Imminent and severe market correction

[Kauri]

The surprise failure of the Treasury bailout plan to pass Congress has forced US Treasury and the Fed to go back to individual solutions, according to the Wall Street Journal."Treasury is likely to revert to addressing problems institution by institution." The article goes on to say the US government is likely to continue trying to extinguish fires by lending money to troubled institutions, aiming to prevent failures that could ripple through the financial sector. The FDIC, which oversees failing banks, could also play a greater role. Plan B isn"t that encouraging in light of Paulson"s comment: "Our tool kit is substantial but insufficient" in the immediate aftermath of the bill"s failure.
Congressional leaders said they intended to go back to work on the bill, with a new vote possibly late in the week after the Jewish holiday of Rosh Hashanah, which began at sundown Monday and runs through Wednesday night. The WSJ points out that complex election-year politics makes the outcome hard to predict and the tone of the article suggests that an eventual passage is not a done deal despite the harsh reaction in the financial markets.

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

 

[MrBurns]

150 points down as @ 1:30 is not a disaster. People still have too much money and not enought sence. Let the market clean them out and then we'll see a real fall.
One thing this says to me is that the bailout wasnt needed, I don't see blood on the streets anywhere yet...................

 

[Kauri]

The French President, Nicolas Sarkozy says, the French state and state bank CDC are to invest in another besieged Benelux bank. Amidst all the latest US rejection of the bailout plan the news is seen as little more than a continuance of a theme. According to the statement they will have a 25% stake in Dexia, which under Belgian law is a blocking minority. The decision was taken to "guarantee continuity of funding for local authorities".

The Irish government has announced that it is safeguarding all deposits at Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society. The scheme also guarantees covered bonds, senior debt and dated subordinated debt (FT website).
There is an article by Ambrose Evans-Pritchard in today"s Daily Telegraph headlined "Now Europe is staring into the abyss" . This reports that half of the ECB"s shadow council have called for a rate cut this week.

Russian Stock Market Suspended Until 08:30 GMT Precautionary measures taken by the Russian regulators in light of Monday"s significant Wall St collapse. The market will re-open at 12:30 local time-08:30 GMT

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

 

[Kauri]

Rumours about Unicredit are back in the spotlight, once more generating "share suspension" rumours...

Rumours of a possible emergency Fed rate cut later today are being touted as a factor in cable"s rise to an intra-day high of 1.8119. The last emergency Fed Funds rate cut was a 75bp reduction to 3.5% on January 22. The FF rate has been at 2.0% since it was cut to that level in April. The next scheduled FOMC meeting is on October 28/29. The final FOMC meeting of 2009 is scheduled for December 16. December FF futures are reportedly pricing 1.5%.

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

 

[sam76]

FTSE is green (just)

 

[Macquack]

Chuck Norris is The Fed.

It might be time to change your signature to "Chuck Norris kicking the s*** out of the Fed"

 

[sam76]

It might be time to change your signature to "Chuck Norris kicking the s*** out of the Fed"

How about Helicopter Chuck - dropping pain to the people?

 

[Macquack]

How about Helicopter Chuck - dropping pain to the people?

How about
"Chuck Norris is the pilot Ben Bernanke calls when he wants to shower the economy with dollar bills. Sometimes, Chuck refuses to fly. "

 

[CAB SAV]

Data due tonight in US- Consumer Confidence rating est. 56.9 ,sure.
Due friday US- Unemployment rate est. steady 6.1%, sure
Recent poor data from US has been overlooked due to bailout getting all media attention. Wait till they add 2 & 2 together.

Thursday AUST. Trade balance est. deficit $800bill.

 

[Kauri]

The market is now concentrating on a possible co-ordinated rate cut. Speculation was already growing that Australian rates were going to be cut by 50bps at the RBA meeting next Tuesday.

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

 

[Uncle Festivus]

The market is now concentrating on a possible co-ordinated rate cut. Speculation was already growing that Australian rates were going to be cut by 50bps at the RBA meeting next Tuesday.

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

Um, US rates are already effectively negative, so will they now start to Turn Japanese and pay people to take the money & run. Woops, they are already doing that now. The funny thing is, the banks are putting more money BACK into CB's vaults because they don't trust anyone!

"The interbank market has collapsed," said Hans Redeker, currency chief at BNP Paribas.
"We're now seeing a domino effect as the credit multiplier goes into reverse and forces banks to cut back lending to clients," he said.
Mr Redeker said the latest alarming twist is a move by banks to deposit €28bn in funds at the European Central Bank in a panic flight to safety. This has jammed the mechanism used by the authorities to shore up the financial system in a crisis.
"The ECB is no longer able to inject liquidity because the money is just coming back to them again. This is extremely serious. If monetary policy is no longer working, there is a risk that the whole system will blow up in days," he said

http://www.telegraph.co.uk/finance/...-crash-hits-Europe-as-ECB-loses-traction.html

 

[Awesomandy]

hey chaps - 3 peaks domed house. looks a bit like the DOW hey. 7,500 anyone? (not tomorrow btw )

That certainly looks eerily similar, but from my knowledge, the first 3 peaks should be around 8 months apart (point 3 -> point 7). From your chart, that section took at least 16 months to complete.

Also, for this pattern to be valid, the low at point 10 must be tested at least twice (point 12 and 14 at the least). It appears that, in this chart, the low has only been tested once.

But still, the general shape looks very close, I have to say...

 

[IFocus]

That certainly looks eerily similar, but from my knowledge, the first 3 peaks should be around 8 months apart (point 3 -> point 7). From your chart, that section took at least 16 months to complete.

Also, for this pattern to be valid, the low at point 10 must be tested at least twice (point 12 and 14 at the least). It appears that, in this chart, the low has only been tested once.

But still, the general shape looks very close, I have to say...

For as long as I have looked at markets that pattern has been trotted out I guess it has to be right one day

 

[chops_a_must]

Not trading it, but expecting a big fade here...

 

[wayneL]

LTSB is "renegotiating" the deal to buy out HBOS.

http://www.citywire.co.uk/personal/...unds/content.aspx?ID=315867&re=3844&ea=199083

 

[cuttlefish]

Couldn't help but smile at the following suggestions on what the US govt could do to help with the credit crisis (this was on cnn web site, and no its not a humorous piece it was serious commentary).

*Suspend so-called mark-to-market accounting rules, which during the past year have required financial firms to write down more than $500 billion in losses.
*Change federal requirements that force banks to keep a certain level of cash on hand for every dollar they lend out.
*Give banks the chance to exchange loan notes for notes from the Federal Deposit Insurance Corp. As a government agency, the FDIC's notes would be more valuable than the banks' notes, allowing the banks more flexibility to make loans.
*Purchase on a massive scale mortgage-backed securities issued by finance giants Fannie Mae and Freddie Mac. The Bush plan calls for the Treasury to buy a broader range of mortgage-backed securities.
*Extend limits on short sales of financial sector stocks.
*Cut the fed funds rate - the Federal Reserve's target for short-term lending - perhaps all the way to zero, or in coordination with rate cuts by other central banks around the globe.


I like the first 2 in particular - stop forcing banks to value assets at market prices and stop forcing them to have money before they lend any out - I mean you can't really be fairer than that can you ?!?


Full article here.

http://money.cnn.com/2008/09/30/news/economy/plan_b/index.htm?postversion=2008093015

And actually upon reading it I can almost agree with point no. 1 - maybe I can qualify for a job on wall street lol.

 

[Aussiejeff]

Looks like [size=+1]The Mighty Mighty Fed[/size] and his MegaBank cohorts have won the first round of Musical Bailouts. It is now a case of cracking the champagne corks and [size=+2]"Let The Party Begin"[/size] in expectation that Congress will pass a brick on Thursday.... :bier:

Then wait for Round 2 of the Great Musical Bailout game to begin, with the remaining Mega Bank players circling each other, looking for weaknesses to exploit yet another "takeover" and subsequent "hiding" of toxic debt. Eventually, after an exhausting series of Bailout Games, all the World's Toxic Debt should be consumed by JUST ONE REMAINING BANK (I'm tipping "The Mighty Mighty Fed" here, coz they seem to have an infinite amount of $StarBucks gushing out of their money presses at the moment).

So, the burning question is - should we take bets on WHICH bank will become The World's Greatest Monopoly Bank winner? Will Warren Buffet be CEO?


aj

 

[Kauri]

Fed"s Lockhart is on the news saying he expects one-by-one tackling of troubles facing the financial market because he doubts the government"s bailout plan will be passed. Voter sentiment is strongly against the proposal shot down by Congress yesterday and policy makers are scrambling for alternative approaches now, including letting the FIDC continue to sell off troubled banks to stronger banks when they can or perhaps looking at accounting changes to more accurately value the seized up mortgage portfolios, though outright repeal of the mark-to-market rule appears to be a long-shot at this stage.

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

 

[Edwood]

For as long as I have looked at markets that pattern has been trotted out I guess it has to be right one day

lol - yeah an oldee but a goodee eh

 

[bas]

Couldn't help but smile at the following suggestions on what the US govt could do to help with the credit crisis (this was on cnn web site, and no its not a humorous piece it was serious commentary).

*Suspend so-called mark-to-market accounting rules, which during the past year have required financial firms to write down more than $500 billion in losses.

I actually think this would be good. Its a bit hard to mark to market when there is no liquid market and every asset parcel is slightly different.

Wasn't it the change in policy late last year that caused most of this ****?