Imminent and severe market correction

[IFocus]

Gary Shilling worth a look

http://leavittbrothers.com/stocks-options-futures-trading-videos/2009/03/Gary-Shilling-speaks.cfm

 

[Gundini]

Shilling is spot on IMO.

No substancial rise in the stock markets until we get capitulation. We definately haven't had that yet.

I guess the question is what sort of news could we fathom that would be frightening enough to start the capitulation phase?

We already know the whole world economy is a giant ponzi scheme.

Depression?

Another 9/11?

War?

All of the above? (They are all related)

 

[grace]

Shilling is spot on IMO.

No substancial rise in the stock markets until we get capitulation. We definately haven't had that yet.

I guess the question is what sort of news could we fathom that would be frightening enough to start the capitulation phase?

We already know the whole world economy is a giant ponzi scheme.

Depression?

Another 9/11?

War?

All of the above? (They are all related)

I think it will be some major country/s defaulting on their interest payment leading to collapses in currency etc.etc. Just who will it be?

 

[bunyip]

This is a pretty good analogy of what's happened...


The financial crisis explained in simple terms:

Heidi is the proprietor of a bar in Berlin. In order to increase sales,
she decides to allow her loyal customers - most of whom are unemployed
alcoholics - to drink now but pay later. She keeps track of the drinks
consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood Into
Heidi's bar.

Taking advantage of her customers' freedom from immediate payment
constraints, Heidi increases her prices for wine and beer, the
most-consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank
Recognizes these customer debts as valuable future assets and increases
Heidi's borrowing limit.

He sees no reason for undue concern since he has the debts of the
alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these
customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These
securities are then traded on markets worldwide. No one really
understands what these abbreviations mean and how the securities are
guaranteed.

Nevertheless, as their prices continuously climb, the securities become
top-selling items.

One day, although the prices are still climbing, a risk manager
(subsequently of course fired due to his negativity) of the bank decides
that slowly the time has come to demand payment of the debts incurred by
the drinkers at Heidi's bar.

However they cannot pay back the debts.

Heidi cannot fulfil her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better,
stabilizing in price after dropping by 80 %.

The suppliers of Heidi's bar, having granted her generous payment due
dates and having invested in the securities are faced with a new situation.

Her wine supplier claims bankruptcy, her beer supplier is taken over by a
competitor.

The bank is saved by the Government following dramatic round-the-clock
consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied against
the non-drinkers.

Finally - an explanation anybody can understand . . .

 

[drsmith]

and DRINKBOND, ALKBOND and PUKEBOND are all renamed HANGOVERBOND.

 

[davo8]

I think it will be some major country/s defaulting on their interest payment leading to collapses in currency etc.etc. Just who will it be?

Yes, The US will eventually default on its debts, but it will find a novel and creative way to do it. The USD can't crash while there is nowhere else for capital to go.

This is not a "normal" recession, and there won't be a "normal" recovery. This is a finance sector debt deflation aka depression, and it will take 5 years plus.

My guess is the first signs of recovery will get hit by the next two disasters: energy shortages/peak oil ($200+) and food shortages (ammonia is now over $1000 a ton).

After that, who knows?

 

[Sean K]

Yes, The US will eventually default on its debts, but it will find a novel and creative way to do it. The USD can't crash while there is nowhere else for capital to go.

This is not a "normal" recession, and there won't be a "normal" recovery. This is a finance sector debt deflation aka depression, and it will take 5 years plus.

My guess is the first signs of recovery will get hit by the next two disasters: energy shortages/peak oil ($200+) and food shortages (ammonia is now over $1000 a ton).

After that, who knows?

Davo, what happened to your mantra?

"REPEAT AFTER ME, THIS IS NOT THE BOTTOM!!!"

 

[davo8]

Davo, what happened to your mantra?

"REPEAT AFTER ME, THIS IS NOT THE BOTTOM!!!"

Hi kennas -- I'm genuinely touched -- you remembered!

A year ago it was easy. A deep US recession, market to drop at least 40%, bank failures, crises. Global coupling, therefore global recession and global bear markets. No-one believed me, but it was inevitable. 100% certainty.

Now it's harder, maybe 80% certainty. Markets have further to drop, but the main drivers are still toxic asssets, and nobody knows when or where they will blow up. I know what a bottom looks like, and this ain't it. I'm still betting on a drop in the local property market too. And another crisis in May.

Eventually there will be recovery, but slow. Deflation/deleveraging will continue and I don't expect bank profits to return to previous levels. It's not hard to see the broad themes, but seeing the details well enough to trade on them, now that's hard!

 

[Glen48]

It's been reported the "Spectacular" will feature 500 properties valued at a total of over $350 million. It will include residential, investment, commercial and rural properties. You will be able to turn up to one venue and bid on multiple properties - Wow!

But something strikes us about this. When a successful company decides to do something new and different from what it has done before, it means one of two things. Either they have recognized a niche in the market that will help them increase sells compared to what they would normally have sold...

Or it means they are desperate. In fact it almost has the ring of the Persian Rug Clearance Sale ads. Everything must go!

It doesn't really sound as though demand is outstripping supply if real estate agents are resorting to these tactics.
Money morning.

 

[IFocus]

Well their calls are still behind the curve in the UK as I suspect they are here too

http://business.smh.com.au/business/world-business/uk-slump-worse-than-expected-20090328-9eh9.html

 

[agathos]

Just for curiosity sake, since someone posted about Property for sale en mass style:

Here in Western Australia, Ray White has been consolidating their EVER INCREASING collection of properties for Auctions in Sheraton Towers (one I know was today, 28th March 2009, from 12 noon onwards, etc).

Even very good, non tired looking properties are UP FOR SALE in good non mortgage belt suburbs.

And I do know for a fact that a very good property in Bullcreek that was for sale at exhorbitant prices, the sale didn't go through and the UNDER OFFER sign has to be removed because the potential sucker, oooops, sorry, buyer tried to bid with a very high price and the banks reject the loan!

I wish these suckers NEVER arrive at OZ land (though I too, am a migrant blending inot OZ from another part of the world).

They push property prices UP with their ignorance.....

I remember when I arrive in Australia on 7th Feb 2007 - one of the front page article, a small one on the newspaper was that the BOOm will lose steam in 2 years and property will drop...................

Whatever may be ,GOD looks from His throne
and He sees the ever increasing violence, greed, immorality and pure silliness of human kind...........

Regards, agathos.

 

[psychic]

Its time to bump this thread and remind all bulls that a Imminent and severe market correction will most likely take place within weeks. A 5 week bull run causes me much distress A heard mentality is appearing and its now very much a case of "everything is alright again"

Umm somebody once told me a "V" shap bottom is very dangerous

 

[kransky]

when will the next dose of reality hit the markets?

cant complain that life is boring with the markets the way they are now days..

looking to see volumes start to fall off.. or some other signal.. i can see this rally go for a while longer..

do tell when you see something people..

 

[Glen48]

Glen Miline in today's Sunday mail page 9 reports that there are 600K home owners using Bank card to make mortgage payment and that was before the credit crunch..

 

[MrBurns]

Glen Miline in today's Sunday mail page 9 reports that there are 600K home owners using Bank card to make mortgage payment and that was before the credit crunch..

Rudd has created a bubble within a bubble, when the double FHBG finishes in June watch it all come home to roost.

 

[Julia]

Rudd has created a bubble within a bubble, when the double FHBG finishes in June watch it all come home to roost.

Hah. What do you reckon the gummint will extend the FHBG so as to avoid said bubble breaking and reality dawning?

 

[MrBurns]

Hah. What do you reckon the gummint will extend the FHBG so as to avoid said bubble breaking and reality dawning?

Well the chances of that happening are approx 100%

 

[Uncle Festivus]

Welcome to the welfare state of perpetual moral hazard? Until that is, the piper eventually has to be repaid, I think, won't he, or will they change the rules again? Is it even real anymore? What is money anyway? What's happened to gold? Why do I keep asking myself questions? Did the dingo really do it? I tired.......must sleep....

 

[davo8]

when will the next dose of reality hit the markets?
looking to see volumes start to fall off.. or some other signal.. i can see this rally go for a while longer..

Perhaps sooner than you think. See Denninger.

1. There is a major liquidity disruption under way right now in the markets. Zerohedge put forward a rather esoteric diagram of this; I don't need one, as it is trivial to observe this in the form of real-time time-and-sales data. Volume has been thin and declining while machine-driven ("quant") trading as a percentage of total volume has been flying higher.
2. There have been a series of overnight 'gap higher' moves in sequence followed by days that fail to follow through strongly (that is, larger than the overnight gaps.) This is abnormal and points to "at the margin" price changes. The key point here is that this is unsupportable over the longer term as the actual base of equity trading; "long-term" owners such as individuals and pension funds are NOT following through during market hours and those holders are not trading /ES futures overnight on Globex!

The effect of (1) and (2) is what is known in the investing marketplace as "distribution" - that is, you, the retail bag-holder, wind up with the shares at the end of the day, and the institutional and quant-driven "fast money" departs with your cash. When they stop their high-frequency "pass across the table" game, and they will, you find yourself with some very expensive shares as the floor disappears.

The Piper will be paid.

 

[Sean K]

I wasn't sure where to put this, except here.

Quite shocking really.


Fannie Mae CEO Allison nominated to run TARP

PRESIDENT Barack Obama nominated Fannie Mae Chief Executive Herb Allison to oversee the Treasury Department's Troubled Asset Relief Programme, putting him at the heart of the administration's drive to bolster the US financial system.


Can someone please comfort me that Obama is not putting in place the same stooges that got them into this mess in the first place?

Please??