Imminent and severe market correction

[wayneL]

It must be cartoon time.

 

[wayneL]

 

[Sean K]

Time to go long, the bears are getting cocky?

:

 

[wayneL]

Time to go long, the bears are getting cocky?

:

 

[ithatheekret]

Ah , good old fashion British humour . Love that bear , no wonder the Lemmings are running to the cliff .

ASX200 rolled back through 5200

I am somewhat amazed that if we are in an oil crisis , why am I not lining up for petrol yet ?

If we invade Canada we should be right for water , they can keep the shale.

 

[explod]

Ah , good old fashion British humour . Love that bear , no wonder the Lemmings are running to the cliff .

ASX200 rolled back through 5200

I am somewhat amazed that if we are in an oil crisis , why am I not lining up for petrol yet ?

If we invade Canada we should be right for water , they can keep the shale.

Yep, there's gunna be a run on whale skins. The Japanese are going to tow the water down in leather bags so as to soothe their new buddy Rudd. Maybe Therese will use the Comsec leverage to invest in the sailing tuggs.

 

[dhukka]

Headlines like Goldman downgrades fellow banks at http://money.cnn.com/2008/06/26/news/companies/goldman_brokers/index.htm?postversion=2008062609 isn't helping much either.

Pretty much a case of bag the opposition to make your own prospects appear better... becoming a bit of a self fullfilling prophecy.

There's nothing self-fulfilling about it. This bear market is just following the usual course of events. Analysts are always behind the curve at turning points in economic and earnings cycles. Goldman is just catching up to reality.

The writedowns on exotic credit products are starting to get smaller but that was never the greatest problem. Credit revulsion has now hit main street as consumers default on all types of loans. What this means for financial institutions is more loan loss reserves, more dividend cuts, more capital raising and a wave of bankrupticies.

Full blown recession was never in my calculations and the revised numbers suggest it was not even close.

Take the export sector out of the equation and the domestic US economy grew at 0.2% in 1Q08. That's with a ridiculously low PCE deflator of just over 2% and employment numbers which are clearly being over estimated to the upside. Granted, recessions usually contain at least 1 quarter of negative GDP growth. However the the very nasty recession of 1981-82 started in July 1981, GDP growth in 3Q81 was 4.9%.

Employment has contracted for 5 straight months in an economy that needs to produce 150k jobs a month just to keep pace with population growth. Consumer confidence is at 25 year lows. Housing is in a depression, corporate earnings are deteriorating and consumers are being battered by declining wealth and higher prices, oh but they all got $800 bucks from uncle Sam, yeah that oughta save the day. This looks very much like a 1980's double dip recession with the second dip being the real nasty one.

You underestimated the extent of the credit crunch and incorrectly called a new bull market in what was obvious to most as just a bear market rally. Having a rosy view of the world doesn't make you any less wrong.

 

[Whiskers]

I am somewhat amazed that if we are in an oil crisis , why am I not lining up for petrol yet ?

Good point ithatheekret. I made the same observation a little while ago.

For me it tends to support the speculators theory, holding contracts and forcing refiners to pay more.

I'm putting my money on the US congress giving the oil trading industry a long over due regultory reform a-la the financial industry. They have about half a dozen bills already, some with bi-partizan support.

 

[professor_frink]

Good point ithatheekret. I made the same observation a little while ago.

For me it tends to support the speculators theory, holding contracts and forcing refiners to pay more.

I'm putting my money on the US congress giving the oil trading industry a long over due regultory reform a-la the financial industry. They have about half a dozen bills already, some with bi-partizan support.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBOhMpxHVbJE&refer=home

Oil Falls From Record as U.S. House Passes Speculation Measure
June 27 (Bloomberg) -- Crude oil fell in New York, retreating from the record $140.39 a barrel reached yesterday, as the U.S. House of Representatives approved a bill aimed at curbing excessive energy-market speculation.

The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using position limits, or constraints on the size of the stake each speculative investor can own, and raising margin requirements, the amount of money required to trade. The vote came after the record was set. ..................

 

[Whiskers]

There's nothing self-fulfilling about it. This bear market is just following the usual course of events. Analysts are always behind the curve at turning points in economic and earnings cycles. Goldman is just catching up to reality.

Reality eh!

It all sounds like pretty petty self preservation in the public eye to me. Only problem is that they are shooting themselves in the foot.

I reckon this post by refined silver in the gold thread is pretty right.

Here's another take on yesterday's action by Dan Norcini who is one of the smarter commentators versus Barrett's well described army of moron economic journalists.

My take on this is that while the Forex markets are pushing the European currencies as well as the Yen higher, the market views the Fed's statement from yesterday as a capitulation of any attempt to talk up the Dollar. Bernanke's bluff has been called and the weakness of his hand revealed. Economic data simply will not permit the Fed to hike anywhere near as soon as many had been duped into believing by all the hawkish talk coming out of the Fed prior to the FOMC statement. That has attracted a wall of money back into commodities as an inflation hedge and is the reason why gold is so strong. Further helping gold is the horrific beating the darlings of yesterday’s stock rally, the financials, are receiving in today’s session.

The stock market is being pounded to kingdom come as those same financials get shellacked due to a series of downgrades by Goldman Sachs which issued a sell recommendation on Citi. That prompted a near immediate response from Wachovia which promptly then downgraded Goldman in a tit-for-tat exchange being played by the investment banks. If you listen carefully, you can almost hear them saying to each other as soon as their recommendations are made public, “NA-NA-NA-NA-NA, we downgraded you before you downgraded us!” or, “Take that, you swine!”

https://www.aussiestockforums.com/forums/showthread.php?t=2366&page=230

Take the export sector out of the equation...

Now now, dhukka your picking the eyes out when they're down. Why not ignore the worst aspect as an aberation rather than what is still good?

You underestimated the extent of the credit crunch and incorrectly called a new bull market in what was obvious to most as just a bear market rally.

I called an overall sideways market for the best part of the year... and that still hasn't changed. I also forecast a rise about may and coming back to a low for the end of june qtr.

Having a rosy view of the world doesn't make you any less wrong

Well, I feel sorry for you dhukka, if you can't find something rosy and pleasant in the world.

I just happen to subscribe to the philosophy that you are what you think and you will only attract positive experiences if you reflect a bit of positive karma.

 

[Whiskers]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBOhMpxHVbJE&refer=home

Well, they moved pretty smartly on that one. But I didn't realise they had next week in recess.

Have to get a close look at what it says now.

 

[wayneL]

I just happen to subscribe to the philosophy that you are what you think and you will only attract positive experiences if you reflect a bit of positive karma.

The secret?

Well, it works to a point. As observed in a particular philosophical tome:

To every thing there is a season...
...A time to be born, and a time to die;
A time to plant, and a time to pluck up that which is planted;
A time to kill, and a time to heal;
A time to break down, and a time to build up;
A time to weep, and a time to laugh;
A time to mourn, and a time to dance;
A time to cast away stones, and a time to gather stones together;
A time to embrace, and a time to refrain from embracing;
A time to get, and a time to lose;
A time to keep, and a time to cast away;
A time to rend, and a time to sew;
A time to keep silence, and a time to speak;
A time to love, and a time to hate;
A time of war, and a time of peace.

The Austrian school of economic thought puts it across in another way in relation to economies. In succinct terms:

A time for boom, and a time for bust.

 

[Trembling Hand]

For me it tends to support the speculators theory, holding contracts and forcing refiners to pay more.

I'm putting my money on the US congress giving the oil trading industry a long over due regulatory reform a-la the financial industry. They have about half a dozen bills already, some with bi-partizan support.

Won't it be funny when they increase the margin rates. Only people that will hurt is the people that lose money trading anyway. For the traders that set the value they will not give a flying toss whether the margin is 8 g's or 16 g's or 24.

What will be there answer when they take ownership of the price and set these ridiculous "controls" and see still goes up??

 

[ithatheekret]

Good point ithatheekret. I made the same observation a little while ago.

For me it tends to support the speculators theory, holding contracts and forcing refiners to pay more.

I'm putting my money on the US congress giving the oil trading industry a long over due regultory reform a-la the financial industry. They have about half a dozen bills already, some with bi-partizan support.

Or the competition / offshore asset managers / OPEC members .........

and anyone else with a vested interest to keep the price of oil high whilst the globe is on a war footing .

How's about that for a string of assumptions ? :

 

[Whiskers]

Won't it be funny when they increase the margin rates. Only people that will hurt is the people that lose money trading anyway. For the traders that set the value they will not give a flying toss whether the margin is 8 g's or 16 g's or 24.

What will be there answer when they take ownership of the price and set these ridiculous "controls" and see still goes up??

Well, as yet I'm still unclear what will happen, although the bill still has to pass the senate and get Bushs monica on it... but assuming it passes it seems there is quite a lot of latitude and descretion in it from the Bloomberg article.

What's the effect of requiring someone to consider something? How does that work out?

The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using:

• position limits, or
• constraints on the size of the stake each speculative investor can own, and
• raising margin requirements, the amount of money required to trade.

My understanding of what they were trying to get at was to identify if there was any market manipulation, monolopy interests type of activity that was substantially corrupting the true market price.

I reckoned that sooner or later they had to get the bulk of the oil market back in trading between producers and refiners. It just seemed an unsustainable bubble brewing with 70% of the oil market in speculators hands. How they apply this new law is gonna be interesting. It appears the CFTC can invoke immergency powers. Will it come to that!

Or the competition / offshore asset managers / OPEC members .........

and anyone else with a vested interest to keep the price of oil high whilst the globe is on a war footing .

How's about that for a string of assumptions ? :

Exactly. We don't know whether it's mega rich hedge funds or even some of OPEC double dipping the market.

In any case, I've been getting the feeling for awhile that around the world people and politicans have been thinking the oil market is too much of a vital resource that has very serious consequences for the world economy to have the major share of it controlled by speculators.


Oh Wayne, I didn't go to the Austrian school of economics. We better make sure it doesn't become main stream curriculum eh!

 

[alankew]

Well, as yet I'm still unclear what will happen, although the bill still has to pass the senate and get Bushs monica on it... but assuming it passes it seems there is quite a lot of latitude and descretion in it from the Bloomberg article.

What's the effect of requiring someone to consider something? How does that work out?

The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using:

• position limits, or
• constraints on the size of the stake each speculative investor can own, and
• raising margin requirements, the amount of money required to trade.

My understanding of what they were trying to get at was to identify if there was any market manipulation, monolopy interests type of activity that was substantially corrupting the true market price.

I reckoned that sooner or later they had to get the bulk of the oil market back in trading between producers and refiners. It just seemed an unsustainable bubble brewing with 70% of the oil market in speculators hands. How they apply this new law is gonna be interesting. It appears the CFTC can invoke immergency powers. Will it come to that!



Exactly. We don't know whether it's mega rich hedge funds or even some of OPEC double dipping the market.

In any case, I've been getting the feeling for awhile that around the world people and politicans have been thinking the oil market is too much of a vital resource that has very serious consequences for the world economy to have the major share of it controlled by speculators.


Oh Wayne, I didn't go to the Austrian school of economics. We better make sure it doesn't become main stream curriculum eh!

Whiskers sorry to pull you up on this but i think you will find that technically it was Bills Monica and it landed him in a whole heap of trouble.Bush is in enough trouble without bringing Monica into it

 

[wayneL]

Oh Wayne, I didn't go to the Austrian school of economics. We better make sure it doesn't become main stream curriculum eh!

Au contraire! As the only truly useful model for both projection and management, it should be compulsory.

Here is a series of videos by Professor Krassimir Petrov, which give a very good overview:

http://sigmaoptions.blogspot.com/2007/09/lessons-in-economics.html

 

[Trembling Hand]

I reckoned that sooner or later they had to get the bulk of the oil market back in trading between producers and refiners. It just seemed an unsustainable bubble brewing with 70% of the oil market in speculators hands.

That is a fundamental misunderstanding of how/who operates ALL futures markets. Speculators. All Futures. They are the best at pricing.

In any case, I've been getting the feeling for awhile that around the world people and politicans have been thinking the oil market is too much of a vital resource that has very serious consequences for the world economy to have the major share of it controlled by speculators.

I hope you are stating other peoples opinions not yours. ie pollies.

I don't think anyone has EVER came up with a better alternative to pricing ANYTHING other than the market/speculators. Even given the odd bubble. Certainly not a bunch of populist pollies who only care about the next political poll.

I find it amazing that the price isn't been cheered considering the obvious damage fossil fuels do and the need to reprice that damage. Not to mention the need to develop an economy on something that is sustainable. and after I have another Beer we can talk about relying on a finite commodities that is mostly in undemocratic nut houses. Let the market price commodities not pollies.

 

[Whiskers]

Whiskers sorry to pull you up on this but i think you will find that technically it was Bills Monica and it landed him in a whole heap of trouble.Bush is in enough trouble without bringing Monica into it

LOL LOL

Oh alankew, you...

Gees if I wasn't in a 'rosy' mood I certainly am now after a couple of schnaps on a friday night and that...

 

[wayneL]

I find it amazing that the price isn't been cheered considering the obvious damage fossil fuels do and the need to reprice that damage. Not to mention the need to develop an economy on something that is sustainable. and after I have another Beer we can talk about relying on a finite commodities that is mostly in undemocratic nut houses. Let the market price commodities not pollies.

It's called cognitive dissonance.

Over here it's: let's save the world and tax the crap out of fossil fuels, lets stop people buying big cars, let's cut down on air travel, let's encourage public transport...










.... let's build a new runway at Heathrow, let's add another couple of lanes to the M25, let's ignore the deplorable state of the train network etc.