Imminent and severe market correction

[explod]

A tit-bit from this weeks "Privateer Newsletter"

Citigroup analysts have stated that a tightening of the rules regarding banks' off-ballance sheet vehicles (SIVs etc.) would force the banks to respond and could result in up to $US 5,000 Billion of assets (read "loans") coming back onto the books of the US banks. That's $US 5 TRILLION of liabilities which have been kept off the ballance sheets of these banks. When they arrive there, they will blow the total liabilities of American banks into orbit. The main rating agencies in the US are all still trying to regain some credibility, having missed the main event while it was building up and then scrambling since last August. They have now placed most major US banks on a credit watch and even downgraded some of them."

To quote a further conclusion from my source

"This is bigger than the subprime mess"

"

So further to your report above Sassa, the raising of funds will need a lot of spin now.

 

[Mike Trader]

Re: George Soros :Short

According to an interview yesterday on the BBC ,George Soros is short in both European & American Markets,quite pessimistic.Cheers Mike

 

[ithatheekret]

I wonder what the price on his head is?

If there is one though , I have noted that anyone that speaks out against the pro-Israeli stance is flogged severely . Being one that supports the Israeli cause I find it perplexing and without creedence as opinions are suppose to be welcome even though they may differ from others . Many overstate the positions held , then again many overstate the position the US markets and economy are in . If anyone was to cop some flak on their economic stance it would surely have to be Poole and it is always sobering words that come from Lacker and Poole . After all they're only trying to keep the bastards honest , but perhaps and just perhaps , they will go the same way our Dems went or are heading ........ into obscurity . Gag the truth and publish the BS .

Like the unemployment situation is due to teenager workers .

MOOOOHAAAHAAA .

 

[Pommiegranite]

Re: George Soros :Short

According to an interview yesterday on the BBC ,George Soros is short in both European & American Markets,quite pessimistic.Cheers Mike

So he's shorting the market...hence the outward pessimism. It would be great if the media wouldn't give these people the time of day.

He's a trader/investor not an economist.

 

[Macquack]

Re: George Soros :Short

So he's shorting the market...hence the outward pessimism. It would be great if the media wouldn't give these people the time of day.

He's a trader/investor not an economist.

I totally agree.

I also subscribe to the theory that these "guru's" end up doing the opposite to what they say to the media.

 

[dhukka]

After all they're only trying to keep the bastards honest , but perhaps and just perhaps , they will go the same way our Dems went or are heading ........ into obscurity . Gag the truth and publish the BS .

Like the unemployment situation is due to teenager workers .

MOOOOHAAAHAAA .

Typical spin from the cheerleaders. Also heard that the minimum wage hike last year is pricing teenage workers out of the market. But if you actually look into the numbers you can see that the teenager effect was only part of the story. The following came from the BIG PICTURE:

"Teen unemployment rose 3.3 points, which was probably exaggerated by some calendar issues. But teens are less than 5% of the workforce, so they contributed just 0.2 point of the total rise. Adult unemployment rose from 4.5% to 4.8% - and it was a clean move, with no rounding funniness. The adult participation rate rose 0.1 point, and the EPR [Employment Population Ratio] fell by 0.2 point. Also, the composition of the unemployment rise shows that it wasn't just the kids: permanent job losers and re-entrants accounted for 0.2 points of the rise, and new entrants just 0.1 point.

If you want to spin a story out of this, it could be that people are re-entering the labor force because they're having a hard time making ends meet."

-Liscio Report

 

[sassa]

Stock investors looking for good news after Friday's rout in the U.S. won't be happy with the message coming from global bond markets.

Economic strength outside the U.S. has been a source of stability for corporate earnings amid the turmoil of the real-estate market collapse and credit crunch. Now, global bond markets, which have been more pessimistic than stock markets, are flashing warning signs about the outlook for both growth and inflation.
For big developed economies -- most notably Europe, bond investors are signaling that the big risk is a severe economic slowdown. In emerging markets like China and India, inflation is a more serious threat. If these economies stumble or run into an inflation problem, that removes an important prop from under the stock market.

http://online.wsj.com/article/SB121295844546455357.html?mod=hpp_europe_whats_news

 

[davo8]

Investors don't need bond markets to tell them which way is down -- the bad news just keeps coming. Downgrading the monolines will wipe billions off bonds. Lehman is toast -- they just don't know who is big enough to bail them out.

So, anyone want to take a punt on where the market is headed tonight?

I don't do waves -- I'll just stick to my megabear forecast. Down, with the worst yet to come, no bottom this year. Whiskers?

 

[explod]

Investors don't need bond markets to tell them which way is down -- the bad news just keeps coming. Downgrading the monolines will wipe billions off bonds. Lehman is toast -- they just don't know who is big enough to bail them out.

So, anyone want to take a punt on where the market is headed tonight?

I don't do waves -- I'll just stick to my megabear forecast. Down, with the worst yet to come, no bottom this year. Whiskers?

Absolute crap and the martkets will continue to hold and sometimes rise on the crap. So tired, would someone else explain that we are all broke. A lot of us dont know it yet

 

[nioka]

So, anyone want to take a punt on where the market is headed tonight?
?

I've just checked CFE in London. It's up. That is one that should be up here tomorrow. I doubt that it will be the only one. The price of oil and the credit squeeze may make the overall market fall but the oil and gas should do OK. All is never lost. When the speculators turn from buyers to sellers they will talk the market up again.

 

[dhukka]

Things were looking relatively bright in the US this evening until Lehman Brothers dropped this bomb:

Lehman Loses $2.8 Billion, Plans to Raise $6 Billion
Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, reported a record $2.8 billion second-quarter loss and said it will raise $6 billion in capital in a public offering.

Lehman fell as much as 11 percent in New York trading after the firm said it sold about $130 billion of assets during the quarter. The New York-based bank reduced mortgage-related assets and leveraged loans by about 20 percent, it said today in a statement. The figures are preliminary and the final results will be released June 16.

Chief Executive Officer Richard Fuld, 62, is adding to the $8 billion he raised since February to quell concern that the collapse of the mortgage market would bring his firm down. Financial companies have raised more than $285 billion from investors to make up for almost $390 billion in writedowns and credit losses.

``I am very disappointed in this quarter's results,'' Fuld said in the statement. ``However, with our strengthened balance sheet and the improvement in the financial markets since March, we are well-positioned to serve our clients and execute our strategy.''

Lehman dropped $3.49 to $28.80 at 7:24 a.m. in early New York trading after the company said it would sell common and preferred stock that converts to common shares in three years. It didn't say how much of each type would be sold. The company had $3.7 billion of writedowns on its portfolio of mortgage- related assets and leveraged loans during the quarter as hedges against the positions lost money, the bank said.

 

[Whiskers]

Originally Posted by Whiskers
I don't normally study overseas charts too much, but I decided to test my EW skills :

What I am thinking is the US finished a 5 leg up and had a little corrective wave A, B, C...

I reckon we've finally hit bottom for awhile again..

You may well be correct at this time, but if we follow the U.S. market leads then according to SOME we will be in for further trouble.


http://www.safehaven.com/article-10466.htm


http://www.safehaven.com/article-10463.htm

I usually am thanks sassa. ... but you're right, there will be more pain to come... carried over for another day, eh Uncle Festivus.

 

[Uncle Festivus]

I usually am thanks sassa. ... but you're right, there will be more pain to come... carried over for another day, eh Uncle Festivus.

It will whipsaw with a negative bias until the permabulls capitulate under overwhelming evidence. Stand close to the exits

 

[Whiskers]

Looks like interest rate cuts are done... what with news reports that rate rises are back on the horizon, and as many of us expected, the US admin talking up the USD and not ruling out intervention to prop it up 'just in time' to save/improve the US economy.

Who says they are the leaders of the 'FREE' world.

But as I have emphasised, political adgenda corrupts the free markets, and usually wins out in the short term.

Despite a couple of aspects not fitting neatly with common EW thoughts, I'm thinking this is the bottom or near to of intermediate wave c, leg 2 of the next impulse up.

The main area where I differ from most is where I call August the intermediate (circled) wave 5 and the August low intermediate A with the Oct high (on low volume) B.

I know it may be a controversal point, but I initially tried calibrating by eye of the chart and wasn't satisfied. So I got thinking about the intent of EW and calibrated the moves by priority of the most important criteria. It makes more sense for me... but again I'm open to discussion.

Actually I will post a detailed chart on the XAO as that is what I am more interested in and for the most part resembles the DJIA.

 

[davo8]

Where do you get that eternal optimism about the markets?

I don't do EW, but to my eye the chart simply looks like a primary downtrend since that peak back in October. On a historic scale it looks like a bull market that should run 12 months or more, and the secondary uptrend since March is a typical retrace. The expected target would be around 1050 or so, about Xmas, and this would bring PEs back to where stocks start looking cheap again.

The devastating economic news means it could go lower or longer. A major event like Lehman folding would produce a 100 point drop.

So I can see why you might keep dancing, but I'd hope you keep close to the exits.

 

[Whiskers]

Been doing a bit more maths on my EW wave count.

It seems that my wave c can extend down to abt 11,735 and still be valid.

That's testing the limits of a Flat corrective wave c... of all the high oil speculators and the bears as well... oh, and the nerves of the bulls too. :

 

[Whiskers]

Actually, that should be about 11,800'sh.

Still a bit sleepy eyed. :

 

[davo8]

Actually, that should be about 11,800'sh.

Whereas to me it looks like a target of around 10,000.

I wonder who'll be closer.

 

[Whiskers]

Whereas to me it looks like a target of around 10,000.

I wonder who'll be closer.

It could well be in now. The market likes the better than expected retail sales. Inventories are up also. Oh and I think they liked kicking a couple of arses at Lehmans.

Get another positive CPI tomorrow and I think I'd be game to say game over. Economic ruin and recession a non event... apart from the anxiety and panic attacks some have suffered.

 

[sassa]

It could well be in now. The market likes the better than expected retail sales. Inventories are up also. Oh and I think they liked kicking a couple of arses at Lehmans.

Get another positive CPI tomorrow and I think I'd be game to say game over. Economic ruin and recession a non event... apart from the anxiety and panic attacks some have suffered.

And of course there are differing opinions as to the market's performance-

In the morning … bidding the market up on 2 reasons …

- a good feeling that retail sales will come in better than expected

- the rollover of the leading equity futures contracts

So the game was BID ON HOPE in the morning … bash some shorts …

then the news flow … OVERWHELMINGLY NEGATIVE … as always …

Today …

- Lehman makes some management changes without cutting the man responsible … the CEO

- Yahoo and Microsoft take some air out of M&A hopes as they end talks

Result … markets loses all hot air from the morning …

hits NEW LOWS …

and then … as seen many times before … the last 30 mins.

10 points squeeze … to bash some shorts …

Do I hate it??? … YES

Can I change it??? … NO

Why does it function?

As to much money is around … stupidity rules and the greed is big enough for most investors to “better” stay in the market …

Horrible … But payday looms

http://www.ridingthedax.com/2008/06/12/every-day-the-same-structure/