Archive through December 06, 2007
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     ingot54
Member
Username: ingot54
Post Number: 2047
Registered: 05-2004
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Votes: 0
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| | Wednesday, November 28, 2007 - 03:02 pm: | 
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Good commentary HC
My observation was that if ONE cash injection of US$7.5 billion into ONE company can move the DOW + 150 points, how fickle is the DJIAA?
And how fickle is the ASX - knee-jerk every day based on what happens in the USA!
Duhh.
I don't buy the story that we MUST follow the US because they are the biggest ...yada yada ...blah!
Observation shows little changing economically (apart from the well-covered credit crisis) on a day-to-day basis, yet market fluctuations are numbering in the $billions globally.
What I think we are seeing is a movement of cash to the strong hands as less-informed players attempt to handle the conditions - ultimately giving up their cash as the indices yo-yo about.
Serves them right imho - short-term trading not only consumes personal life-style time, is is arguably shown to be the highest risk engagement a trader/investor can attempt.
Obviously there are exceptions to this - here on IC we have accomplished ST traders doing OK I believe - but the fact that this ST buy-sell-buy-sell thing is happening is testimony to a lot of underlying pain out there.
Who are the winners? ... the losers?
Keep Smiling - Don't look back
Hell, there are no rules here - we're trying to accomplish something ~ Thomas A. Edison
Loss and failure are inevitable but misery is optional
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holycow
Member
Username: holycow
Post Number: 3503
Registered: 08-2004
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Votes: 0
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| | Wednesday, November 28, 2007 - 03:08 pm: |
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http://tinyurl.com/ytut39 - Banks come to the rescue of SIV funds
In a sign of the building pressure, British banking giant HSBC Holdings yesterday became the first bank to bail out specialised funds known as structured investment vehicles. HSBC plans to gradually shut down two bank-sponsored special investment vehicles and take $45 billion in mortgage-backed securities and other assets owned by the funds on to its own balance sheet.
...
HSBC's move, particularly if followed by other banks, also may help relieve stress among SIVs by taking responsibility for a big chunk of the sector's assets. It reduces the risk "of the kind of distressed SIV asset sale, which is kind of the nightmare scenario right now", says Antony Broadbent, a bank analyst at Sanford C. Bernstein in London. "It will be interesting to see if others do follow suit."...
*** well, when SIV comes home to roost, the mother hen, uh,... the mother bank will have to provide the necessary shelter and share the burden of having some negatives appearing on their balance sheets. This is unavoidable short term. And this is going to impact their profit, like it or not.
So the question is this - will the local banks join HSBC and start taking a similar action? The earlier they act, the better as the cost of credits can only go up from now on... the more they try to delay or hide, the more it will cost them! So what's it gonna be?
... and think a little further, if the banks were to copycat HSBC's move, what will happen to their profit guidance?
Or do you still buy their everything is fine, will be ok, and trust them please mother of all please-trust-me statement?
No? Yes? Anyway, let's just wait for the next two quarter's confession season and we will find out... meanwhile, enjoy, and buy big into banks coz they are... so clean and so cheap!
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3504
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Wednesday, November 28, 2007 - 03:24 pm: |
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Ingot,
The word "desperate" was used by the analyst and it kind of stuck with me - the market and the bulls were so desperate for a rally they clung on this news and had a rally! This fact was simply amazing and amusing.
The unspoken news which is really very negative is this - Citi is in a dire straits! And the other major banks are probably in the same shoe. Just because they have not acted, does not mean they are not in a similar desperate state. More and more ARM will be unwound as time moves on. To compound the banks' problem, the CP/SIV are fast catching up with them too.
The worst of all these is they still don't know the total amount of damage outstanding! They can't tell how extensive and how expensive all these will add up!
Yet, they had a party and celebrated because they believe the white knight is in the horizon to rescue them!
... how silly! 
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3511
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Thursday, November 29, 2007 - 08:43 am: |
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http://abcnews.go.com/print?id=3922069 - Read this if you are a lazy bum...
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3512
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Thursday, November 29, 2007 - 09:20 am: |
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http://tinyurl.com/2clmxc - U.S. stock futures gain on talk of 'nimble' Fed
U.S. stock futures pointed to a higher start Wednesday after Federal Reserve Vice Chairman Donald Kohn said the central bank can be "nimble" and can't hold the economy hostage to teach speculators lessons...
*** he seems to have missed the point, it's not about teaching the speculators, it's about combating and controlling inflation. The effectiveness of a rate cut at this juncture won't solve the subprime problem, won't solve the credit crunch issue, won't really help the slowing down in the economy (in my view) as it only leads to more depressed dollar value, serves to inflate imported goods price... in the process it reduces the effectiveness of the only tool that is available to the FEDS to effect control on inflation, the banks and the economy.
Anyway, the banks had a roaring "success" this morning and everyone over there were happy. It's going to be a booming market today... the bears, the bears,...
...there's only this little contrarian thought left for the bears - let's say when the time comes the FEDs don't play ball and they don't drop the rate - can you imagine what will happen next?
Ok, I am done with scaring everyone. Let's party!
ps: I believe today is an expiry day, so, it's going to be fickle out there.
pps: the gold, the gold... up down up down, the moral is simple - don't go too long or you will lose your gain!
Major Banks
Brokers
HC
... hopelessly addicted to charts!
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ingot54
Member
Username: ingot54
Post Number: 2048
Registered: 05-2004
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Votes: 0
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| | Thursday, November 29, 2007 - 09:41 am: |
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Could gold get back to USD$700?
Keep Smiling - Don't look back
Hell, there are no rules here - we're trying to accomplish something ~ Thomas A. Edison
Loss and failure are inevitable but misery is optional
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holycow
Member
Username: holycow
Post Number: 3514
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Thursday, November 29, 2007 - 10:05 am: |
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Ingot,
Yes. I think it's likely to drop back down to around 700 and consolidate at that level for a while. Let's assume this round of gold rally is due to the plunging of US$. Recently the US$ were making new low after new low but the gold price has stopped rising - this says alot about the rally - it's over!
By 2nd qtr next year, I think most banks and the FEDs would have seen, if not have a good grasp of the full impact of the sub-prime fallout, they will be in a much better position then to arrest the situation, and in the process, I won't be too surprise to see the US$ to rebound strongly by then - that's where we will find out what is gold's long term direction. (jmv could be wrong)
Cheers.
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3515
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Thursday, November 29, 2007 - 11:56 am: |
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http://tinyurl.com/2lyagj - China wins from credit crunch fallout
*** here's a good read.
In the 1920s, individual Americans went on a binge, buying shares on margin - that is, borrowing as much as 90 per cent of their cost. In October 1929, when the US stock market started to fall, these investors were forced to liquidate their holdings to pay back what they owed. The downward financial spiral helped to precipitate the Great Depression.
Between 2002 and 2007, banks were buying bonds on margin - borrowing more than 90 per cent of the cost to pay for their investments. In August, when parts of the bond market collapsed, the spectre of 1929 began to haunt the world's major banks...
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3516
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Thursday, November 29, 2007 - 12:02 pm: |
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http://tinyurl.com/2bvatz - Temperature falls to freezing for junk bonds
Société Générale said the monthly volume of junk bond issues peaked at €6.5bn (£4.69bn) in June, falling to zero in August, September, October, and November as investor flight from the market forced up yield spreads to stringent levels.
Far from returning to normal, the credit markets appear to tightening even further into the Christmas season.
Spreads on three-month Euribor - used to price floating-rate mortgages and some corporate lending - have ballooned to 74 basis points, the highest since 9/11 terrorist attacks in 2001...
*** since Xmas is still a month away, I guess the bulls can ignore this for the time being? Let's party...!
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3522
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Saturday, December 01, 2007 - 10:05 am: |
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http://tinyurl.com/yvhcpv - The difference between market boom or bust is just seven stocks
If you take BHP out of the equation the ASX 200 index is not up 13.85 per cent, it is up 7.6 per cent. If you have not held BHP this year you have missed out on 40 per cent of the market's performance. Without BHP the market would have performed in line with the Dow Jones (not twice as well).
Take out the main resource stocks including BHP (up 66 per cent), Rio (up 87 per cent), Fortescue (up 309 per cent) plus Woodside and Newcrest and the market is only up 4.7 per cent. The Australian stockmarket would be underperforming the US without resources. Pretty damning considering the subprime and credit market trouble they have had.
More incredible, take out the top 20 point contributing stocks from the ASX 200 and amazingly enough the market would have fallen 0.4 per cent this year. In other words just 20 stocks in the ASX 200 have accounted for the whole of the market's rise this year...
*** Clap clap clap! Let's give Marcus an applause he well deserves! Let's just hope that one day the bulls do not wake up finding out the bull market is nothing but... a wet dream!
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3523
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Saturday, December 01, 2007 - 11:01 am: |
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*** I find this write-up so "very telling" that I'd shamelessly copied it verbatim for future reference...
http://tinyurl.com/2hedkj - A credit crunch in anyone's language
An American guy in a string vest buys a house he cannot afford, forcing the Italian Government to pay more for its money. Chaos theory is spreading the pain around the global financial markets, though stockmarkets are still in denial. You know there is a credit crunch. This is how.
The gap between the US Federal Reserve's key rate and what banks charge each other to borrow dollars for three months this week widened to about 58 basis points, the most in 2½ months. The cost of overnight money is now more than a quarter-point higher than the Fed's target. There is a similar picture in borrowing costs for euros and British pounds.
The European Central Bank said last week that there was a "re-emerging risk of volatility" and that it would supply cash "for as long as it is needed". This week the Fed said it would "counter the re-emerging risk of volatility" in money markets and would "provide sufficient reserves to resist upward pressure" on borrowing costs around the turn of the year. You know there is a credit crunch when central banks use identical words to name their pain.
The 10-year US Treasury yield was whipsawed by 25 basis points in a single 24-hour period this week. "That's four times the normal daily range over the past decade," said Stuart Thomson, who helps oversee $US46 billion ($51.8 billion) in bonds at Resolution Investment Management in Glasgow.
The two-year yield dived below 3 per cent this week, from 5 per cent in June. It has not been this far below the 10-year level since January 2005. Jan Hatzius, the chief US economist at Goldman Sachs in New York, this week chopped his mid-2008 Fed rate forecast to 3 to 4 per cent.
You know there is a credit crunch when the bond market is telling you that the Fed will have to slash its key interest rate from 4.5 per cent to avert recession.
Investors now demand a 4.44 per cent yield to own Italian 10-year government debt. That is 38 basis points more than they charge Germany - the widest spread since March 2001. The 22-basis-point premium on 10-year Spanish debt versus German bunds is near a six-year high. The story is similar in other European debt markets, including those of France and Greece.
Even though all the bonds are denominated in euros, investors prefer to park their money in German debt. Those spreads are telling us that there is a flight to quality in Europe as fear trumps greed.
You know there is a credit crunch when governments that have done nothing to offend the gods of the capital markets are forced to pay more for their money.
Investor appetite for commercial paper is withering away. The total US market has shrunk almost 17 per cent since July and is down to $US1.8 trillion, the smallest it has been for more than a year. The amount of asset-backed commercial paper has fallen to $US849 billion, the lowest level since January last year.
You know there is a credit crunch when short-term cash becomes unavailable because investors will not lend. About 90 per cent of US companies have now reported earnings, and "the news is bad", Merrill Lynch says. The securities firm calculates that third-quarter operating earnings per share have fallen by an average of 8.5 per cent compared with the year-earlier period, the poorest performance since the final quarter of 2001.
Earnings at financial companies fell 33 per cent. You know there is a credit crunch when earnings at a third of the economy's companies have shrunk by a third.
The Governor of the Bank of England, Mervyn King, is the quintessential old-school central banker, hedging his pronouncements with ifs, buts and maybes, highlighting uncertainties and stressing risks. So his candid comments about stockmarkets on November 14 came as a surprise.
"Equity prices are higher now than they were in August, and in emerging markets they are 20 per cent higher," he said.
"There must be some downside risks. It's that sort of risk that's the bigger risk to the global economy than the narrower one from the banking sector." You know there is a credit crunch when central bankers start warning that stock prices are irrationally exuberant.
Paragon Group, the third-biggest British lender to people who buy houses and then rent them out, said last week it might sell new shares to raise £280 million ($651 million). Paragon, which is down 80 per cent this year, cannot find a way to replace a credit line that expires in February. You know there is a credit crunch when a British mortgage company with no US mortgages, subprime or otherwise, and no investments in structured investment vehicles or collateralised debt obligations, cannot finance itself.
Mark Gilbert is a Bloomberg columnist.
HC
... hopelessly addicted to charts!
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holycow
Member
Username: holycow
Post Number: 3531
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Tuesday, December 04, 2007 - 09:13 am: |
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http://www.abc.net.au/news/stories/2007/12/04/2108540.htm -
Turnbull more popular than Nelson...
*** well, the libs seem to have problem learning from the recent butt kick... the last thing they need is another conservative leader!
If they still are open minded enough, here's something for them to chew over: ...government of the people, by the people, for the people... - lest they forget.
HC
... hopelessly addicted to charts!
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