Imminent and severe market correction

[Whiskers]

Your post is to be applauded. Have felt that the ASX, ATSIC etc have not been operating towards the fair interests of the average investor for some years. Of course the previous (following the Thatcher idea of deregulation) seemed to be supporting the big end of town at every turn.

Hope the new Government, Conroy, Tanner et. al. are tuned in.

Cheers explod

I think a good part of the reason (sic) ATSIC err ASIC have been hamstrung is due to the failure of the Howard gov to give it more teeth.

The other thing to remember about ASX it is a listed company bound by articles of association as well as oversight by ASIC and ACCC. These fundies have to abide by the rules, ethical, common law and statute, like everyone else.

If these fundies have a gripe about anti competitive behaviour there are avenues to deal with it, but I have never heard a complaint like this before.

I think it's just a case of certain people throwing up red herrings to distract attention from their collective extreme caveat emptor attitude and behaviour.

 

[Uncle Festivus]

Re: market manipulation

It goes on all the time, both officially & unofficially. So long as all the big players are doing ok nothing is going to change. It's the insiders club!

I can't see any difference to when a broker (or their high net worth clients) loads up on a stock then puts out a research note or whatever with a buy rec or vice versa (officially sanctioned manipulation eg Rivkin type etc), to when the large funds have data, computer power & software at their disposal (that the majority of traders don't have) to ramp up or down.

If you study daily index or sector patterns you can see most days have definate 'action' periods eg around 11 o'clock or 1:30pm. This is when the computer orders are engaged for index or sector wide ramping or dumping

The ASX is the ultimate goal of capitalism - a monopoly on the capitalist capital system - I can't see the old boys school giving it up that easily.

 

[ithatheekret]

I wouldn't go so far to say it is perfectly free to regulate itself, after all it is still an Australian public company subject to the same laws as everyone else.

ASIC has been mentioned and obviously has higher control of all public companies.

.

You have to see the funny side of that Whiskers .

Subject to what laws , all ever see is a noncompliance and no policing .

ASIC should be put back in the test tube until they've matured and can walk .

 

[Whiskers]

You have to see the funny side of that Whiskers .

Subject to what laws , all ever see is a noncompliance and no policing .

ASIC should be put back in the test tube until they've matured and can walk .

I think you are being a bit unfair ithatheekret.

HIH is a good example of ASIC doing it's job, another current example below.

But you have to remember APRA had the first line of responsibility that failed. ASIC cleaned up the mess.

What Laws... Well as they are saying in this extract from your post, and I pointed out earlier, the howard gov sat on their hands and watched new products and trading behaviour develop.

The regulators can't do much if the law makers don't give them the tools and power to deal with those who push outside the envelope. As I said earlier I think we are in a new more marxian gov enviornment and the changes will come, but at the end of the day it was against the philosophy of Howard and Bush to interfere much with like minded business people.

But the ASX executives did call for more regulation to force the disclosure of the increasing degree of short-selling in the Australian share market.

They said this was an area that could be more closely supervised by ASIC if it were given greater control over the regulation of stock brokers. Mr Elstone called on the federal Government to set up an inquiry to look at new laws and regulations needed to cope with massive changes in financial markets in Australia in the decade since the Wallis inquiry.

08-23 Former Sydney financial advisers guilty of ASIC charges

Wednesday 13 February 2008


Two Sydney men have appeared in the Sydney District Court, New South Wales, following an investigation by ASIC into Progressive Investment Securities Pty Ltd (Progressive) and Capital Investments Group (Aust) Pty Ltd (CIG).

On 30 November 2007, Mr Tunde Doja, of Sydney, New South Wales, was found guilty by a jury in the District Court before Judge Goldring of eight fraud charges following a three-week trial. Mr Doja was found guilty of six charges under the NSW Crimes Act following allegations he fraudulently obtained a financial advantage for investors by arranging 100% Investment Loans through Macquarie Bank. The funds were invested on behalf of the investors in products known as ORB 1, ORB 2 and OMIP 15 – 7. The investors were required to enter into agreements with Macquarie Bank for up to $300,000 in investment loans on each product.

Mr Doja was found to have submitted loan applications to Macquarie Bank on behalf of investors which contained false information in relation to their financial position. The jury found that Mr Doja had completed the Statements of Financial Position in the loan applications without obtaining those details from investors. The jury also found that Mr Doja was guilty of obtaining a financial advantage for Progressive and CIG by fraudulently obtaining commissions totalling $740,025 from Capital Guaranteed Investments Limited and $341,352 from MAN Investments Australia Ltd, who were the sponsors of the ORB and OMIP products respectively. It was found that Mr Doja had made false statements to Capital Guaranteed Investments Limited and MAN Investments Australia Limited about holding a valid financial services licence.

Mr Mohammad Zareei, of Baulkham Hills, New South Wales, pleaded guilty yesterday to one count of unlawfully providing financial advice on behalf of Progressive which failed to hold an Australian financial services licence. He also pleaded guilty to two counts of inducing investors to apply for 300,000 shares in OMIP 15 – 7 by making false, misleading or deceptive statements regarding the product.

Mr Doja is currently in custody awaiting sentence on 28 March 2008. Mr Zareei’s bail has been continued until sentencing on 11 April 2008.

The matters have been prosecuted by the Commonwealth Director of Public Prosecutions.

ASIC Website: Printed 15/02/2008 http://www.asic.gov.au/ASIC/asic.ns... advisers guilty of ASIC charges?opendocument

 

[ithatheekret]

Sorry Whiskers , you hit my hidden agenda right on the head


What Laws... Well as they are saying in this extract from your post, and I pointed out earlier, the howard gov sat on their hands and watched new products and trading behaviour develop.

The regulators can't do much if the law makers don't give them the tools and power to deal with those who push outside the envelope. As I said earlier I think we are in a new more marxian gov enviornment and the changes will come, but at the end of the day it was against the philosophy of Howard and Bush to interfere much with like minded business people.




EXACTLY

We are all answerable , so they should be too

If Administrations openly allow this type of behavior , we are in a state of anarchy

Chaos and Anarchy walk hand in hand

PS... the word we are looking for is " undermined "

 

[numbercruncher]

We probably dont need anymore recession " proof " ..... but .....

US consumer confidence has slumped to 'recession' levels


By Sean O'Grady, Economics Editor
Saturday, 16 February 2008


Consumer confidence in the United States has slumped to levels usually associated with the onset of a recession.


The Reuters/University of Michigan Survey of Consumers index of sentiment for this month dropped to its lowest reading since February 1992. With a 1985 base of 100, yesterday's figure of 69.6 was well below the 78.4 level reached at the end of January and was also shy of analysts' expectations.

Consumer spending accounts for around 70 per cent of the US economy and, as the world's "consumer of first and last resort" Americans' buying habits affect every major economy. American consumers spent about $9.5 trillion (£4.5 trillion) last year, while Chinese could only manage $1 trillion and the Indians $650bn. China, often cited as being "decoupled" from the US economy derives 8 per cent of its national income directly from US consumption.

American households are seeing the worst squeeze on their disposable income since 1980, with higher fuel prices, food bills and the cost of servicing their record debts proving an increasingly heavy burden. The amount Americans must spend each month on debt service, housing, medical care, food and energy rose to 66.9 per cent of their spending in December, the highest since record-keeping began in 1980, according to figures supplied by Bloomberg.

The gloomy picture was confirmed by the latest news on American industrial output. Production rose by just 0.1 per cent for a second straight month, matching economists' forecasts, the Federal Reserve reported yesterday, with production largely supported by the cold weather, which increased demand for energy. Manufacturing, which accounts for four-fifths of US industrial production, was unchanged from December after a 0.2 per cent gain. The figures pushed stocks lower on Wall Street, though only marginally as most analysts took the view that the bad news would encourage the Federal Reserve to continue its aggressive policy of cutting interest rates. The Fed's chairman Ben Bernanke said last week that he was prepared to take "timely" action to aid the economy.

Even so, the verdict of economists viewing events was unanimously despairing. Brian Gendreau, an investment strategist at ING in New York said: "These figures reflect how consumers are heavily influenced by the uncertainties with regards to the economy, gasoline prices, upcoming elections – everything. This is a pretty bad, pretty dismal number. We look at 14 indicators of recession, and 10 out of the 14 are signalling that we are either about to go in to a recession or are in one already."

http://www.independent.co.uk/news/business/news/us-consumer-confidence-has-slumped-to-.htmlssion-levels-783075.html

 

[explod]

We probably dont need anymore recession " proof " ..... but .....




http://www.independent.co.uk/news/business/news/us-consumer-confidence-has-slumped-to-.htmlssion-levels-783075.html

Pretty amazing, with the figures and arguments clear enough the end of the article still hangs on partly in or in a recession. And Bernanke "timely rate cuts" the assertive among the pensive.

it all just cracks me up.

Its time to just party, roulette this arvo.

 

[numbercruncher]

Its time to just party, roulette this arvo.

Good luck on the tables, hope your blessed with a Bias wheel or a section spinner

Are you a section player ? orphans , tiers etc ?

Im a raw luck gambler when I rarely play, remember once at Treasury cas, simulatneously placed $5 on no 4 and $5 on 23/1 on the big wheel, they both came in at the same time, $290 return on a $10 wager, now what are the odds of that!

 

[numbercruncher]

The beginning of a messy endgame to the bond-insurance crisis may be underway, and the industry that emerges could look very different from the one that bet big on subprime mortgages.

On Friday, FGIC Corp., holding company for the nation's third-largest bond insurer, told the New York State Insurance Department that in effect it wants to split up the business. The idea would be to create a new company to insure safe municipal bonds and for the existing one to keep responsibility for riskier debt securities already insured, such as those tied to the housing market.

Neat plan huh ? Now imagine if every company did that, split the profitable debt free bit off, and leave the debt ridden bankruptcy in waiting bit behind more creative capitalism

 

[ithatheekret]

That's exactly what the funds do with bad bets , roll them into tier two and wait for them to start performing again . Tier one has the performers running somewhat to script , anything else is put on the backburners of tier two .
Managing large amounts of money may seem like someones perfect job , but it's no party nowdays . Everything has it's limitations . If we look back at banks performances , the beacon that was , is now dimming .
I for one am still waiting for AMPs double digit growth promises to come about , been a few swipes at that glowing line , can't see it eventuating in a tight credit climate , especially now that banks have hit their peak profitablity and are more likely to start declining . Just another round of misquotes to the ASX and the public .........

here's an interesting piece from Bloombergs Paris desk :

http://www.bloomberg.com/apps/news?pid=20601039&sid=aB2QLMpsHn_c&refer=home


Fed Heavy Lifting, SocGen Fallout, China Trade Tension: Timshel


Commentary by Michael R. Sesit


Feb. 16 (Bloomberg) -- Like the proverbial horse who refuses to drink when dragged to water, banks are resisting lending while the U.S. Federal Reserve lowers official interest rates. That underscores the biggest question in global financial markets: Can the Fed and other central banks rescue the world economy?

The Fed has lowered rates by 2.25 percentage points to 3 percent since last September. Elsewhere, the Canadian and U.K. central banks have cut rates; markets are betting that the European Central Bank will eventually have to lower borrowing costs and that the Bank of Japan will at least back off from raising them.

Nonetheless, lowly rated companies and investment-grade ones are having to pay more to borrow than before the Fed knocked 125 basis points off its federal-funds rate in January. Likewise, rates on so-called jumbo mortgages -- those above $417,000 -- have risen in the past month.

In the Fed's January Senior Loan Officer Opinion Survey covering the previous three months, a poll of 56 domestic banks and 23 foreign institutions showed they had ``tightened their lending standards and terms for a broad range of loan types.''

The comparable ECB survey, released in late January, painted a similar picture. The message from Europe may be even more worrisome because euro-area companies depend more on bank lending than their U.S. counterparts, which satisfy most of their funding needs in the capital markets.

Loan Policies

The tougher loan policies reflect the fallout from the subprime crisis as banks take more assets onto their balance sheets, eroding their capital ratios. Lenders are also wary of the worsening economic outlook and the prospect of increased delinquencies and defaults.

``The longer the banks wait to join the Fed by easing credit standards, the more the Fed will have to ease in order to stimulate growth,'' says Bob Prince, Westport, Connecticut-based co-chief investment officer at Bridgewater Associates Inc.

Regardless, this doesn't imply monetary policy is impotent, optimists contend. Central-bank rate cuts still keep the cost of capital lower than otherwise, cushion the fall in asset prices, reduce default and foreclosure rates on adjustable-rate mortgages and encourage more bank lending by widening the margin between banks' interest costs and lending rates, Deutsche Bank AG economists Peter Hooper, Thomas Mayer and Torsten Slok said in a recent report.

Money Supply, Cost

Pessimists contend that central banks couldn't control the supply and cost of money as liquidity flooded global economies and markets in the 1990s and early part of this decade. So there's no reason to expect them to have any more influence when world liquidity is shrinking. Derivatives and securitized debt account for 93 percent of the world's liquidity, while bank loans represent 6 percent and central banks make up a mere 1 percent, according to London-based consulting firm Independent Strategy.

Although the combination of monetary and fiscal easing ``can still prevent a cataclysmic recession, it may not be able to save industrial countries from a rather protracted period of sluggish growth,'' Deutsche Bank said.

* * *

Do French companies believe in meritocracies where the most deserving get the biggest rewards and best opportunities? According to reports from headhunters, Jerome Kerviel's trading scandal at Societe Generale SA has wrecked the chances of back- office clerks being promoted to traders.

Compliance and Control

Kerviel initially worked in the bank's compliance and control operations, and French prosecutors and SocGen executives allege he drew on his knowledge of clearing and settlement systems to mask fictitious transactions backed by falsified documents. But not promoting clerks because of their know-how makes as much sense as refusing to hire government officials or ex-paratroopers, respectively the former vocations of Societe Generale Chief Executive Officer Daniel Bouton and Jean-Pierre Mustier, head of SocGen's corporate and investment bank.

By contrast, U.K. banks were famous for hiring rough characters from London's poorer East End neighborhoods to work as traders. They didn't have Harvard MBAs or advanced degrees in mathematics. They did have street smarts. When asked what skills made for a good trader, the head of foreign-exchange trading at a big New York bank once replied, ``the ability to scalp tickets outside of Madison Square Garden.''

No wonder lower-class English longbowmen crushed the flower of French nobility at the battles of Crecy, Poitiers and Agincourt in 1346, 1356 and 1415.

* * *

The last thing the ailing world economy needs right now is a trade war. Yet recent revelations that China last year overtook Canada as the biggest exporter to the U.S. is sure to raise protectionist sentiment in the American heartland, not to mention Washington. After all, it is an election year, and the Democrats, who have a good chance of capturing the White House and keeping control of both legislative branches, have never been gung-ho advocates of free trade.

U.S. imports from China last year totaled $321.5 billion, while those from Canada were $313.1 billion. And with the Chinese buying a mere $65.2 billion of American goods, the U.S. bilateral trade deficit widened to a record $256.3 billion.

It might be time for China to consider taking more effective steps to reduce its burgeoning trade surplus with the U.S. These might include letting the yuan appreciate more quickly, cutting or eliminating export subsidies, stepping up imports from America and taxing exports. The tools are all there. All China has to do is use them.

Best not to wait until some grand-standing congressman or senator calls for a boycott of the Olympics.

 

[GreatPig]

It might be time for China to consider taking more effective steps to reduce its burgeoning trade surplus with the U.S

Hmm... so the problem is China's trade surplus with the US and not the US's trade deficit with China.

Obviously it's all China's fault, as of course the US can't do anything to stop themselves importing too much - even if many of the businesses there are US-owned to take advantage of the cheap labour rates.

GP

 

[sassa]

Do the figures produced by the economic arms of the U.S government sometimes not tell the real truth?

"The Bush administration has a long and comical history of going to great lengths to hide bad news from the public. Today, Amanda at TP reports on the latest gem:

The U.S. economy is faltering. Family debt is on the rise, benefits are disappearing, the deficit is skyrocketing, and the mortgage crisis has worsened. Conservatives have attempted to deflect attention from the crisis, by blaming the media’s negative coverage and insisting the United States is not headed toward a recession, despite what economists are predicting.

The Bush administration’s latest move is to simply hide the data. Forbes has awarded EconomicIndicators.gov one of its “Best of the Web” awards. As Forbes explains, the government site provides an invaluable service to the public for accessing U.S. economic data:

“This site is maintained by the Economics and Statistics Administration and combines data collected by the Bureau of Economic Analysis, like GDP and net imports and exports, and the Census Bureau, like retail sales and durable goods shipments. The site simply links to the relevant department’s Web site. This might not seem like a big deal, but doing it yourself–say, trying to find retail sales data on the Census Bureau’s site ”” is such an exercise in futility that it will convince you why this portal is necessary.”

Alas, as the economic conditions worsen, the administration decided to shut down this “necessary” website, citing “budgeary constraints.”

 

[STRAT]

Hmm... so the problem is China's trade surplus with the US and not the US's trade deficit with China.

Obviously it's all China's fault, as of course the US can't do anything to stop themselves importing too much - even if many of the businesses there are US-owned to take advantage of the cheap labour rates.

GP

LOL, Perhaps the US can do what is done with all examples of over indulgence. They can simply label over spending a disease there by alleviating themselves from any blame just as they have done with eating too much or getting pissed too often.

How about
Deficity or
Deficitism

 

[ithatheekret]

Hmm... so the problem is China's trade surplus with the US and not the US's trade deficit with China.

Obviously it's all China's fault, as of course the US can't do anything to stop themselves importing too much - even if many of the businesses there are US-owned to take advantage of the cheap labour rates.

GP

I'd swear a hint of sarcasm was at the end of his finger tips , the formal class distinction tones .

and here , just pessimists huh

Pessimists contend that central banks couldn't control the supply and cost of money as liquidity flooded global economies and markets in the 1990s and early part of this decade. So there's no reason to expect them to have any more influence when world liquidity is shrinking. Derivatives and securitized debt account for 93 percent of the world's liquidity, while bank loans represent 6 percent and central banks make up a mere 1 percent, according to London-based consulting firm Independent Strategy.


MOOHAAHAAAHAAA

He started out with factual data , then ended it all with wah wah


I did say it was interesting , and from the Paris desk


I should have put Bloombergs vanilla disclosure clause up with it

 

[explod]

Good luck on the tables, hope your blessed with a Bias wheel or a section spinner

Are you a section player ? orphans , tiers etc ?

I,m a raw luck gambler when I rarely play, remember once at Treasury cas, simulatneously placed $5 on no 4 and $5 on 23/1 on the big wheel, they both came in at the same time, $290 return on a $10 wager, now what are the odds of that!

Thanks for the good wish Numbercruncher

Nah, not a good day, think Jamie Packer must be feeling the pinch from market correction too. Dealers very tight and changing very much more often here at Crown of late. Public relations of Crown Staff very much down the tubes. A lot of people starting to say that Government Regulators may need a shake up.

I play a pocket count system which follows the hottest sector/s. Only go in when the percentage is at a certain point so on bad days lose little. Takes a good deal of patience though. But not being the gambling type it is good entertainment whilst the Missus feeds the pokies.

 

[ithatheekret]

Little snippets of data that are sometimes missed by the mainstream can mean quite a lot to us ground dwellers .

Japanese monthly earnings are down from last years data , from Dec , so imagine the lag effect the data has in formulating solutions , down on the ground wears it . Dec to Dec they are down 1.7% and it takes into account bouses etc. av mthly earnings now 597546 Yen ..... $1500.00 AUD a week .

Bit under $80K a year , may sound okay , but it's well off the glory days .

Team it up against the Services sector decline , that would have to be at reduced staffing levels , the pinch must be being felt and is starting to drip out in the data . My bet is that wage level is really hurting Japanese industry and has already help the services and financial sectors to wobble without having to cope with write downs in the wings .

Japan is well equipped to build anywhere , but the latest round of ore rises will effect contracted prices on major projects . This is an area the Japanese compete in regularly . I doubt they haven't thought ahead , but whether they can keep the monsters contained is another matter altogether .

Look at it from a global perspective and ponder how it has effected lower economies down the ladder , especially the ones that rely on Japanese trade .

I haven't exactly noted a flurry of Japanese investment into any forward projects in mining really , only a few big names . The majority has been Chinese . I would have thought , there would be more ..............

 

[ithatheekret]

There was something else I wanted to added but lost it in a thought track .

The Japanese a perfectly situated to take on huge infrastucture projects in India , they have equipment ,steel etc., close at hand , the distance is nothing for them , it can be said they are in better shape to take advantage than Chinese firms .
But the trade agreements that have been in place with Australia for decades and the dialogue between previous governments can be used to benefit both economies , too many are competing for China , a longer term view , with foundations built now would be far more beneficial in the dynamics of growth .

Japanese heavy equipment companies are very hard to match in technology and the practical application side of their work is hard for many nations to compete with , Germany inclusive .

It grated me to see Sony delegated back a few pegs , but that's the climate , and Sony have a fantastic product range . Kyocera , I love that company , pioneers they be .

 

[explod]

There was something else I wanted to added but lost it in a thought track .

The Japanese a perfectly situated to take on huge infrastucture projects in India , they have equipment ,steel etc., close at hand , the distance is nothing for them , it can be said they are in better shape to take advantage than Chinese firms .
But the trade agreements that have been in place with Australia for decades and the dialogue between previous governments can be used to benefit both economies , too many are competing for China , a longer term view , with foundations built now would be far more beneficial in the dynamics of growth .

Japanese heavy equipment companies are very hard to match in technology and the practical application side of their work is hard for many nations to compete with , Germany inclusive .

It grated me to see Sony delegated back a few pegs , but that's the climate , and Sony have a fantastic product range . Kyocera , I love that company , pioneers they be .

They may have other things on their mind, following is an extract from the Weekend's Privateer newsletter:-

"Japan's machine orders dropped 2.8 percent in December. January housing starts fell to the lowest in 40 years, down 18 percent on the year. Tokyo property was off 22 percent. Historically, when Japan acts to contract its internal investments in its export industries, that has always been the signal that it is preparing for a global downturn. The reported two month contraction of 6 percent in total new machinery orders tells this story. Why invest in new plant and machinery and equipments when Japan's external export markets are on the verge of a very large contraction? "...


The bigger picture of course is that not only the US but China are in trouble now too, with lack of fuel and the Govt imposing price controls, India seem to be OK but overall times ae becoming grim indeed.

 

[sassa]

Interesting article to those into charts regarding the SPY.

http://srsfinance.blogspot.com/

 

[dhukka]

For a bit of interactive market pr0n to start your day, click here