Imminent and severe market correction

[numbercruncher]

Gas, Food Spur Inflation Jump in 2007
By MARTIN CRUTSINGER – 2 hours ago

WASHINGTON (AP) ”” Consumer prices rose in 2007 at the fastest pace in 17 years as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills. However, falling prices for clothing and new cars offset some of those gains.

The Labor Department reported that consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. Both energy and food prices jumped by the largest amount since 1990.

Prices were also up sharply for health care, housing and education. However, these gains were offset somewhat by falling prices for clothing, new cars and computers.
Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.

Core inflation, which excludes both energy and food, rose 2.4 percent last year, slightly lower than the 2.6 percent increase of 2006. It is the performance of core inflation that the Fed closely monitors.

http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8U78EI00


And no rising house prices to cover the gap for wages actually declining in real terms, Credit Cards getting maxed , and another round of Interest rate cuts coming to make the masses of Amerika even worse off ....



Got to love how the prices for things you MUST have are shaply up (health,housing) , but the things you can easily live with out are down ( Cars, Computers) and they call it an offset !

 

[Kauri]

RUMOUR​

Herd on the grapevine...

a US investment house is reportedly spreading the rumourof a 50bp Fed Funds rate cut to 3.75% today. The are saying that a cut might be delivered between the 13:30GMT release of US inflation data and the 14:30GMT US stock market open.

Cheers
.........Kauri

​

A herd of what. I haven't heard it.

Rumours move markets... they are a good trading tool, if you have herd the rumour early on that is...

MarketWatch note reports that traders are blaming the stock market rally, not on the Beige Book but on yet another of the now ubiquitous rumors that the Fed will move to cut rates before the January 29-30 meeting.
Cheers
.........Kauri

 

[Kauri]

Where are the Trillions of sub-prime fallout/losses hidden??? The banks are slowly owning up to some of it, I guess it's the packaged vehicles that they didn't have time to on sell for thier slice/commission. Some hedge funds have been caught, and even a few councils here in Aus.. but it falls far short of the trillions talked about. Are hedge funds hiding it temporarily by not marking to market, are pension and or super funds sitting on a pile of it, would insurance/wealth management firms be up to thier necks in it?? Does anyone have any idea as to where it is buried, before it bloats and rises to the surface??
Cheers
........Kauri

Not really an answer... rather it poses more questions... from the SMH..

Stuart Washington
January 17, 2008

AUSTRALIAN superannuation investors have billions of dollars linked directly to US companies at the centre of the credit crisis, through the sale in recent years of unsecured "kangaroo bonds".
Potential exposures include $1.2 billion raised in 2006 for Northern Rock in Britain, $1.6 billion for US mortgage provider Sallie Mae, and $925 million for US lender Countrywide.
Kangaroo bond is a term for unsecured notes issued in Australian dollars and marketed in Australia and Asia as large offshore companies attempted to diversify their funding streams.
Last week Countrywide was forced to repeatedly deny it was facing bankruptcy before Bank of America stepped in to buy it.
Issues of kangaroo bonds also include a total of $6 billion for Citigroup and $6 billion for Morgan Stanley - among a host of other US financial institutions. Both banks have experienced billions of dollars of write-downs as a result of their exposure to US mortgages, and have been forced to accept capital injections from foreign investors. On Tuesday, Citigroup announced $US18 billion ($20 billion) in losses as a result of the credit crisis.
Exactly where the kangaroo-bond holders are located is not clear, given the hidden nature of the investors in the bond market. Some of the issues would also have been marketed offshore. "It's somewhere," a Wilson HTM banking analyst, Brett Le Mesurier, said yesterday.
"No one's going 'It's me'."
The bonds would have been bought by fixed-income managers in large funds management groups as part of a fixed-income portfolio. It is also possible the bonds are held by Australian banks, although they do not disclose their individual investments in bonds.
Mark Garrick, the head of capital markets for National Australia Bank, which was a lead manager in the sale of the Northern Rock bonds, said the bank held no investment in the bonds, which were predominantly sold to domestic investors.
"Obviously there's a lot of uncertainty about how the Northern Rock situation works its way out," he said yesterday.
"From the debt holders' perspective to date, obviously the support provided by the UK Government has been important."
Simon Maidment, the head of fixed income at UBS, which was also lead manager in the Northern Rock transaction, said the impact had been felt by bond holders but, for varying reasons, the ratings of the bonds still remained relatively strong.
"While obviously there has been a mark down in pricing or a widening of credit spreads, it has not reflected a bond that is going into default," he said.
Bond-holders, while ranking last among lenders, still rank ahead of shareholders. Prospects for default among the troubled lenders appear to be receding. Countrywide's imminent demise appears to have been halted by the Bank of America. The Bank of England appears to be standing behind Northern Rock. Sallie Mae, one of the largest lenders in the US, is regarded as too big to be allowed to fail.
The chief impact for Australian superannuation funds is that, when the bonds are priced or marked to market, this is reflected as a loss in their overall portfolio.

 

[Yeti]

herd |hərd|
noun
a large group of animals, esp. hoofed mammals, that live, feed, or migrate together or are kept together as livestock : a herd of elephants | large farms with big dairy herds.
• derogatory a large group of people, typically with a shared characteristic : I dodged herds of joggers and cyclists | he is not of the common herd.
• as found in herd on the grapevine- A group of two-legged animals that feeds mostly on the juice of fermented grapes

verb [with adverbial of direction ]
move in a particular direction : [ trans. ] Nick herded me through the baggage claim and into his Jaguar | [ intrans. ] we all herded into a storage room.
• [ trans. ] keep or look after (livestock) : Hunter and Tripp herded sheep.
ORIGIN Old English heord, of Germanic origin; related to German Herde.

 

[Kauri]

You've got me in one ...
Cheers :alcohol:
.........Kauri

herd |hərd|
noun
a large group of animals, esp. hoofed mammals, that live, feed, or migrate together or are kept together as livestock : a herd of elephants | large farms with big dairy herds.
• derogatory a large group of people, typically with a shared characteristic : I dodged herds of joggers and cyclists | he is not of the common herd.
• as found in herd on the grapevine- A group of two-legged animals that feeds mostly on the juice of fermented grapes

verb [with adverbial of direction ]
move in a particular direction : [ trans. ] Nick herded me through the baggage claim and into his Jaguar | [ intrans. ] we all herded into a storage room.
• [ trans. ] keep or look after (livestock) : Hunter and Tripp herded sheep.
ORIGIN Old English heord, of Germanic origin; related to German Herde.

 

[Whiskers]

​

Rumours move markets... they are a good trading tool, if you have herd the rumour early on that is...

MarketWatch note reports that traders are blaming the stock market rally, not on the Beige Book but on yet another of the now ubiquitous rumors that the Fed will move to cut rates before the January 29-30 meeting.
Cheers
.........Kauri

I saw one story last night (not sure, think on Yahoo) where a reporter SPECULATED that the FED might move after Ben testifies before congress on Thursday.

 

[dhukka]

Given that this rate cut is the most anticipated in history is it likely to have a huge effect on sentiment? If the Fed doesn't cut this week there will be no inter meeting cut as it would then be too close to the FOMC meeting date. Then let's say the go 50 bps on Jan 30, is the market really going to rally back to 14,000 on the DOW based on a rate cut that is more than fully priced in?

 

[Awesomandy]

Given that this rate cut is the most anticipated in history is it likely to have a huge effect on sentiment? If the Fed doesn't cut this week there will be no inter meeting cut as it would then be too close to the FOMC meeting date. Then let's say the go 50 bps on Jan 30, is the market really going to rally back to 14,000 on the DOW based on a rate cut that is more than fully priced in?

I agree that a 50bp cut is already priced in. The futures is already saying that the chance of a 50 points cut is 100%. However, if they go for 75, then there might be a bit of a rally. But for it to go back up to 14000, we'll need good news... a lot of good news.

 

[alankew]

Think it is a case of damned if they do damned if they dont-.5 is expected any more than that and the initial euphoria will soon wear off to "didnt realise we were in such a state" will also be dependant on the spiel that goes with the cut.Still dont think it will be enough but might allow some to exit and stand back but the bad news is constant whereas the cut is soon forgotten

 

[Yeti]

I think it is time to start expecting something totally unexpected, out of left field. Maybe some political event...

 

[Uncle Festivus]

What's a doom & gloom thread without more doom & gloom -

Fund managers across the world have turned "super-bearish" over the last month, abandoning hope that Europe and Asia can escape contagion from the US housing crisis.
A Merrill Lynch survey found that a fifth of big investors now expect an outright global recession, an occurrence not seen since the 1930s. Some 8pc think the world is already in recession.

As it is increasingly looking that the US is already in a recession, half a point here and there is window dressing. I'm not sure if zero rates will do anything either, so deep is this secular debt contagion. This is going to the core of the fiat money and fractional banking system, and exposing the glaring anomalies of unrestrained debt issuance. The Fed has lost control, so interest rates as a weapon is like firing financial blanks, only satisfying the money shufflers on Wall St with an ephemeral 'fix'.

"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of US monetarism and life-time student (with Milton Friedman) of the Great Depression.
"It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.

Japan, again, on the brink of deflation.

Japan's prime minister Yasuo Fukuda has pledged to intervene if necessary to prevent a disorderly plunge of the Tokyo bourse amid fears that the country may be sliding back into recession.

Euro countries real estate imminent implosion and consequent casualties.

Aus super redemptions exacerbating the slide here.

Left field events maybe

- General Motors finally goes into bankruptcy
- Citigroup ditto
- Homebuilders ditto
- an LTCM type bust with contagion into the real economy
- presidential candidate assassination

 

[Bushman]

What's a doom & gloom thread without more doom & gloom -

Left field events maybe

- General Motors finally goes into bankruptcy
- Citigroup ditto
- Homebuilders ditto
- an LTCM type bust with contagion into the real economy
- presidential candidate assassination

Nice Uncle - I cannot believe you have not added the bird flu pandemic to the list. So here it is...
- A global bird flu pandemic a la the 1918 Spanish flu wipes out millions.

Add the US attacks Iran, the arms race kicks off again, Turkey invades Kurdistan, etc etc

Yawn ad naseum. Yawning is off course the bodies way of coping with stress.

9 days red and counting...

 

[ithatheekret]

not something I have herd as such... more something that I have red... AFP

Cheers
........Kauri

Sounds like the tier 2 piles are growing and the alpha is on the backburner at present . That would mean quite a few quantative analysts may be unemployed soon as well as a flock of long-short equity managers .


I'd rate that more as classified info than a rumour , who let the cat out of the bag there ..........

 

[Kauri]

Sounds like the tier 2 piles are growing and the alpha is on the backburner at present . That would mean quite a few quantative analysts may be unemployed soon as well as a flock of long-short equity managers .


I'd rate that more as classified info than a rumour , who let the cat out of the bag there ..........

Have I ever told you about my Budgies... :nuts:

 

[Kauri]

from WSJ (Wall Street Journal)

suggests the Bush administration may soften proposed controls on borrowing by Freddie Mac and Fannie Mae. Calls have risen for the two government agencies to buy more mortgages to support the housing market as other funding methods have dried up. The limits on the two agencies" mortgage portfolios could also be eased within or without the framework of a larger economic stimulus package, tipped at roughly $100 bln if not $150 bln as proposed by Larry Summers.

 

[STRAT]

from WSJ

Hi Kauri. WSJ is short for?

 

[Nyden]

Hi Kauri. WSJ is short for?

I should assume Wall Street Journal

 

[wavepicker]

Looks to me US Indices are setting up for some sort of rally here. Not saying that this is the end of the correction, but it does look like the complettion of the last impulse(leg) down from my EW studies and TIME studies.

We have a contracting triangle wave in place in the last small consolidation before the market fell the last few days. Also very important, we have Time cycle point low due 18/01/08. (3 smaller degree cycle lows in a row = completion of next higher degree cycle), good probability these indices should move up tonight. Subsequently have taken long positions this afternoon. I have labelled this and abc down(green) for now, with a nesting
1-2,1-2,1-2 subdividing impulse as an alternate

Cheers

 

[STRAT]

from WSJ

I should assume Wall Street Journal

Doh!! Cheers Nyden

 

[ithatheekret]

a US investment house is reportedly spreading the rumourof a 50bp Fed Funds rate cut to 3.75% today. The are saying that a cut might be delivered between the 13:30GMT release of US inflation data and the 14:30GMT US stock market open.

That will move something either way , if they were to stick to the vanilla .25 the market will be quite upset , a few currencies will wobble too ..........

But , .50 basis points will certainly move the main currencies , stuff the USD , lets get USA on it's feet first .