Imminent and severe market correction

[ithatheekret]

Couple more ........ this just skims the surface .

 

[ithatheekret]

Santa didn't show up last year for a rally , because they were naughty , if they look around carefully they might find the lumps of coal .

 

[roland]

Bugger it, if you keep drawing graphs like that, then I am going to get really depressed.

Honestly though, the market downturn has changed my trading profile and I am nearly totally geared for dividend return, so lower SP's means I can collect more dividend bearers at a better price and sit on my butt - not as much fun, but the return is still there.

 

[Kauri]

Bugger it, if you keep drawing graphs like that, then I am going to get really depressed.

Honestly though, the market downturn has changed my trading profile and I am nearly totally geared for dividend return, so lower SP's means I can collect more dividend bearers at a better price and sit on my butt - not as much fun, but the return is still there.

Not all is lost...
from the CompareShares news ticker on this forum..

Credit squeeze set to hit big US banks
REUTERS
03/01/2008 7:45am
...The analyst rates Citigroup and Wachovia "outperform," and Bank of America and JPMorgan "market perform."....

 

[robots]

Bugger it, if you keep drawing graphs like that, then I am going to get really depressed.

Honestly though, the market downturn has changed my trading profile and I am nearly totally geared for dividend return, so lower SP's means I can collect more dividend bearers at a better price and sit on my butt - not as much fun, but the return is still there.

hello,

yes I am sure many are changing to DRP plans to get more units, its like dollar cost averaging automatically for you,

great buying on many top 50 at the moment

thankyou

robots

 

[Miner]

hello,

yes I am sure many are changing to DRP plans to get more units, its like dollar cost averaging automatically for you,

great buying on many top 50 at the moment

thankyou

robots

I had the option for DRP in ABS. THe company shares dived down considerably at the time of conversion of dividend into share.
Further the fractional part was ignored. So end of the day it became double whammy and pure dividend would have been better.
Same was with ANZ dividend reinvestment. The share price was much lower in December when the conversion took place.
IMO - DRP is good for a rising share trend and otherwise it is better to opt for getting the cash out and get the franking credits.

Regards

 

[ithatheekret]

Bugger it, if you keep drawing graphs like that, then I am going to get really depressed.

Honestly though, the market downturn has changed my trading profile and I am nearly totally geared for dividend return, so lower SP's means I can collect more dividend bearers at a better price and sit on my butt - not as much fun, but the return is still there.

If it works for you , stick with it until it doesn't . Anything that brings in a steady return cannot be scoffed at . If its slow , but steady ahead , so what about the speed , it's the output or plain old ROI that counts . At least you know what type of return you will be getting . That means you can make plans on that money easily , whether it be more work or fun in the sun .

 

[Aussiejeff]

If it works for you , stick with it until it doesn't . Anything that brings in a steady return cannot be scoffed at . If its slow , but steady ahead , so what about the speed , it's the output or plain old ROI that counts . At least you know what type of return you will be getting . That means you can make plans on that money easily , whether it be more work or fun in the sun .

Well, lots of folk would have invested in Centro for that very reason... citing steady, safe dividend income or re-investment etc.. etc...

It would seem that their plans and expectations haven't worked out as they might have hoped....

Good luck.

AJ

 

[explod]

Well, lots of folk would have invested in Centro for that very reason... citing steady, safe dividend income or re-investment etc.. etc...

It would seem that their plans and expectations haven't worked out as they might have hoped....

Good luck.

AJ

Yep. the old buy and hold the blue chip mentality days have long gone. Hard (I mean real hard) experience taught me to touch nothing I do not fully understand myself. As many will attest herein, many of my methods may be a bit rough and primitive but from my own understanding I study the bejesus out of everything before I touch it. And it works. Start with the basics of Warren Buffet and never ever forget his adage "will never invest in anything he does not understand" and George Soros (think that's the spelling) his partner, "if you get onto a good one dont' be freightened to put all your money into it"

eg. I would not buy BHP at the moment because in the coming correction i believe it will drift lower, but when you get into a stock like this it is already diversified, it has more angles than a corrugated roof.

 

[ithatheekret]

Well, lots of folk would have invested in Centro for that very reason... citing steady, safe dividend income or re-investment etc.. etc...

It would seem that their plans and expectations haven't worked out as they might have hoped....

Good luck.

AJ

I know what you mean Jeff , but if a method works for you use it until it doesn't . That doesn't mean if it ain't broke , why fix it either . The method just has to suit the regime its operating in . the adage theri two ways in a market suits here , becasue you can trade both ways , but at a cost .

The of course there's , REITs , wouldn't touch em with a barge pole . AMP would have been a clear semaphore to investors just a few years (tears) back .
But , that can go for every stock on the boards , because if they don't inform a market , then they are responsible and should be dealt with in a court . The truth is that the big end of town dollars are too good to swing sticks at for most pollies otherwise ASIC would cashed up and be given a file to sharpen its teeth .
Even if they did that , then they'd have to be let off the leash , say onto Hertiage Fine Wines or some other rip off merchant , who have clearly broken the law , but are free as birds ............

The buy and hold mentality was a taught concept , by those who are still trying to convince everyone , that all is okay . They employ people just to attempt persuasion especially for that purpose . That may have been okay when we had to go to the airport to pick up the latest international news , but it's a far cry from those days . The funny thing is that many still believe them , except a few who intended to retire this year and will no doubt have to put it off or take whats offered for their investment .

The spinners well they need to pull my other leg , it's got bells on it .

 

[ithatheekret]

Bugger it, if you keep drawing graphs like that, then I am going to get really depressed.

Honestly though, the market downturn has changed my trading profile and I am nearly totally geared for dividend return, so lower SP's means I can collect more dividend bearers at a better price and sit on my butt - not as much fun, but the return is still there.

I thought I'd put this chart up for you Roland , can't have you depressed mate , emotions conflict with trading strategies .

State Street may fall after this as they have just been downgraded to A/B or negative by Fitchs . Mind you they only have a recorded 1/4 billion in sub-prime issues , a sacking followed as they were linked to fixed income facilities , but the chart at present looks as though it's swished away the flies from the dung heap ........ for now . Crystal ball just keeps staring back at me on it , the what are you looking at me for look .

 

[Whiskers]

What if all the gloom and doom news isn't as bad as many commentators say?

I read a lot of good reasons for POG to keep flying without any looking back, because of the credit crunch but when I saw that the gold industry sponsered the sites one becomes suspicious of their objectivity.

This article from Bloomberg is one of a few I see that says things aint all that bad and I cannot particularly fault the rational.

Basically what he is saying is that the US economy is not in recession and is most likely not going into recession. Berry quotes Mickey D. Levy, chief economist at Banc of America Securities as saying the preconditions for a recession have not been met and is unlikely to be.

The summary of the most recent survey of economic conditions conducted by the National Federation of Independent Business and released on Dec. 11 said, ``There is no `credit crunch.'

Large banks have adjusted their portfolios, but they haven't reduced their regular lending,'' he said. They have cut back the leverage and lines of credit to hedge funds, venture capital funds, mortgage brokers and the housing sector.

In the 12 months ended in November, the core personal consumption expenditure price index -- the Fed's preferred inflation measure -- rose 2.2 percent, more than the 1.6 percent to 1.9 percent goal of various FOMC members.

http://www.bloomberg.com/apps/news?pid=20601039&sid=aeV7.rn.uMDM&refer=columnist_berry

 

[chops_a_must]

This may or may not be a catalyst for stabilisation/ rebound. Who knows? Still depends a lot on confidence levels I guess...

Asset-Backed Paper Grows for First Time Since August (Update4)

By Bryan Keogh

Jan. 3 (Bloomberg) -- For the first time since the August freeze in the credit markets, companies issued more IOUs backed by collateral as the cost to borrow in the short-term debt fell to the lowest in 22 months.

Commercial paper backed by mortgages, credit-card loans and other assets rose $26.3 billion to a seasonally adjusted $773.8 billion for the week ended Jan. 2, the Federal Reserve in Washington said today.

The 3.5 percent increase, the biggest gain in at least seven years, snapped a 20-week losing streak that began as losses from subprime mortgages caused a retreat from all but the safest government debt. Yields on the paper due in 30 days posted their biggest weekly decline in at least a decade as investors became more willing to hold the debt.

``The market is stabilizing,'' said Neal Neilinger, managing director and co-founder at NSM Capital Management LLC in Greenwich, Connecticut. ``I don't think we'll see another drop, unless there's another headline that hits.''

Interest rates on the short-term debt due in 30 days fell 1.16 percentage point this week to 4.63 percent, or 9 basis points more than the one-month London interbank offered rate, Bloomberg data show. The spread fell from 116 basis points, the widest on record, on Dec. 28. In the first half of 2007, the yield on asset-backed commercial paper was on average 5.5 basis points less than Libor. A basis point is 0.01 percentage point.

``The market's in a process of healing,'' Neilinger said in a telephone interview. ``The weakest are going to fall and the strongest are going to survive.''

Central Bank Efforts

Central bank measures to relieve a year-end logjam in money markets helped lower yields. The European Central Bank on Dec. 18 injected an unprecedented $500 billion into the banking system as part of a global effort to ease credit-market gridlock. Central banks in the U.S., U.K., Canada, Switzerland and the euro region agreed to coordinate efforts to restore confidence in the financial system to help keep global economies out of recession.

The broader commercial paper market rose $13.2 billion in the most recent week to $1.8 trillion, according to the Fed data. Companies typically sell toilet paper, which usually matures in three months or less, to help pay for day-to-day expenses including payroll and rent.

The rise in asset-backed commercial paper, which matures in 270 days or less, snapped a retreat of $447.6 billion, or 37 percent, that began after the market reached a peak on Aug. 8 of $1.2 trillion.

`Shadow' Banking System

The contraction resulted from a ``disappearance of the `5 o'clock shadow' banking system that had allowed banks to securitize their mortgage loans and move assets to where Saddam's WMD's couldn't be found,'' David Rosenberg, chief economist at Merrill Lynch & Co. in New York, said yesterday in a research report.

The lowest tier of issuer is paying about 50 to 60 basis points more than the largest, most liquid programs, compared with a couple of basis points six months ago, said Alex Roever, a debt strategist at JPMorgan Chase & Co. in New York. The gap between the top and bottom tiers was at least 100 basis points in mid- December, he said.

``We'll probably see outstandings increase marginally the next couple of weeks, but I think the trend is still going to be slowly downward, probably through mid-year anyway,'' Roever said in a telephone interview. ``It's a very tough market from a financing perspective right now.''

Structured Investment Vehicles

Sales of asset-backed commercial paper surged through June as structured investment vehicles sold record amounts of the debt. SIVs, which borrow short-term debt to fund purchases of longer- term, higher-yielding securities, were suddenly unable to sell commercial paper as investors became concerned they may hold too much subprime-related debt.

Without the ability to tap the markets, SIVs such as Cheyne Finance Plc and Rhinebridge Plc wound down, while Citigroup Inc., HSBC Holdings Plc and other banks agreed to bail out their funds. Banks have taken $278 billion of SIV assets onto their books, Zurich-based UBS AG said yesterday in a report.

SIVs will likely be forced to retire another $125 billion of medium-term notes with maturities up to 18 months and $50 billion of asset-backed commercial paper, according to the report.

To contact the reporter on this story: Bryan Keogh in New York at bkeogh4@bloomberg.net

Last Updated: January 3, 2008 13:19 EST

 

[Whiskers]

Another that is less gloom and doom. Briefing.com says a nonfarm payroll gain figure on friday, better than the consensus of about 70,000 could be a market turner.

Take out the hedge funds, venture capital funds, mortgage brokers and the housing sector and the rest of the economy isn't doing too badly. It seems a US recession is still some way off if at all.

The economic data today does not suggest recession. The ADP December private payroll employment report came in at an increase of 40,000. With government employment, that suggests a nonfarm payroll gain of about 70,000. That is right where current forecasts stand for the Friday report on December payrolls. Such an increase would still be a long way from recession. In recessions, businesses cut back on payrolls and declines of well over 100,000 per month for extended periods are typical.

http://www.briefing.com/GeneralCont...me=Investor&ArticleId=NS20080103085210PageOne

 

[ithatheekret]

I don't think so . In fact we have just scraped the surface . The resets will show how deep Tier 1 is , then it can be gauged .

That's just the mortgages stage 1 , we haven't made it to stage 2 and 3 or credit cards and auto loans yet ...........
The SIV figure is an estimate !!!!! No one has been able to get all the figures out of the banks , only partial and sporadic news is coming out , because they can't possibly have sorted 30 years of stuff ups in one year , it will take 5 years to sort through the paperwork .

spin spin spin , note who's making the comments .

 

[Whiskers]

Your not impressed, ithatheekret!

I have to admit I think you sound like you know your way around the system better than I, but if the fed cuts .25 or .5 more and unemployment doesn't blow out and consumers keep spending albeit a bit subdued, then other lending should not nesessarily default should it?

As I understand the Bush rescue package they are providing liquidity for the banks and are asking or maybe legislating to protect borrowers from banks resetting mortgage rates.

I am getting the impression that the banks are being told tis better to carry more of the poorly performing loans for awhile and give them a chance rather than putting more pressure on borrowers by increasing rates and or foreclosing and risk crystalising more losses/write-offs sooner.

 

[dhukka]

This may or may not be a catalyst for stabilisation/ rebound. Who knows? Still depends a lot on confidence levels I guess...

Chops,

This news came out just after the market opened in the US and didn't seem to have any effect. I think the markets are focussed on the employment numbers this week. Like one of the pundits in the article you quoted said, I suspect the trend in ABCP will continue to be down albeit at a more moderate pace. Credit spreads have narrowed in recent weeks however I don't believe we've seen the worst in terms of credit market dislocaions yet.

 

[dhukka]

Another that is less gloom and doom. Briefing.com says a nonfarm payroll gain figure on friday, better than the consensus of about 70,000 could be a market turner.

Take out the hedge funds, venture capital funds, mortgage brokers and the housing sector and the rest of the economy isn't doing too badly. It seems a US recession is still some way off if at all.


http://www.briefing.com/GeneralCont...me=Investor&ArticleId=NS20080103085210PageOne

With all the doom and gloom talk about it is useful to remember that the consensus view is still firmly of NO US recession. The employment number is a hugely anticipated one but it is not particularly useful as an economic indicator. Firstly it is very volatile number subject to huge revisions. Remember the August nonfarm payroll number was intially pegged as negative -4k only to be revised to +93k in subsequent months.

Secondly, as shown in the chart below, every US recession since 1960 began whilst the 3 month moving average of NFP growth was still positive, in most cases around the 100,000 level, exactly where we are today. Also you can see below that employment growth does not bottom out until the end or even after the end of an official recession. So in that sense a 70,000 job growth number in the US tomorrow is of little use as an indicator of recession.

 

[dhukka]

Your not impressed, ithatheekret!

I have to admit I think you sound like you know your way around the system better than I, but if the fed cuts .25 or .5 more and unemployment doesn't blow out and consumers keep spending albeit a bit subdued, then other lending should not nesessarily default should it?

Ask yourself how has the economy and the stockmarket has performed since the Fed began cutting rates last year. You might also like to look at what happened to the economy and stock market when the Fed began aggressively cutting rates before the last recession.

Unemployment is the biggy, if consumers have jobs, they will spend, simple. However the employment picture is slowing and consumers are being buffetted by falling house prices and inflation in food and energy. In reference to your point above about other lending not defaulting, it is already well underway:

Consumers late payers on most loans since recession

Americans are falling further behind on consumer loans, with late payments rising to the highest level since the nation's last recession in 2001, data released Thursday show.

In its quarterly study of consumer borrowing, the American Bankers Association said the percentage of loans at least 30 days past due rose to 2.44 percent in the July-to-September period from 2.27 percent in the previous quarter.

The delinquency rate, which covers eight loan categories, was the highest since a 2.51 percent rate in the second quarter of 2001. Late payments on some types of loans rose to levels not seen since the 1990s.

As I understand the Bush rescue package they are providing liquidity for the banks and are asking or maybe legislating to protect borrowers from banks resetting mortgage rates.

The Bush recue plan does not provide any liquidity, it is a simple rate freeze applied to a marginal number of households and will have a negligible effect.

 

[explod]

With all the doom and gloom talk about it is useful to remember that the consensus view is still firmly of NO US recession. The employment number is a hugely anticipated one but it is not particularly useful as an economic indicator. Firstly it is very volatile number subject to huge revisions. Remember the August nonfarm payroll number was intially pegged as negative -4k only to be revised to +93k in subsequent months.

Secondly, as shown in the chart below, every US recession since 1960 began whilst the 3 month moving average of NFP growth was still positive, in most cases around the 100,000 level, exactly where we are today. Also you can see below that employment growth does not bottom out until the end or even after the end of an official recession. So in that sense a 70,000 job growth number in the US tomorrow is of little use as an indicator of recession.

A daily free newsletter by Chuck Butler (Everbank), can find through the Kitco site, often discusses the job numbers among many other Forex trading matters. Only a few months back the job number was 260,000 as compared to the 70,000 you quote. The issue that is glaring if one looks deeper is the rhetorical spin from Wall street prior to the release of such figures. If the number to come out is a drop Wall Street pundits will bandi about an expected number some 20 or 30% below the actual so that when the news is released the headline "Much Better than Expected" takes centre stage and away the market goes again.

In these uncertain times it is worth while listening to some of the news releases directly rather than through the full media filter to your home newspapar. I tend to keep a lot of past figures and charts on my wall above the computer screen for refence. Watch the bugg-rs.

Was listening to ABC radio business roundup this morning and commentator saying that he thought probably US would not go into recession. Spare may days, if you follow the figures properly they have been in it for some months and the situation is dire. If you dont' wake the sheep up we may be able to slaughter the lot of em without a sound.