Who thinks there will be a slump?

[sptrawler]

Define "cheap"

Well that is the subjective question.
If everyone had the same definition of "cheap" you wouldn't have any sellers or buyers.
Some use N.T.A some use P.E, some use R.O.E, some use dividend, some use a combination of these and other indicators.

 

[wayneL]

Well that is the subjective question.
If everyone had the same definition of "cheap" you wouldn't have any sellers or buyers.
Some use N.T.A some use P.E, some use R.O.E, some use dividend, some use a combination of these and other indicators.

Those might be pretty slippery vectors if one believes a recession is imminent.

 

[Boggo]

Great buying oppurtunity at 3700, just pick your long term position, they will be all cheap. IMO

Well bogo, long term the underlying demand for raw materials will not diminish.
The current market volatility is more to do with money markets, dodgy loans and the money printing excercise.
We are getting caught up in it, however I see it as an opportunity to purchase long term growth shares at prices that are cheap relative to underlying asset.
The 3700 is a strong resistance and support point, which I feel we will have trouble falling through.
These are only my opinions.

I sort of see what you are saying but in reality the only cheap stocks are the ones that are down after the market has hit the bottom and is on the way up.

Everything could be considered "cheap" compared to where it was, but by being in line with an overall regressive market is it cheap or just where it should be.

At the moment the market is on the slide and what is "cheap" today by whatever way you measure it is likely to be even cheaper tomorrow or next week.

There are numerous posts on here of individuals trying to outwit the current market, posts such as PTM being cheap when it was $4.60, it is now $3.60, what is it now then, ultra cheap ?

The way I read your first statement is 'Buy at 3700, hold onto them and they will get cheaper', I suspect you may be right.
I do agree that 3600 to 3700 may be an area of interest on the XAO but I wouldn't be thinking about jumping back in on the first bounce, in my case anyway the reversal would require more than just a few hundred points to get my funds out of their current cosy and safe place of residence.

Just my

 

[basilio]

Things not looking so good in Europe. Dexia bank in Belgium seems in free fall.

Came across an analysis of the bad/disastrous options facing Europe in the event of Greek default.

How could Australia not be seriously affected by such events ?

Dark visions of a Greek default

John Hempton


I am on a plane – long-haul over the Pacific – and someone has asked me to spell out what I think would happen with a Greek sovereign default. As this is drafted on a plane it is designed to outline extreme views (you know, the ones formed after two glasses of wine). Still, all options look bad.

I see two broad variants for a potential Greek default – both, of course, stick most of the losses on Germany and France.

http://www.businessspectator.com.au...rrency--pd20110928-m596d?opendocument&src=msp

http://www.guardian.co.uk/global/blog/2011/oct/04/european-debt-crisis#block-14

 

[sptrawler]

The indicators are all starting to point down.

http://www.perthnow.com.au/business...-dunn-bradstreet/story-e6frg2qu-1226124630624

Very interesting that manufacturing business start ups have averaged 700/ year for the last three years and only 14 in the first 6months of 2011.

 

[Starcraftmazter]

Over the next months and years things will go from bad to worse to a nightmare.

The only thing left is trying to predict the velocity with which things get worse.

 

[basilio]

I'm just wondering... and maybe this all sounds crazy.

As the situation in Greece and Europe looks grimmer we havn't actually seen any real signs of panic in the market (well not recently). In fact it is looking surrealy buoyant.

Is it possible that all the big investors are trying to avoid starting a panic in the certain knowledge that a stock market crash in itself will be calamitous let along having to deal with the inevitable fallout of debt reconstruction/default in Europe ? Is it possible a few government are either having direct talks with traders or evening quietly buying shares to keep up some liquidity and confidence ?

Given what we know about traders activities, hedge funds and short selling I half thought last Friday or today would have been close to panic. But no ?

Any thoughts ? Just fantasy ?

 

[Starcraftmazter]

As the situation in Greece and Europe looks grimmer we havn't actually seen any real signs of panic in the market (well not recently). In fact it is looking surrealy buoyant.

We've effectively had somewhat of a crash since April, it's just been rather slow and had quite a few little rallies here and there. But overall, market is down what, over 20% give or take depending on whether we are rising or dropping?

I think the markets want certainty about Greece more than anything. If Greece defaults, but they can safeguard banking institutions in EU and elsewhere, I do not see a major crash ala GFC. That's a pretty big if though, nobody knows what the off balance sheet derivative exposure to Greece is.

Is it possible that all the big investors are trying to avoid starting a panic in the certain knowledge that a stock market crash in itself will be calamitous let along having to deal with the inevitable fallout of debt reconstruction/default in Europe ?

Well I think a lot of them have already liquidated quite a lot of their holdings since April, and quite a bit of cash is sitting on the sidelines waiting to jump in if Greece is resolved. But I don't think things are perceived to be bad enough for a crash yet, everyone is hoping (praying?) for a solution.

Is it possible a few government are either having direct talks with traders or evening quietly buying shares to keep up some liquidity and confidence ?

I don't think so. Even if you take very big institutions, there are too many of them, and I don't see how the governments could influence them. Governments are pretty weak in general, it is them who get influenced not the other way around.

Given what we know about traders activities, hedge funds and short selling I half thought last Friday or today would have been close to panic. But no ?

Several EU countries have banned short selling, and Europe I think last week banned uncovered CFD positions or something to that extent? I don't exactly remember so someone please correct me if I'm wrong.

The point is however, Europe has been legislating furiously trying to ban all shorting activities to prevent what you are describing here from happening.

 

[Aussiejeff]

Apparently, the silly Chinese are predicting a BIG slump. They call it a "long term global economic recession".

What would they know?

The world economic situation is “extremely severe,” China’s Wang said at a financial work meeting in Hubei province, state news agency Xinhua reported late on Nov. 19. “The global economic recession triggered by the international financial crisis will be long-term,” Xinhua cited Wang as saying.

http://www.bloomberg.com/news/2011-...-sees-prolonged-global-slowdown-economy.html#

Oh well. Party on, mining boom and all that....

LOL

 

[sptrawler]

Apparently, the silly Chinese are predicting a BIG slump. They call it a "long term global economic recession".

What would they know?

http://www.bloomberg.com/news/2011-...-sees-prolonged-global-slowdown-economy.html#

Oh well. Party on, mining boom and all that....

LOL

Thanks for sharing that Aussiejeff, Gerry Harvey should have a read it might stop him talking up the economy.LOL

 

[Aussiejeff]

Thanks for sharing that Aussiejeff, Gerry Harvey should have a read it might stop him talking up the economy.LOL

Worse to come?......overnight German Debt Sale Fail....

Debt crisis now at German doorstep
Belgian and French yields jump on Dexia bailout worries

FRANKFURT (MarketWatch) ”” An auction of German government bonds technically failed Wednesday, underlining fears that the long-running crisis in European sovereign debt now threatens the core of the euro zone.

“It was awful,” said Nick Stamenkovic, fixed-income economist at RIA Capital in Edinburgh.

The sale of 6 billion euros ($8.1 billion) of 10-year government bonds, known as bunds, attracted bids totaling just €3.889 billion. The Bundesbank, which conducts auctions on behalf of the Germany’s federal debt agency, accepted €3.644 billion in bids.

http://www.marketwatch.com/story/po...risis-hitting-core-2011-11-23?link=MW_popular

They need.....

SuuuuuuperrrrSchwan - The World's Greatest Treasurer, to sort them out.

LOL.

Tin hats on?

 

[joea]

Hi
I am wondering if this thread is just discussing the small issues.
Are there bigger issues? I think China and their currency is the issue!

http://www.fas.org/sgp/crs/row/RS21625.pdf

joea

 

[explod]

Hi
I am wondering if this thread is just discussing the small issues.
Are there bigger issues? I think China and their currency is the issue!

http://www.fas.org/sgp/crs/row/RS21625.pdf

joea

Yes, the big one will be Government and private company bonds. Interesting our Government is easing business into this form of capital raising as we speak. And the failure of Germany to sell all their bonds in the last day or so ought to send a chill down some spines when it all sinks in.

Lots of info on the history of bond issues and the Great Depression which I think are worth wading through, just hit google.

http://www.futurecasts.com/Depression_bottom-1932-1933.html

The following however is Eric Sprott being interviewed on Kingworld News:

With stocks plunging and gold and silver still consolidating, today King World News interviewed billionaire Eric Sprott, Chairman of the $10 billion strong Sprott Asset Management. KWN wanted to Sprott’s take on the ongoing financial crisis and where we are headed from here. When asked about the German bond auction, Sprott responded, “The results were that they (Germany) only sold about 65% of the issue on offer. Rates went up a little, but the fact that the Germans, who would have been regarded as the number one credit in Europe, couldn’t sell, I think it was a $5 billion euro issue, and they couldn’t sell it, I mean it’s truly shocking.”

“What does it mean when some of these other governments are going to try to raise money that the number one credit (in Europe) can’t raise money. So I think it’s a very important signpost for us all, as we look at the reeling that’s going on amongst sovereigns in Europe, as we realize that the pressures in the banking system in Europe are just (so) intense. We can see that by the deposits/withdrawals and the borrowings from the ECB and so on.


Our expectation has been that when you are over-levered you’re in a very vulnerable position. The fundamental weaknesses in the banking system, I have the toughest time imagining that banks in Europe could have any capital left over after you are seeing what’s happened to the stock markets and the bond markets.

It’s just another nail in the coffin and I’m sure the domino effect will be spreading as we move along here....

http://kingworldnews.com/kingworldn...ial_Crisis_Will_Be_a_lot_Worse_Than_2008.html

In the period 1930/33 most bonds became worthless.

Anyhoooow, we live in intersting times.

 

[explod]

Missed a bit at the end of Eric Sprots take, so read it onwards here. Found for some reason I could not edit, or more correctly, add it into the quote:

When asked how this portion of the financial crisis will compare to that of 2008 and 2009, Sprott replied, “I think it’s going to be a lot worse because it took a certain amount of money to bail out Lehman and all of the counterparties to Lehman. But when you have governments and sovereigns and major banks that have these issues, I just can’t imagine there is enough money to bail it out.





Of course day by day people are losing confidence in these various currencies. So I don’t think it can be solved. I don’t think there is enough money to bail it out and of course if they try we are going to end up with some kind of hyperinflation or (massive) depreciation of currencies. It’s not going to work, I just don’t think there is a solution to the problem.”

 

[young-gun]

Missed a bit at the end of Eric Sprots take, so read it onwards here. Found for some reason I could not edit, or more correctly, add it into the quote:

hallelujah, about time someone with some credibility put it as blunt as it is.(i havent heard much of this guy, but after a bit of reading on google he appears credible)

thanks for the interview explod, i see more is set to be released soon

 

[Aussiejeff]

130 pt slump in last 3 hrs of trading in short Black Friday DOW session to finish down -25pts.

Hmmm. Just Bad Black Friday karma? Or jitters after Italian short term debt bonds sold at near 7% IR's overnight?

How UK banks managed to soar 3-5% last night in the face of all this & put a positive spin on their market is beyond me.. certainly didn't impress the Yanks a few short hours later.

 

[sptrawler]

For what its worth, which isn't much. I think the European countries are going to have to go back to their own currencies and cop a flogging.
Maybe England wasn't stupid when it kept the pound stirling.

 

[young-gun]

Over the next months and years things will go from bad to worse to a nightmare.

The only thing left is trying to predict the velocity with which things get worse.

mo star give it mid 2012 and it will have hit the fan, it honestly is actually looking very scary indeed.

 

[Smurf1976]

Taking a step back and looking at the world as a whole, it would seem that just about every significant country either has had problems for quite a long time (Eg USA), has problems due to factors other than purely the markets etc (eg Japan), is at war or at credible risk of being at war, is part of the EU and going down the plug hole at an alarming rate, or is simply an upstream supplier to these countries (China, Australia).

There doesn't seem to be much good news unfortunately and as a consumer I find it hard to ignore the storm which seems to be brewing. If others think likewise and keep their wallets shut then there goes the Aussie economy too. (Actually, if you exclude mining then I'd argue that we're not doing that well as it is, but that's another story).

One thing which does stand out however is the price of oil at roughly $100 per barrel. That one has me thinking:

1. Just inflation or the market expecting inflation?
2. Some sort of "war premium" in expectation of disruption to supplies?
3. Despite all the bad news oil consumption is holding up and oil is actually in relatively short supply on world markets?
4. The oil price is about to crash and this situation is temporary?

Any thoughts? That's the one thing that really doesn't seem to fit with the overally economic situation right now. The wheels seem to be falling off the economy and yet oil prices remain virtually unchanged at a post-2008 high. Maybe this should go in an oil thread, but I do think it has relevance to the overall situation - WHY is the oil price behaving this way? Any thoughts?

 

[Aussiejeff]

Taking a step back and looking at the world as a whole, it would seem that just about every significant country either has had problems for quite a long time (Eg USA), has problems due to factors other than purely the markets etc (eg Japan), is at war or at credible risk of being at war, is part of the EU and going down the plug hole at an alarming rate, or is simply an upstream supplier to these countries (China, Australia).

There doesn't seem to be much good news unfortunately and as a consumer I find it hard to ignore the storm which seems to be brewing. If others think likewise and keep their wallets shut then there goes the Aussie economy too. (Actually, if you exclude mining then I'd argue that we're not doing that well as it is, but that's another story).

One thing which does stand out however is the price of oil at roughly $100 per barrel. That one has me thinking:

1. Just inflation or the market expecting inflation?
2. Some sort of "war premium" in expectation of disruption to supplies?
3. Despite all the bad news oil consumption is holding up and oil is actually in relatively short supply on world markets?
4. The oil price is about to crash and this situation is temporary?

Any thoughts? That's the one thing that really doesn't seem to fit with the overally economic situation right now. The wheels seem to be falling off the economy and yet oil prices remain virtually unchanged at a post-2008 high. Maybe this should go in an oil thread, but I do think it has relevance to the overall situation - WHY is the oil price behaving this way? Any thoughts?

Apparently, there is currently an increasing shortage of light distillate (gas oil or diesel) worldwide - covered in the latest WOO (World Oil Outlook). A hefty tome indeed, but worth a browse. http://www.opec.org/opec_web/en/publications/340.htm

This shortage is going to run over at least 10 years or so. There's a graph in there somewhere that shows a widening gap between expected pump prices for petrol vs diesel.

IMO this is a very BAD outlook for Australian transport sector - and anyone with a diesel (notice how diesel is currently +150c ltr and climbing, while UL is around 139+ and falling).

Hmmm.....

aj