Imminent and severe market correction

[MrBurns]

A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze.

Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS, said in a joint statement they "initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."

From the ABC web site.

I don't think anything can stop this now.

The market will fall because the companies that make up the market will not be worth what they were a few months ago and whats more it wont come back in a hurry.

This isn't panic this is logic.

I saw this coming 3 years ago, but the boom just kept going ...........til now.

 

[wayneL]

I do not expect a servere market correction. Most of the negatives are alreday known now. Seems it's more a case of riding out the storm. There will be ups and downs, more downs than ups are very likley but somewhere the tide will turn.

There are known knowns, there are known unknowns, but then there are the unknown unknowns.

 

[Uncle Festivus]

I do not expect a servere market correction. Most of the negatives are alreday known now. Seems it's more a case of riding out the storm. There will be ups and downs, more downs than ups are very likley but somewhere the tide will turn.

Well yes, we know the negatives, only the depth of the sludge is unknown, and if our generation will be around for the turning?

From Wikipedia, the free encyclopedia

A credit default swap (CDS) is a credit derivative contract between two counterparties, whereby the "buyer" or "fixed rate payer" pays periodic payments to the "seller" or "floating rate payer" in exchange for the right to a payoff if there is a default[1] or "credit event" in respect of a third party or "reference entity".
If a credit event occurs, the typical contract either settles by delivery by the buyer to the seller of a (usually defaulted) debt obligation of the reference entity against a payment by the seller of the par value ("physical settlement") or the seller pays the buyer the difference between the par value and the market price of a specified debt obligation, typically determined in an auction ("cash settlement").
A credit default swap resembles an insurance policy, as it can be used by a debt holder to hedge, or insure against a default under the debt instrument. However, because there is no requirement to actually hold any asset or suffer a loss, a credit default swap can also be used for speculative purposes and is not generally considered insurance for regulatory purposes.

What went up, must come down, many times over, negative contagion.

The market for credit derivatives is now so large, in many instances the amount of credit derivatives outstanding for an individual name are vastly greater than the bonds outstanding. For instance, company X may have $1 billion of outstanding debt and $10 billion of CDS contracts outstanding. If such a company were to default, and recovery is 40 cents on the dollar, then the loss to investors holding the bonds would be $600 million. However the loss to credit default swap sellers would be $6 billion. When the CDS have been made for purely speculative purposes, in addition to spreading risk, credit derivatives can also amplify those risks.

The tide is out for the tsunami; lot's of fat, ugly, greedy corporates are naked . The music has stopped.

 

[wayneL]

This isn't panic this is logic.

Now that's a quotable quote!

Ace!

 

[MrBurns]

Now that's a quotable quote!

I'm flattered

 

[dhukka]

Sorry to interrupt the financial meltdown with some boring economic news. Industrial Production down -1.1% in August. That's the steepest decline since Hurricane Katrina. IP is one of the key measures the NBER uses to call recessions.

 

[brty]

Perfect scenario for Uncle Ben to come in with a large interest rate cut, and send the markets into a buying frenzy.

It may not last long though.

Starting to look like the Feds have run out of money to bail. I too wonder what is in store for MS, Goldman and for that matter BofA.

brty

 

[gav]

So ladies and gents .......is tonight the night we start making new records ? gunna be intresting thats for sure

I believe it will. Tomorrow we'll smash through that 4800 barrier that has been holding up as of late. Just my

 

[wayneL]

I believe it will. Tomorrow we'll smash through that 4800 barrier that has been holding up as of late. Just my

Dunno 'bout that.

There are buyers in this market. There is a concerted effort at a gap fill, up 24 SP points from the gap down.

Don't ask me who is buying or why, but suspect GS a/c no. 95 is underpinning it.

 

[wayneL]

Dunno 'bout that.

There are buyers in this market. There is a concerted effort at a gap fill, up 24 SP points from the gap down.

Don't ask me who is buying or why, but suspect GS a/c no. 95 is underpinning it.

BTW I'm LMAO.

Suspected this would happen.

 

[Whiskers]

Dunno 'bout that.

There are buyers in this market. There is a concerted effort at a gap fill, up 24 SP points from the gap down.

Yeah, well bugga-me-dead... we may even get a green day yet!

 

[Kauri]

all eyes are are on stocks and whether the Lehman failure inspires broader safe-haven flows into the close. Today"s week NY Fed and Industrial Production releases certainly do little to reassure investors. Lower oil prices, although helpful to strapped consumers and businesses, are part and parcel of the weakening demand scenario that has crippled credit.
Big money on the sidelines... mainly short term momentum players playing currently... too many rumours to post... a lot most likely with no basis other than to drive the fear/hope and clip a quick profit...

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

 

[wayneL]

Dunno 'bout that.

There are buyers in this market. There is a concerted effort at a gap fill, up 24 SP points from the gap down.

Don't ask me who is buying or why, but suspect GS a/c no. 95 is underpinning it.

Next time I post something like this, FADE IT! LOL

Posted right at HOD.

 

[CanOz]

Next time I post something like this, FADE IT! LOL

Posted right at HOD.

Well, the July low was just taken out....look out below.

 

[explod]

Yeah, well bugga-me-dead... we may even get a green day yet!

All this gloom and doom stuff, sorry I got out of bed.

Anyway we are all still together on ASF

And hear that Big Chief Burnin Bush stated they are not going to bail out all these bad mobs at taxpayers expense either.

What a difference a few days can make

 

[nunthewiser]

Well here it comes..........................here comes the night.............whoa whoa yeah..................record breakin day on the asx ?

 

[Kauri]

Next time I post something like this, FADE IT! LOL

Posted right at HOD.

One institution that is often good to watch for further insights or direction into the markets is Goldman Sachs which more often than not is ahead of the rest of the crowd in terms of reacting to developments in times of heightened sensitivity. It hit new daily, and yearly lows.. 4 hours or so before the market closed... giving a little hint where tings were heading..

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

 

[Sean K]

It's been a beautiful afternoon on Ilha Grande south of Rio.

Tropical paradise.

Good opportunity to invest in a pousada here, while the rest of the world crumbles..

Gotta be a buying opportunity soon...

 

[deadset]

It seemed like the Australian market dropped in anticipation already yesterday, whereas last night the US market dropped only 4%, so I'm only expecting a fairly minor drop today. Then again it could over-panic with Oil and Commodities dropping as well last night too. It's definitely being a learning experience watching all this happen lately. I'm curious as to how low oil will go and how long it will stay low, high 80s/barrell is within reach.

Let's hope that the last of the bad news with financials.

 

[juiceman]

It seemed like the Australian market dropped in anticipation already yesterday, whereas last night the US market dropped only 4%, so I'm only expecting a fairly minor drop today. Then again it could over-panic with Oil and Commodities dropping as well last night too. It's definitely being a learning experience watching all this happen lately. I'm curious as to how low oil will go and how long it will stay low, high 80s/barrell is within reach.

Let's hope that the last of the bad news with financials.

Sorry to say this BUT i feel this is just the begining