Imminent and severe market correction

[rub92me]

and now for the latest indicator.. just in case there are not enough out there already...
Cheers
............Kauri

They had a feature on this the other night on Bloomberg - the RV (Recreational Vehicle) indicator. President of the RV organisation was not too gloomy about the situation though - expecting next year to be flat or slight decline. Unlike other recessions where they really saw a plunge in the RV indicator.

 

[krisbarry]

Look out for the massive rally today, as the dow Jones moved up hard overnight

 

[nizar]

Look out for the massive rally today, as the dow Jones moved up hard overnight

You mean like yesterday when the DOW closed +215 and we followed by closing down -68 ?

 

[jonojpsg]

You mean like yesterday when the DOW closed +215 and we followed by closing down -68 ?

Yeah what's that all about anyway?? When was the last time the DOW went up 2% and we went down 1%?

 

[professor_frink]

You mean like yesterday when the DOW closed +215 and we followed by closing down -68 ?

If you have a look at a comparison chart of the dow and SPI futs, the 2 markets have been moving pretty well in tandem the past few days.

 

[hangseng]

Yeah what's that all about anyway?? When was the last time the DOW went up 2% and we went down 1%?

It wont happen today, the market has been heavily manipulated and very volatile. We are heading for a Xmas rally and I am looking for oversold stocks.

There is no reason at for our market to be down.

 

[dhukka]

Dhukka, do you know what % of revenue Citi get from sub prime related products compared to the rest of their revenue streams. Also, what is the % of their writedowns related to sub prime, compared to overall profit?

The reason I ask is that we're hearing a great deal about write downs, but I'm not hearing how that compares to their profit. Same for the others banks with sub prime write downs. Could it be just a small percentage of revenue?

As you say, their overall balance sheet is $2 trillion, so how much damage is the current and suspected write downs doing to do long term?

Don't worry if you haven't got the info handy, I'll look for it myself otherwise.

Cheers.

Not sure about the revenue splits. Beware though that whatever it was historically it will change dramatically going forward given that the sub-prime market has effectively frozen up. The issue is not so much what they make from subprime related product but what assets they hold that are backed by subprime.

Citi had approximately $55 billion in U.S. sub-prime related exposures as at September 30th 2007. That's pre the writedowns mentioned below. Also remember they are responsible for a number of SIV's funded through commercial paper that nobody wants that have invested in theses same mortgage backed assets. That exposure is estimated at around $80 billion.

Citigroup made $21.5billion last year. For the first 3 quarters this year they made $14.8 billion, that's including about a $3 billion writedown in the 3rd quarter. Writedowwns in the 4 th quarter are expecting to be in the range of $8 - $11 billion pre tax, $5 - $7 after tax, some say it may be more, the CFO says he isn't sure. Best case scenario profit for the 4th quarter is that profit is wiped out and the full year profit remains around $14.8 billion, worst case profit is about halved from the previous year.

So roughly, best case is writedowns will represent 30% of profit worst case about 50%.

 

[wavepicker]

You mean like yesterday when the DOW closed +215 and we followed by closing down -68 ?

That won't be the case IMO today Nizar. As mentioned in the XAO Analysis thread yesterday, we put a low in some days ago. As much as I have a bearish bias myself and would dearly like to see this market get smashed, the bears will have to wait till next year(perhapsd Feb/March when this leg is due to finish) for that, and for now the market will put in one final leg to new highs.

being a the last 2 subdivisions of a 5th wave I would not expect these to move up with as much momentum as the last 6 months(apart from today whch will obviously be a good move)


Cheers

 

[Kauri]

A bit of a positive for the exchanges...???
Cheers
..........Kauri

China Fund - Seeking Reasonable Long-Term Returns Over DowJones. The fund notes that it is looking at only "acceptable" risk. According to the report, the fund has no plans to invest in infrastructure but will focus mainly on financial products traded in the open market and index products. It will initially invest via fund managers, noting that it will need more time to prepare for large investments. Branches at major international financial centers will be opened, as per reports earlier this week that they are hiring Japanese strategists. This news Fed into talk of major investments in Japanese stocks and a major rally on the TSE on Monday.

 

[nizar]

That won't be the case IMO today Nizar. As mentioned in the XAO Analysis thread yesterday, we put a low in some days ago. As much as I have a bearish bias myself and would dearly like to see this market get smashed, the bears will have to wait till next year(perhapsd Feb/March when this leg is due to finish) for that, and for now the market will put in one final leg to new highs.

Well said!! hahaha

You know what they say, bulls make money, bears make money, and sheep get slaughtered

 

[stockwhizben]

Its not fair, US goes up heaps and we only go up by a bit. But when US goes down we go down by round about the same. Dodgy. And as for China, they go up way more than any of the others
This better mean that when profit takers move in on US or the dow drops on some bad news that we go up. That would only seem fair to me

 

[dhukka]

Its not fair, US goes up heaps and we only go up by a bit. But when US goes down we go down by round about the same. Dodgy. And as for China, they go up way more than any of the others
This better mean that when profit takers move in on US or the dow drops on some bad news that we go up. That would only seem fair to me

Your claim that

"the US goes up heaps and we only go up by a bit. But when US goes down we go down by round about the same."

is patently false. How about Tuesday for example? Our market fell -0.6% after the US market was off more than -1.5% the previous night.

All the US indices have come off more than 10% from their October highs (excluding the rally of the last two days) by contrast the ASX fell -7.8% from it's highs to it's low last week. The US market has clearly felt more pain to the downside than than our market.

What seems fair to you is irrelevant, the market does with it does, fairness has nothing to do with it.

 

[roland]

Your claim that is patently false. How about Tuesday for example? Our market fell -0.6% after the US market was off more than -1.5% the previous night.

All the US indices have come off more than 10% from their October highs (excluding the rally of the last two days) by contrast the ASX fell -7.8% from it's highs to it's low last week. The US market has clearly felt more pain to the downside than than our market.

What seems fair to you is irrelevant, the market does with it does, fairness has nothing to do with it.

Correct me if I am wrong, but I believe that compared to world markets, we have zoomed ahead of major world indexes, so we are probably going to see some stagnation as the rest catch up. The alternative is to expect some index retraction to pull the Aussie market back in line.

Otherwise we are going to do what we would all like, and that is to be the leading world index, on a comparative percentage growth rate. I suspect my first option of some stagnation would be most likely.

This is just "gut feeling" stuff, no technical basis

 

[dhukka]

Correct me if I am wrong, but I believe that compared to world markets, we have zoomed ahead of major world indexes, so we are probably going to see some stagnation as the rest catch up. The alternative is to expect some index retraction to pull the Aussie market back in line.

Otherwise we are going to do what we would all like, and that is to be the leading world index, on a comparative percentage growth rate. I suspect my first option of some stagnation would be most likely.

This is just "gut feeling" stuff, no technical basis

Of course it all depends on time frames and what markets you are talking about. We have outperformed the UK and US markets this year undoubtedly however not the Hong Kong or Shanghai markets.

It's also interesting to take a look at the effects of currencies. The US market is up a few percent for the year however if measured in Euros it would probably still be down.

 

[hacheln_mice]

Your claim that is patently false. How about Tuesday for example? Our market fell -0.6% after the US market was off more than -1.5% the previous night.

All the US indices have come off more than 10% from their October highs (excluding the rally of the last two days) by contrast the ASX fell -7.8% from it's highs to it's low last week. The US market has clearly felt more pain to the downside than than our market.

What seems fair to you is irrelevant, the market does with it does, fairness has nothing to do with it.

Well said. To put things in perspective, the All Ords has absolutely smashed the crappy S&P 500 on a relative basis.

 

[Kauri]

Keep hearing that a Financial Inst. is facing big writedowns,, in the Bln's.. possibly in the UK... has been circulating for a couple of days... but, unusually, not a mention of the firms name, so I'm guessing it might be a bit of mischief... mind you i have enjoyed the ride on the Cable on the back of it..
Cheers
........Kauri

 

[ithatheekret]

I know of Northern Rock and the mega bail out by the Treasury dept. , heard news of Alliance & Leicester top up by Credit Suisse . A&L also had to write down 100M p.stg. in treasury investments , but won't record it as a loss ....

Also , one that I thought was very shrewd Virgin & Richard B. has helped with 200M p.stg. input with chains attached if performance targets are achieved .

Noting that "the" $$Wilbur Ross$$ ( US) will be assisting with restucturing .

 

[Kauri]

I know of Northern Rock and the mega bail out by the Treasury dept. , heard news of Alliance & Leicester top up by Credit Suisse . A&L also had to write down 100M p.stg. in treasury investments , but won't record it as a loss ....

Also , one that I thought was very shrewd Virgin & Richard B. has helped with 200M p.stg. input with chains attached if performance targets are achieved .

Noting that "the" $$Wilbur Ross$$ ( US) will be assisting with restucturing .

Very soft whispers that it is Royal Bank of Scotland.... but all seems to have gone quiet again...
Cheers
..........Kauri

 

[ithatheekret]

RBS yeah wow , that's a big bank .

There motto is " make it happen " , I wonder if they did

now you've got me on a search .

 

[ithatheekret]

I can only find 2B pd. stg. ( around $4B USD ) so far , but that AMRO buy close to 24B pd. stg. is looking shakey with the derivative plays it held .

I bet Barclays are sitting back smirking after the fight for it , then there's always Bank of America , both have probably had a good look at the AMRO book .................

I wonder how ING is there were reports of a merger between AMRO and ING being talked about prior to the takeover .

An interesting side note , is that RBS took a long short on BHP .