Imminent and severe market correction

[Macquack]

Hardly something you expect from someone on a stock market forum to state. Aren't we all trying to be capitalists?

There is a difference between a "capitalist" and a "capitalist pig". The former has some morals, the latter has none.

 

[CanOz]

Hardly something you expect from someone on a stock market forum to state. Aren't we all trying to be capitalists?

Perhaps the greed factor is slightly more apparent in the Wall St. Banking crowd.

CanOz

 

[Kauri]

PS: How are those odds going?
Lehman, Merrils and WaMu have gone. What price Morgan Stanley and Goldman Sachs? The shorters are running out of targets.

Given the focus on the financial sector, the spotlight will fall on Goldman
Sachs today where the bank is due to report Q3 earnings before the Wall Street open. consensus expectations at $1.89 EPS versus $6.21 a year ago.

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

 

[Kauri]

Back on topic I read that the interbank lending rate is now suddenly 2% above the fed rate (triple the norm I think)... I really hope people are re-learning how to price risk and I really hope that the market does not take its cue from a fed drop this week to go dead cat bounce or raging bull for a few weeks.

Funding continues to prove a problem with short-term depo prices surging. The inability to trade with certain names is causing markets to rise and fall dramatically as offers are searched for by certain players. However, if funding cannot be secured 9% above the market it is unlikely to get done at 10,11% either. O/N USD depo prices surged to above 10% bid amid the recent move higher but offers are now only seen into 11/13% for the names looking for the bid.
Cheers
............Kauri

 

[IFocus]

Nothing to add, except great post unc.

Ditto

 

[pepperoni]

Funding continues to prove a problem with short-term depo prices surging. The inability to trade with certain names is causing markets to rise and fall dramatically as offers are searched for by certain players. However, if funding cannot be secured 9% above the market it is unlikely to get done at 10,11% either. O/N USD depo prices surged to above 10% bid amid the recent move higher but offers are now only seen into 11/13% for the names looking for the bid.
Cheers
............Kauri

So this gets me wondering ... could this lead back to higher mortgage rates in aus?

 

[dhukka]

PS: How are those odds going?
Lehman, Merrils and WaMu have gone. What price Morgan Stanley and Goldman Sachs? The shorters are running out of targets.

Don't forget AIG and Wachovia, plenty for the shorts to play with yet.

 

[Kauri]

Don't forget AIG and Wachovia, plenty for the shorts to play with yet.

Weehaa... tanks dhukka ... glad someone else spotted the elepants..

Slainte
...........Kauri

 

[jono_oz]

My only hope out of all this mess is that some of the media pouring the blood in the water, get bitten as well. At some point the disaster they want as front page news will mean no spending on ads...... hmmm no ads no money and hopefully less journalists!
Now we just have to figure out how to get ride of the shorters and politicans and the world would be a much nicer place

 

[pepperoni]

My only hope out of all this mess is that some of the media pouring the blood in the water, get bitten as well. At some point the disaster they want as front page news will mean no spending on ads...... hmmm no ads no money and hopefully less journalists!
Now we just have to figure out how to get ride of the shorters and politicans and the world would be a much nicer place

Keep the shorters ... they expose the market's lies ... it only they could short pollies promises .

 

[Gundini]

Keep the shorters ... they expose the market's lies ... it only they could short pollies promises .

This is what makes the sharemarket fun!

 

[Julia]

Secondly I get no pleasure out of my vent as you term it. I am as aware as you are that America's present problems are a result of uncontrolled and unregulated lending and irresponsible borrowing. I have never borrowed above my means, and my reality is that I feel as a result of sensible investment I can weather the storm.

I was feeling similarly, but had a sense of discomfort when I read the following from one of today's financial commentators (sorry, forget which one):

The Fed widened the set of assets eligible as collateral for loans of US Treasuries to include all investment grade paper, and raised the size of these Treasury loans to $US200 billion.

The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries, in what was the most dramatic part of the arrangements.

Does this mean that everyday depositors risk losing their cash?

 

[jono_oz]

I heard on the news that there was a huge toxic waist dump found in Balmoral Slopes, and that property prices are expected to fall through the floor! Stay tuned for more updates!!

(Shorting is so much fun in someone elses back yard)

 

[Gundini]

I heard on the news that there was a huge toxic waist dump found in Balmoral Slopes, and that property prices are expected to fall through the floor! Stay tuned for more updates!!

(Shorting is so much fun in someone elses back yard)

That is soooo funny....Surely they are all on slabs in Balmoral Slopes, they can't fall through the floor!

 

[gfresh]

So this gets me wondering ... could this lead back to higher mortgage rates in aus?

RBA has been providing a lot of extra short-term funding to give liquidity to our banks. And they can trade RMBS (mortgage securities) for cash now. Maybe why our banks have been able to so quickly to pass on lower 1 year fixed rates, etc to get people in the door. How long they can continue to do that I'm not sure. Keep firing up those printing presses I guess..

Julia: FDIC provides backup to all bank deposits up to USD$100K.. but even they're running out of money, they're asking congress for more

Washington Mutual surely must fail now.. A junk rating is terrible, who's going to lend them money with that sort of rating? I don't know why the hell the average American still trusts a bank in this state to hold their money? maybe the deposit insurance is their reassurance. A run would be it very quickly..

Personally, if I saw my bank at 95% off highs, there is no way my money was staying in there! even with a deposit guarantee..

http://www.bloomberg.com/apps/news?pid=20601087&sid=a33xqCXC0xCA&refer=home

WaMu Falls in German Trading After S&P Slashes Rating to Junk

By Edward Evans and Ari Levy

Sept. 16 (Bloomberg) -- Washington Mutual Inc., the biggest U.S. savings and loan, fell 6 percent in German trading after Standard & Poor's cut its credit rating to junk.

S&P cited the deteriorating U.S. housing market and for its decision after the market close yesterday to slash its rating on Seattle-based WaMu to BB- from BBB-, leaving it three levels below investment grade. The stock fell to $1.88 by 10:30 a.m. in Frankfurt today, down from Monday's $2 close in New York.

``Increasing market turmoil and the related impact from managing its concentrated mortgage franchise in this troubled housing and credit cycle led to the downgrade,'' S&P said in a statement yesterday. Wamu's ``weak equity pricing in the markets is also a concern, and it increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility.''

 

[pepperoni]

That is soooo funny....Surely they are all on slabs in Balmoral Slopes, they can't fall through the floor!

Bwahaha.

Ive said many times before I just rent here ... ownership is limited to the token billionaires ha ha.

 

[dhukka]

RBA has been providing a lot of extra short-term funding to give liquidity to our banks. Same in Europe and other places. How long they can continue to do that I'm not sure. Keep firing up those printing presses I guess..

Julia: FDIC provides backup to all bank deposits up to USD$100K.. but even they're running out of money, they're asking congress for more

Washington Mutual surely must fail now.. A junk rating is terrible, who's going to lend them money with that sort of rating? I don't know why the hell the average American still trusts a bank in this state to hold their money? maybe the deposit insurance is their reassurance. A run would be it very quickly..

Personally, if I saw my bank at 95% off highs, there is no way my money was staying in there! even with a deposit guarantee..

If WaMu goes belly up, that would wipe out all FDIC funds and then some. Regardless, they will be going hat in hand to the treasury sooner or later as more and more banks fail.

 

[pepperoni]

"The cost to the FDIC if this company fails is likely to be quite high," analyst Rich X. Bove of Ladenburg Thalmann wrote. He estimates the net cost to the FDIC at $24 billion, which is about half of the assets in the FDIC's insurance fund.

The FDIC doesn't comment on specific cases, but a spokesman said yesterday that the fund has sufficient resources to cover the failure of a very large bank. In most cases, the FDIC promises to guarantee deposits up to $100,000. The government regards that promise as sacred. The FDIC might just have to borrow money from the Treasury Department to meet its obligations to depositors.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091503035.html

 

[Julia]

R
Julia: FDIC provides backup to all bank deposits up to USD$100K.. but even they're running out of money, they're asking congress for more

Geez, that's not much, is it! Thanks gfresh. Less than reassuring.

 

[Kauri]

news on AIG is worse as there are reports that the global insurance giant will file for bankruptcy Wednesday if they don't find capital today.
I smell capitulation, of the short term variety, in the air but there are two more events that must take place first - the FOMC meeting and Morgan Stanley Q3 earnings Wednesday before the bell.

Cheers...I tink
.................Kauri

Incidentally... of course...The Russian stock exchange has been closed for an hour after a 16.6% collapse on the day; the Ruble has strengthened but only because the central bank has kept a lid on it; USD/ZAR has jumped to 8.1800 after a respite to 7.9900 yesterday; USD/TRY hit 1.2765; and in Asian markets the KRW was under huge pressure hitting 1165, the first time in 4- yrs. USD/PHP hit a 1-yr high; and USD/TWD tested the "08 highs.

Slainte
...........Lauri