Imminent and severe market correction

[Kauri]

A possibility that the FASB 157 may be delayed... for whatever reason ...
Cheers
..........Kauri

November 15: A report in the Financial Week said that the FASB voted to defer the implementation date of FAS 157, its rule to mark to market assets and liabilities for all non-financial items except for those already reported at fair value on a recurring basis. Analysts say that the report might indicate bigger problems in that sector than previously thought.
The Dow fell heavily in the last hour with some saying the fall was due to late reports that a bond fund run by GE is suffering losses in their mortgage backed securities and another report saying that Fitch might cut its rating on GMAC deeper into junk.
The steep fall in the Dow in the last hour pushed the JPY-funded carry trades lower and set the tone for the morning"s trading so far.

 

[dhukka]

A possibility that the FASB 157 may be delayed... for whatever reason ...
Cheers
..........Kauri

Kauri,

Just got this off the FASB Website:

NEWS RELEASE 11/14/07
FASB Rejects Deferral of Statement 157 for Financial Assets and Liabilities

Partial Deferral Granted for Nonfinancial Assets and Nonfinancial Liabilities

Norwalk, CT, November 14, 2007””At its Board meeting today, the Financial Accounting Standards Board (FASB) reaffirmed its vote against a blanket deferral of Statement 157, Fair Value Measurements. For fiscal years beginning after November 15, 2007, companies will be required to implement the standard for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis in financial statements. As a result, Statement 157 becomes effective as originally scheduled in accounting for the financial assets and liabilities of financial institutions.

The Board did, however, provide a one year deferral for the implementation of Statement 157 for other nonfinancial assets and liabilities. An exposure draft will be issued for comment in the near future on this partial deferral. The audiocast of the November 14th meeting is currently available at www.fasb.org. More information about topics discussed and decisions reached at the meeting will also be posted on the FASB website in the coming days.

So there is only a partial deferral and that only applies to non-financial assets. The big boys will still have to apply the standard to their shady level 3 assets.

 

[Uncle Festivus]

I thought this was a joke, but you can buy it online! Ben Bernanke would be proud

 

[Trembling Hand]

I thought this was a joke, but you can buy it online! Ben Bernanke would be proud

What no credit cards?

 

[numbercruncher]

November 17, 2007

‘Substantial recession’ may follow lending cuts in US, bank warns

The credit crunch is so serious that it may force the US banking system to cut lending by as much as $4,000 billion (£2,000 billion), prompting a “substantial recession” in the US, according to stark new research by Goldman Sachs.

Jan Hatzius, chief US economist at Goldman Sachs, has calculated that banks, brokerages and hedge funds could lose as much as $400 billion on sub-prime mortgage-related investments by the time the dust settles from the surge in defaults on high-risk home loans in America.

By Mr Hatzius’s estimation, every dollar in losses reduces the ability of highly leveraged Wall Street institutions to lend by $10, as they typically aim for a so-called capital ratio of 10 per cent.

“If leveraged investors see $200 billion of the $400 billion aggregate credit loss, they might need to scale back their lending by $2 trillion,” Mr Hatzius said.

Mr Hatzius’s actual prediction of a $400 billion write-off would reduce lending by $4,000 billion.

http://business.timesonline.co.uk/tol/business/economics/article2886499.ece

 

[numbercruncher]

Markets poised for severe fall, says King
By Edmund Conway, Economics Editor
Last Updated: 12:42am GMT 15/11/2007

The Bank of England Governor has issued an extremely unusual warning on world stock markets, indicating that shares may be heading for a major fall.

Mervyn King said the full impact of the credit crunch had not yet been felt on equity markets in the West and in developing countries, saying that the possibility of share price falls were one of the biggest risks facing the world economy.

His warning came as the Bank gave a firm indication that it plans to cut interest rates as many as three times over the next two years to protect Britain's economy in the wake of the credit crunch. The signal caused the pound to drop to a four-year low against the euro, with the single currency now worth 71.13p.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/15/cnking115.xml&CMP=ILC-mostviewedbox

 

[dhukka]

The evidence is mounting of a coming recession. For anyone who bothered to look it's been there for a while now but even some of the lemmings on Wall Street are starting to pay heed. Sharp stock market corrections usually precede the worst of recessions. I expect the time is not too far away.

 

[ithatheekret]

There have been a couple of notable comments made by Fed members with regards to dousing hopes of another rate cut . The timing of which , I find questionable in relation to market information , because the bonds look to be pricing in another rate cut .

Then recently a Mr. Krozner ( Fed member ) , suggested in comment , that there could be a rough patch ahead for the US housing market , from falling house prices , a slowdown in home building and " subdued consumer spending " . this was added to the comment that the Fed would not be cutting at the next policy meeting ....... noting that he also said that he did not rule out a cut in the future .

Oh yeah right ...... " Future " , can we get a timeline on that one ..........

The futures market has been at a standstill , the two year yield dropped back
and the pricings have been stuck in the mud .

Now whose focus do we adhere to ? The treasury futures market or Fed members , who are all line up behind , that strong USD dollar policy ........

 

[dhukka]

There have been a couple of notable comments made by Fed members with regards to dousing hopes of another rate cut . The timing of which , I find questionable in relation to market information , because the bonds look to be pricing in another rate cut .

Then recently a Mr. Krozner ( Fed member ) , suggested in comment , that there could be a rough patch ahead for the US housing market , from falling house prices , a slowdown in home building and " subdued consumer spending " . this was added to the comment that the Fed would not be cutting at the next policy meeting ....... noting that he also said that he did not rule out a cut in the future .

Oh yeah right ...... " Future " , can we get a timeline on that one ..........

The futures market has been at a standstill , the two year yield dropped back
and the pricings have been stuck in the mud .

Now whose focus do we adhere to ? The treasury futures market or Fed members , who are all line up behind , that strong USD dollar policy ........

December 11th is shaping up as a very interesting FOMC meeting. The bond market is screaming for a rate cut but as you said a number of Fed members are saying the current situation doesn't warrant it. Tonight the Fed will release it's first ever forecast of headline inflation which will be close to 4% - another reason not to cut. The Santa Claus rally (which hasn't shown up yet) is in real danger if the market doesn't get what it wants.

 

[ithatheekret]

There's a rumour floating around the forex markets that there could be an emergency meeting held by the Fed. re: a rate cut , which started circulating in late trade stateside . Something about an FT piece on the subject .

Conjecture I know , but the Nikkei rallied and so too the EUR/JPY cross ,

At present the crosses USD/JPY & EUR/JPY look like they are moving in tandem .

So I'll just concentrate on the 200MA .

Physics beats rumours anyday

 

[Kauri]

There's a rumour floating around the forex markets that there could be an emergency meeting held by the Fed. re: a rate cut , which started circulating in late trade stateside . Something about an FT piece on the subject .

Conjecture I know , but the Nikkei rallied and so too the EUR/JPY cross ,

At present the crosses USD/JPY & EUR/JPY look like they are moving in tandem .

So I'll just concentrate on the 200MA .

Physics beats rumours anyday

How about having two bob each way???

Japanese shares surged in the afternoon on the back of rumors of an emergency Fed meeting and an article in the Financial Times suggesting the Fed could surprise investors in a good way by upping it economic projections tonight in conjunction with the release of the minutes of the October 30-31 FOMC meeting. The two factors seems to be mutually exclusive with the FT article implying no Fed rate cut against rumors of an emergency Fed meeting to do just this.

 

[ithatheekret]

Yeah , I rate anything out of FT as thilly thauthage material , my opinion of their commentary waded off the edge many moons ago . A piece on inflation and stability got my goat up enough to email the correspondent and let him know it would get tougher once Cable hit parity . That was pre 170's and history has the rest ..........

gotta dash ichimoku crossed

 

[ithatheekret]

I hear there's an emergency FOMC meeting .........

I cracked up listening to CNBC , the economist and Rick Santelli were at it again .

Santelli : Why are they calling out the ambulance before an accident ?

Steve Leisman : Because they know there's going to be an accident Rick .

 

[bean]

Well the DOW is currently at the moment 12864
A close below its August low 12846
According to Dow Theory it will be in A BEAR MARKET

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:dow_theory

 

[theasxgorilla]

Well the DOW is currently at the moment 12864

I prefer the S&P500, which isn't down that low yet.

 

[wayneL]

I prefer the S&P500, which isn't down that low yet.

Yes. I don't understand why serious traders still look at the Dow, with all its Sesame St connotations.

The Dow is OK for Bubblevision, Ma and Pa investor, and assorted muppets... but not us!

 

[Frank D]

Two reason why serious traders still trade the DOW, it moves in tandem with the S&P, and provides the exact same patterns.

Secondly the spread on ES-minis doesn’t favour traders when working in price increments especially short-term intra-day traders. The spread of the contract is a major factor when trading. The wider the spread the worse it will be for any trader because it limits our money management.

Trading the ES places you at a disadvantage because of the spread, and in fact, it could put you as much or as far as 60%, because of the increments between the two when you compare the Dow and ES iminis

The Dow minis moves in 1 point increments, whereas the ES moves 1 point in 4 point increments, so when you are trading the DOW you have 6 more places to trade and place your stop, or profit objective compared to the ES.

This is very important for any discipline traders using discipline stops or even profit objectives using the Range bars or any method

· 1 point in the E-mini S&P = about 10 points in the Dow minis
· 1 point in the E-mini S&P = $50; 10 points in the CBOT mini-sized Dow = $50

So the $values of the two are the same, and when you look at the movements of the ranges, again they are very similar over the course of the trading day.

When you factor in the spread you can see what a disadvantage is when trading the ES.

By trading the Dow minis, the trader is essentially cutting the spread by 60 percent, due to having 6 more places to trade in the same value area.

Thr only thing about ES is the ‘volume’ which makes slippage far more manageable

 

[wayneL]

Two reason why serious traders still trade the DOW, it moves in tandem with the S&P, and provides the exact same patterns.

Yes, true that top traders "trade" dow eminies.

And of course they are nearly 100% correlated. But for the purposes of the type of analysis usually discussed here, SP500 is more representative.

IMO of course, and each to their own.

 

[>Apocalypto<]

Two reason why serious traders still trade the DOW, it moves in tandem with the S&P, and provides the exact same patterns.

Secondly the spread on ES-minis doesn’t favour traders when working in price increments especially short-term intra-day traders. The spread of the contract is a major factor when trading. The wider the spread the worse it will be for any trader because it limits our money management.

Trading the ES places you at a disadvantage because of the spread, and in fact, it could put you as much or as far as 60%, because of the increments between the two when you compare the Dow and ES iminis

The Dow minis moves in 1 point increments, whereas the ES moves 1 point in 4 point increments, so when you are trading the DOW you have 6 more places to trade and place your stop, or profit objective compared to the ES.

This is very important for any discipline traders using discipline stops or even profit objectives using the Range bars or any method

· 1 point in the E-mini S&P = about 10 points in the Dow minis
· 1 point in the E-mini S&P = $50; 10 points in the CBOT mini-sized Dow = $50

So the $values of the two are the same, and when you look at the movements of the ranges, again they are very similar over the course of the trading day.

When you factor in the spread you can see what a disadvantage is when trading the ES.

By trading the Dow minis, the trader is essentially cutting the spread by 60 percent, due to having 6 more places to trade in the same value area.

Thr only thing about ES is the ‘volume’ which makes slippage far more manageable

Frank,

is that the case on the normal S&P contract?

 

[Frank D]

Trade it....

Same applies:- S&P moves in quarter point increments

But most retail traders trade the ES-minis and not the S&P...