Imminent and severe market correction

Whiskers · 28 April 2008

Uncle Festivus said:
Mmmm...you confuse me Whiskers - if things are going so well as you imply, then why do you expect a further rate cut. Surely the bottom has been priced in now? Shouldn't they start to resume their 'fight' against inflation again?
I think a lot of people will be surprised (as in :fan)before this week is out. Negative G-D-P!

I'm not implying the US economy is going well, far from it. But by the same token it's not going to fall over overnight. I'm always analysing the psychology of how the decision makers will behave.

As treefrog mentions the consensus seems to be shifting to 25, but with the US elections drawing periliously closer, I'm getting a bit of a sense that political expediency could prevail, that they could wear over cutting a bit now rather than risk dissapointing the market and sort out the consequences later, as they tend to do.

I agree the fight against inflation should be the new concern. I'm thinking they will try to appease the electorate with rate cuts so that lower interest rates flow through to consumers by election time and since (I think) the USD has been oversold especially against the euro, with a bit of PPT help they may try to effectively calm inflation which is largely because of oil by lifting the USD, thus reducing the cost of imports including oil in the process.

After-all they acknowledged early that they would save the economy before the USD. With their kit bag of trix to calm the credit crisis starting to fold out, it's near time to go rescue the USD.

ShareIt · 28 April 2008

Whiskers

I like the way you put it... it seems very possible what you just said

CamKawa · 29 April 2008

Interesting interview with David Whyss from S&P about the future of the US economy on Lateline Business last night.

You can view the interview here http://www.abc.net.au/lateline/business/ 10:41

Aussiejeff · 29 April 2008

....and these "re-affirming" headlines probably won't help the US markets in the short term either:

Buffett says recession may be worse than feared

"This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think," Buffett said. "This will not be short and shallow.

"I think consumers are feeling gas and food prices," he added, "and not feeling they've got a lot of money for other things."

See the full article here:

http://news.yahoo.com/s/nm/20080428/bs_nm/buffett_recession_dc

ShareIt · 29 April 2008

Aussiejeff said:
....and these "re-affirming" headlines probably won't help the US markets in the short term either:

Buffett says recession may be worse than feared

"This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think," Buffett said. "This will not be short and shallow.

"I think consumers are feeling gas and food prices," he added, "and not feeling they've got a lot of money for other things."

See the full article here:

http://news.yahoo.com/s/nm/20080428/bs_nm/buffett_recession_dc

yeah... and then the dude goes and invests a S**** load of money into a gum factory

explod · 29 April 2008

ShareIt said:
yeah... and then the dude goes and invests a S**** load of money into a gum factory

Yeh, and if you cant afford smokes and have to eat less a small amount of gum can last all day. He always kicks a..s

Aussiejeff · 29 April 2008

explod said:
Yeh, and if you cant afford smokes and have to eat less a small amount of gum can last all day. He always kicks a..s

..... and chewing wads of gum helps to relieve stress .....

Kauri · 29 April 2008

Might stretch the Cable..

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/29/cnjobs129.xml

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

Uncle Festivus · 29 April 2008

Kauri said:
Might stretch the Cable..

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/29/cnjobs129.xml

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

Yes, but I'm not sure economic reality has much to do with the share market these days?

wayneL · 29 April 2008

Uncle Festivus said:
Yes, but I'm not sure economic reality has much to do with the share market these days?

Indeed.

Here's a little snippet from an ex options MM that illustrates that point nicely:

While I doubt the eco problems are done, it doesn't mean the market can't rally anyway. I traded CAT options in the early 90's, and each quarter earnings would go from sucky to suckier, and yet the stock just rallied anyway in anticipation of the bottom in the earnings cycle. It literally took 2 years for it to actually bottom, but the stock generally lifted that whole time. That experience forever convinced me the market can see whatever it wants to see, literally forever.

Kauri · 29 April 2008

Uncle Festivus said:
Yes, but I'm not sure economic reality has much to do with the share market these days?

Prolly nott... but the cable stretched a tad... longer term who cares.. share market who cares..
a quick 50-80 pips for the aware..
Cheers
...........Kauri

Kauri · 29 April 2008

Kauri said:
Prolly nott... but the cable stretched a tad... longer term who cares.. share market who cares..
a quick 50-80 pips for the aware..
Cheers
...........Kauri

or more... a couple of strands just gave way..
Cheers
..............Kauri

P.S.. CBI Apr Retail Sales Balance minus 26, Minus 3 was the consensus forecast.

Kauri · 30 April 2008

now we are in real trouble pancho... HSBC downgraded Bimbo, the Mexican's largest baker and one of the world's largest bakeries companies ..
when Bimbos goes down we are all in strife... or so my other harf tells me..

Guilty
............kauri

Uncle Festivus · 30 April 2008

Big night tonight, open the gate & put your running shorts on?

1710 ET 29Apr2008-U.S. economic indicators for April 30
------------------------------------------------------------------------------
Major economic indicators set for release on Wednesday are the weekly
Mortgagemarket index at 7 a.m., the April ADP National Employment survey at
8:15 a.m, first-quarter GDP data at 8:30, the April reading of the New York
NAPM index at 9 a.m., and the April reading of Chicago PMI at 9:45. The Fed's
interest rate decision is set to be announced at 2:15 p.m.

Aussiejeff · 30 April 2008

Uncle Festivus said:
Big night tonight, open the gate & put your running shorts on?

Which way to them thar hills, buddy?

AJ

ithatheekret · 30 April 2008

Uncle Festivus said:
Yes, but I'm not sure economic reality has much to do with the share market these days?

Economic reality ........ nowdays half the media would have us believe that's just a Pink Floyd tune .

Thilly irioth !

Facts are facts and it's still a test . The economic realities test .

It's what we're worth .

davo8 · 30 April 2008

CamKawa said:
Interesting interview with David Whyss from S&P about the future of the US economy on Lateline Business last night.

Saw that. Just remember that S&P is strongly motivated to talk up the economy. They make money when the good times roll.

Did you see Steve Keen? His view is a little different.

davo8 · 30 April 2008

Uncle Festivus said:
Mmmm...you confuse me Whiskers - if things are going so well as you imply, then why do you expect a further rate cut. Surely the bottom has been priced in now? Shouldn't they start to resume their 'fight' against inflation again?

Cutting rates is about generating liquidity and giving banks cheap money so they can survive their losses. Inflation and a dropping USD are inevitable and probably intended.

Low USD spreads the pain to foreigners -- the Bank of Japan has been one of the biggest losers, but they don't count. Consumer pain simply doesn't matter as long as the pollies can explain it away.

Inflation and low interest rates means no safe haven in bonds -- effective returns are negative. Investors are forced to stay in the market to preserve capital against inflation. That's why it's levitating despite bad earnings -- no-one can afford to get off!

Kauri · 30 April 2008

VTB (former Vneshtorgbank) reported to have mandated banks for a USD1 Bln loan in 2 tranches (18-Months & 3-Year), at 0.60 & 0.65 over LIBOR respectively... mmm must brush up on my languages.. ita. any help appreciayed.. bb.. but I guess the message is there somewheres..

Dammmm KRudd and his taxes (grabs)...
Chaars
...............karri

Uncle Festivus · 30 April 2008

davo8 said:
Cutting rates is about generating liquidity and giving banks cheap money so they can survive their losses. Inflation and a dropping USD are inevitable and probably intended.

Low USD spreads the pain to foreigners -- the Bank of Japan has been one of the biggest losers, but they don't count. Consumer pain simply doesn't matter as long as the pollies can explain it away.

Inflation and low interest rates means no safe haven in bonds -- effective returns are negative. Investors are forced to stay in the market to preserve capital against inflation. That's why it's levitating despite bad earnings -- no-one can afford to get off!

Perhaps I was being a tad facetious . Benny, Hanky & Georgy only have interest rates and tax cut's left in the hat - it's obvious interest rates have had zero effect on stimulating a bottom in the housing bust. They would at least be hoping to leave some in reserve, esp now as they appear to have convinced a willing investing public that the end of the credit crunch is over.
Tax cut's, let's see, $600 will go a long way towards, um, yes getting the US consumer to spend, spend & spend again.

No, the leveraged derivatives implosion is just beginning; the foreign support of the US debt black hole is waining; risk is being priced as fear; money & food are being hoarded; Chindia is to blame? Will we let them live like us at the expense of us?

This version of humanity is clearly not sustainable on current methods of consumption, so the day(s) of reckoning beckons? Perhaps we have merely witnessed the first act of the play written by greed & human vanity.
(must get out of other side of bed tomorrow and wear rose tinted glasses)

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