow Jones] S&P/ASX 200 feels like its seen its bottom, so institutions will soon come back in buying, with many holding "obscene" amounts of cash, says Goldman Sachs JBWere afternoon report. Says if markets can withstand more subprime losses (How much more?), tight credit markets (How much tighter?), downgrading of U.S. EPS estimates (How much more downgraded?, plus U.S. recession signs (How many more signs can their be?), that will confirm bottom, says broker. ""When all the instos feel a bit more comfortable (How much is "A bit more comfortable"?, the mother of all rallies will hit and we'll see the upper end of the trading band reached fairly quickly." Tips trading band range of 5000 to 5500-5800. Index last 5301.7. (DWR)


Well duhhhhhhhhh

LOL...

I've added the (unspoken) questions to that vague-quoted gem.....

 

[ithatheekret]

Ah ....... but are they holding obscene amounts of cash to bolster the none existent cash reserve ratios that led them all into the bear pit ?

 

[wayneL]

A bloody interesting article in the UK Daily Mail that applies equally to all Anglo economies. In it, he asks the hard questions that some of us economic numpties, trading at home in our pyjamas have been asking:

TOM UTLEY: Even an economic dunce like me foresaw the credit crunch

SNIP:
Indeed, as far as I remember, only once before have I dared venture an opinion about economics in these pages - and that was 16 months ago, when I said it was utter madness for banks and building societies to go on lending housebuyers as much as seven times their annual salaries.

With personal debt in Britain then estimated at £1.3 trillion, I mused: "Can we really go on living like this, without risking the most catastrophic fall when the economy turns downwards, the creditors start calling in their money - and the never-never becomes the now-now?"

If even an economic ignoramus like me could grasp such an obvious truth, then why did it escape the board of Northern Rock, the Financial Services Authority and the chief economists of just about every big financial institution involved in the American housing market?

What worries me is that if we economic illiterates predicted the credit crunch, long before we'd even heard the term, might we not be right, too, to be deeply concerned about the flight of manufacturing jobs abroad?

FULL ARTICLE

 

[reece55]

A bloody interesting article in the UK Daily Mail that applies equally to all Anglo economies. In it, he asks the hard questions that some of us economic numpties, trading at home in our pyjamas have been asking:

Thanks for link Wayne, a very interesting read....

Almost exactly what ASF was discussing the other day.......

Australia is lucky to have a crap load of dirt the emerging economies need to expand that cushions our service based economy, because we have to provide the assistance to the mining sector.... But I thing I am worried about is how long before China owns half of our dirt? Not long if the rate they are acquiring exploration ground and producing mines is anything to go by!!!!!

Cheers

 

[ithatheekret]

What worries me is that if we economic illiterates predicted the credit crunch, long before we'd even heard the term, might we not be right, too, to be deeply concerned about the flight of manufacturing jobs abroad?


He's never heard of same page mentality in public service by the looks either ...... obviously never played Simon says as a kid .

 

[dhukka]

Signs that the US consumer is feeling a little tapped out.

J.C. Penney cuts first-quarter outlook

J.C. Penney Co. (JCP) on Friday warned that its first-quarter profit will come in at about 50 cents a share, compared to previous guidance of 75 to 80 cents a share. Citing weaker-than-expected sales through the Easter holiday, the retailer also forecast a low-double-digit decline in same-store sales for March and a high-single-digit decline for the first quarter. Its prior expectation was for low-single-digit declines for both periods. J.C. Penney's Chairman and Chief Executive Myron Ullman said, "Consumer confidence is at a multi-year low." Analysts surveyed by FactSet Research expected J.C. Penney to report first-quarter earnings of 75 cents a share. Shares of J.C. Penney fell more than 13% in premarket trading to $34.90.

 

[Kauri]

Signs that the US consumer is feeling a little tapped out.

also... KB Homes also reported a loss, missing expectations.

also... discussions earlier this morning on CNBC from ex-Treasury Snow and Ex-Fed Lindsey over concerns for credit for the automotive market and fears of a broader downturn in car sales.

also... news from Fremont General this morning that it has received a directive for its bank subsidiary, from the FDIC and California Dept of Financial Institutions, to recapitalize in 60 days or accept an offer to be acquired with Fremont General to divest themselves of the bank.

Ho Hum... just another day in paradise...

Cheers
..........Kauri

 

[Kauri]

interesting read in the FT...

 

[dhukka]

also... KB Homes also reported a loss, missing expectations.

also... discussions earlier this morning on CNBC from ex-Treasury Snow and Ex-Fed Lindsey over concerns for credit for the automotive market and fears of a broader downturn in car sales.

also... news from Fremont General this morning that it has received a directive for its bank subsidiary, from the FDIC and California Dept of Financial Institutions, to recapitalize in 60 days or accept an offer to be acquired with Fremont General to divest themselves of the bank.

Ho Hum... just another day in paradise...

Cheers
..........Kauri

Did you see Meredith Whitney's latest interview? For 1Q08 She's predicting $50 billion in writedowns $8 billion in additional loan loss provisions and thinks that Citigroup has to completely eliminate it's dividend to preserve capital. Will be plenty of carnage if she's right and she's been nothing but right over the last 6 months.

 

[wayneL]

interesting read in the FT...

Here's the link for those who want to read it

 

[Kauri]

Here's the link for those who want to read it

ooops,,, sorry bout that... is that a link to the 2nd item in the blue box??
Cheers
..........Kauri

 

[Kauri]

BayernLB are said to be "mulling over guarantees" for the bank. now what does that mean, I wonder??? Fact or Hedgie fiction?? whatever..Gold has pulled up..
Cheers
.........Kauri

 

[Wysiwyg]

Some more firewood ....

German Banks Could Hemorrhage 70 Billion Euros
Spiegel ^ | March 28, 2008

Posted on 03/29/2008 7:22:29 AM PDT by DeaconBenjamin

The fallout in Germany from exposure to America's subprime crisis may be far bigger than previously feared. One major newspaper puts estimated losses at a whopping 70 billion euros, while a prominent politician warns that the US recession has already arrived in Germany. On Friday, Bavarian governor Günther Beckstein said the state's BayernLB bank would announce losses related to the credit crisis of up to €4 billion -- double the €1.9 billion figure the bank had previously disclosed

http://www.freerepublic.com/focus/f-news/1993595/posts

 

[sassa]

"This is just beginning. Somewhere been 40 and 100 hedge funds will liquidate shortly. It's a bloodbath and it will get worse."

Already investors are showing their fury. One said: "I thought volatility was what hedge funds lived for? Making money, or at least preserving cash, during volatile times is certainly what we pay them for. They have been poncing around during the good times and are now found wanting at the first sign of trouble. It's a debacle out there."....

Suddenly, there's a new fear surrounding the sector. Just a few months ago these were the best brains in finance. Now they are being exposed as average fund managers at best, and potential market manipulators at worse. How many more pretenders are there out there and how much more chaos will their demise bring to the rest of the markets?."
http://www.nakedcapitalism.com/2008/03/hedge-funds-its-bloodbath.html