October 11, 2008

Black Monday?



Or bounceback Monday?

Or crazy up and down and all around but break even Monday?

[update - yes, we're supposed to be open on Monday for trading. Let's see if we are]

73 comments:

custer said...

we will rally on the g7 news.This whole thing is almost funny.the crooks on wall street stir up the pot and spook the sheeple into selling their stock.I am buying now why the sheeple shit in their pants as usual.Never follow the herd.

consultant said...

How about black October.

Our fundamentals are all wrong, so it's all down hill from here.

Recovery? No time soon.

consultant said...

No arrests. No trust. No trust. No quick recovery.

In my opinion, Obama's most important pick will be Attorney General.

We need a sheriff who will clean up the town.

dagan68 said...

You mean - BLACK TUESDAY?

I believe Monday is Columbus Day - and the markets and banks are closed

keith said...

And any thought on these G7/G20 weekend meetings?

I don't see how we can get all the nations of the world to agree on anything, even the sun coming up, so an international solution to counterparty risk is just not feasible.

The G7 could do an across the board interest rate cut but it wouldn't solve the problem that banks aren't lending to each other out of fear.

So that leaves us again with nationalizing all of the banks. The the government decides whether to lend or not. But it leaves the taxpayer holding the bag

What a freaking mess.

Thank you realtors

eric in vegas said...

Up big IMO. Governments are going to start outright buying stock to keep them from cratering. It will work temporarily so if you're in for some quick cash great. If you're looking to go long don't; stocks are going to get cheaper. IMO we bottom around 60% from highs like China.

Anonymous said...

I agree with Custer, we will rally on the G7 news. That will hold for a week or two, and than we will see the big drop. Prob a 20-30% decline in a day or two.

Dny

hurin said...

Right now there are still a lot of fools around sitting on a stack of cash waiting to jump in when the market reaches the 'bottom'.

This is the same situation as in the early 1930's when the market experiences a number of 'dead cat bounces'.

But now as it was then, the fundamental problem is that people have to much debt and no realistic way of repaying it. Until all this bad debt has been purged from the system, there can be no recovery.

Government intervention is doomed to fail. This is a problem of solvency, and you can't fix a problem of solvency by adding more liquidity, just as you can't fix a broken dam by pouring more water into it.

Also things are going to get a lot worse than they are now. A number of really dumb people are happy grain prices are going down. Morons, what do they think will happen when farmers see interest rates go up and grain prices go down? THEY WILL GROW LESS FOOD!!! You think food prices are bad now? Just wait and see a year from now.

Anonymous said...

Keith,

I am hearing the formation of a world central bank. New World Order anyone????

Dny

Anonymous said...

http://theseuncertaintimes.blogspot.com/


I am a big Karl D fan. Read this.

keith said...

A moment of absolute and total disgust might be what's needed.

When everyone just gives up

1929-1933 sucked because it took so long to get to that moment.

We're a 24 hour news cycle, internet, McDonald's culture. We want our crash over in a day please.

Even though it's already been a year.

One big cathartic disgusting earth-shaking orgy of selling, and we're done.

Otherwise you're right, bear market rallies followed by new selloffs for a long time

The meetings this weekend and what's announced tomorrow (if anything) is the key

keith said...

On Monday, October 21, six million shares swapped hands, the largest number in the history of the exchange.

But then, on the morning of Thursday, October 24, 1929, it went into freefall. When the New York Stock Exchange opened there were no buyers, only sellers.

The Great Crash had begun. On the floor of the Exchange, there was pandemonium.

Watched by none other than Winston Churchill, who was in the United States on a speaking tour and had come to see how his American investments were faring, there was ‘bedlam’ with ‘the jobbers (trying to buy or sell stocks and shares) caught in the middle’.

As Selwyn Parker, author of a new book on the Crash puts it: ‘In vain attempts to be heard above the din, they were screaming orders to sell; when that did not work, they hurled their chits at the chalk girls.

'Others, transfixed by the plummeting share prices, simply stood where they were in an almost catatonic state.

‘What Churchill was watching,’ Parker goes on to say ‘was the collapse of the collective nerve of American shareholders.’

On the street, the crowds of onlookers grew ever bigger as rumours of the falls swept New York — with thousands upon thousands of ordinary Americans fearful that they were about to lose everything.

By midday police riot squads had to be called to disperse what The New York Times itself called ‘the hysterical crowds’, but they had little or no effect. Rumours spread everywhere — one was that 11 speculators had killed themselves that very morning, though it was not true.

One poor workman on the roof of an office building nearby found himself watched by the crowds below — all convinced that he was about to throw himself to the street below.
1929 Crash

Panic: Investors at New York's stock exchange in 1929 as share prices tumbled

He didn’t, but the legend that one banker did throw himself to his death was to become one of the abiding myths of what became known as ‘Black Thursday’.

Almost 13 million shares changed hands on the NYSE that day, the most that had ever done so, and yet the worst of the falls in value were recouped that same afternoon — in the wake of a rescue attempt by leading bankers who had held an emergency meeting at the offices of JP Morgan.

Yet the rally didn’t last. By Monday, October 28, the sellers were back, and on Tuesday October 29, the Great Crash finally came to a dreadful conclusion in what The New York Times described as ‘the most disastrous day’ in the American stock market’s history.

On that day — ‘Black Tuesday’ — losses approached £4.5 billion ( equivalent to £800 billion today), and more than 16.4million shares changed hands.

http://www.dailymail.co.uk/news/article-1057303/So-learn-Crash-1929-avoid-21st-Century-Great-Depression.html

Anonymous said...

Will the unwinding of YEN CARRY TRADE take down the market to new level.

If G7 can see the root cause of the problem, why can't everyone else.

How can G7 stop Yen Carry Trade from unwinding.

How about ask the other members of G7 to rapidly raise interest rate now.

http://www.bloomberg.com/apps/
news?pid=email_en&refer=home&sid=
aXL2Wu_aoJa4

The yen rallied the most against the dollar since 1998 as a plunge in stocks around the world encouraged investors to sell higher-yielding assets and pay back low-cost loans in Japan.

Japan's yen gained versus all of the other major currencies this week as investors and economists urged Group of Seven financial officials meeting in Washington to step up efforts to prevent the global credit market crisis from choking off lending to companies and households.

Anonymous said...

Prediction:

Monday: Foreign markets continue collapse

Tuesday: Dow goes to 9100.

lazy fed govt employee said...

I'm actually working Monday. Well..at least half a day. LOL

But about the stock market crash. Look at the bright side. The DJIA cannot go less than 0.00. There is a solid bottom.

keith said...

Any chance we come out of this with a world bank and one world currency?

Just asking...

http://uk.youtube.com/watch?v=dYe6dMgeliU

dogcrap green said...

checkout BXP VNO AVB PCL PSA

The real estate investment trust all shot up over 10% on Friday

Anonymous said...

Is it all about the unwinding of the YEN CARRY TRADE or Will the YEN become the next reserve currency of the World.

Didn't BOJ said in 2003 that they want the YEN to be the reserve currency of the World in about 50 years.

It is beginning to sounds more like 5 years the YEN will become the reserve currency of the World, as American assets are sold to back to Japan for pennies to the dollar.

http://biz.yahoo.com/fxcm/081010/
1223674157777.html?.v=1

Euro Plummets On Fears G7 Will Not Find Solution

http://news.yahoo.com/s/ap/20081011
/ap_on_re_as/as_japan_mazda_ford_7

Mazda denied Saturday that a decision had been made by troubled Ford Motor Co. to sell its stake in the Japanese automaker, but didn't rule out a possible deal.

http://www.usatoday.com/money/
autos/
2008-10-10-gm-bankruptcy_N.htm?
csp=34

GM shares have fallen close to a 60-year low, and Ford shares to a 26-year low on fears the global financial crisis could derail turnaround plans at the two biggest U.S.-based automakers.

Paul E. Math said...

I think rallies are coming. What's happening on the VIX will occur across larger stretches of time. The volatility will not just occur within one day but there will be much volatility across weeks and months. One month we're down 2000 then the next month we're up 2000.

But this is pure speculation. The long-term trend continues to be down, in my opinion.

Anonymous said...

The government is closed on Moaday, but the markets are open, and I am talking about Wall Street, not Main Street.

Lady Di said...

Whatever comes out of G7 will not be enough to pacify. Markets will continue down on Mon and Tues.

We will hit 7000 DOW - Roubini predicts by next year. I wouldn't be surprised if it happens before then.

Staying on the sidelines, enjoying the popcorn.

Anonymous said...

One of the most important thing that makes the US Dollar the reserve currency of the world are the value of its assets without its assets then US must rely only on its military power to keep the US Dollar as the reserve currency of the World.

The US must protect the value of its asset from falling into bankruptcy.

http://www.bloomberg.com/apps/
news?pid=20601082&sid=aeX21ndYuZN4

With all three companies working to boost cash, any bankruptcy filing would be a last resort, not a ``strategic'' decision, Schulz said.

General Motors Corp., Ford Motor Co. and Chrysler LLC, the three biggest U.S. automakers, may be forced into bankruptcy as the global credit freeze damps U.S. sales, Standard & Poor's analyst Robert Schulz said.

``Macro factors could overwhelm them at some point'' even as GM, Ford and Chrysler vow to stick with their turnaround plans, Schulz, S&P's lead automotive credit analyst, said today in a Bloomberg Television interview in New York. The companies said they have no plans to seek bankruptcy protection.

LibVet said...

Markets, with the exception of some bond markets, are open on Monday.

Google. It's your friend.

eric in vegas said...

Keith, we're a LONG ways away from a global currency. We're more likely to see continental currencies sooner.

I just don't get why every is so antsy to jump into stocks so soon? Have we learned nothing from the GD? Ask Japanese investors from the 80s how their recovery has gone. At this point it's just speculation, imo.

Anonymous said...

Was there a Euro-Dollar War in 2003.

If so did the US win the Euro Dollar War.

Did Yen Carry Trade pay a part in winning the Euro-Dollar War

http://www.globalresearch.ca/
articles/ENG401A.html

The euro threatens the hegemony of the US

When the euro was launched at the end of the last decade, leading EU government figures, bankers from Deutsche Bank's Norbert Walter, and French President Chirac went to major holders of dollar reserves -- China, Japan, Russia -- and tried to convince them to shift out of dollars at least a part of their reserves, and into euros.

However, that clashed with the need to devalue the too-high euro, so German exports could stabilize Euroland growth. A falling euro was the case until 2002.

Then, with the debacle of the U.S. dot.com bubble bursting, the Enron and Worldcom finance scandals, and the recession in the U.S., the dollar began to lose its attraction for foreign investors. The euro gained steadily until the end of 2002.

Then, as France and Germany prepared their secret diplomatic strategy to block war in the UN Security Council, rumors surfaced that the central banks of Russia and China had quietly began to dump dollars and buy euros.

The result was a dollar free-fall on the eve of war. The stage was set should Washington lose the Iraq war, or it turn into a long, bloody debacle.

But Washington, leading New York banks and the higher echelons of the U.S. establishment clearly knew what was at stake.

Iraq was not about ordinary chemical or even nuclear weapons of mass destruction.

The 'weapon of mass destruction' was the threat that others would follow Iraq and shift to euros out of dollars, creating mass destruction of the United States' hegemonic economic role in the world.

As one economist termed it, an end to the dollar reserve role would be a 'catastrophe' for the United States.

Anonymous said...

The stock market will be open on Columbus Day though most banks are closed.

I believe that it's Thanksgiving Day in Canada as well so their markets will be closed (not that will influence the world markets).

cjmorris1201 said...

I wouldn't be surprised if the markets are flat or actually up early next week based on some false hope due to announcements made over the weekend.

I will be looking at how the markets act Wednesday through Friday this week. If we slowly grind down going into the weekend, the Monday to watch will be Oct. 20th IMHO.

Anonymous said...

*
*
*
And you call it PANIC Keith?
*
*
*

I agree with hurin 7:02 PM
He said:
Right now there are still a lot of fools around sitting on a stack of cash waiting to jump in when the market reaches the 'bottom'.
*
*
*
PANIC it's when NO ONE wants to jump in. NO ONE!!
Everyone wants to sell, but there are NO buyers at any price.
*
*
*
It's not Panic yet, it's just FEAR. The real panic is coming.
*
*
*

Anonymous said...

Ron Paul tells how the US Dollar become the Reserve Currency of the World.

Here is a small portion of the article.

http://www.house.gov/paul/
congrec/congrec2006/cr021506.htm

Dollar dominance got a huge boost after World War II.

We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold.

But the world chose not to return to the discipline of the gold standard, and the politicians applauded.

Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending.

In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound.

Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency.

The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing.

But the world was content to accept those dollars for more than 25 years with little question-- until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold.

In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility, none whatsoever!

Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions.

This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup.

keith said...

Very good point. If the worst week in the history of the stock market wasn't PANIC, then I'd hate to see PANIC.

Wow.

We'll see.

Maybe this time it is truly different.

Owner Earnings said...

Bounce back.

At these levels stocks yeild 6-8%. That aint bad. Even better if you add in a 3% growth rate.

Owner Earnings said...

And BTW, the fact that LIBOR and the TED spread are about 4% means nothing. At this point they are not good indicators.

eric in vegas said...

Buy stocks now or be price out forever!

Anonymous said...

fyi, Schiff says a bounce this week but then down for the foreseeable future. "no reason for Americans to be in stock market right now"

Anonymous said...

If G7 wanted to stop what is currently taking place they should have stopped it long time ago.

The root cause of financial engineering (zaitekku or zaitech) had it roots in the mid 1980 when Yen Carry Trade was taking shape.

The Japan Handbook By Patrick Heenan

Global stuctural developments during the 1980s were dwarfed by the domestic "bubble economy" which defined the second half of the decade.

Essentially, the structural effects of the deregulation set off by the Yen-Dollar Committee combined with the macroeconomic effects of the two major international currency agreements, the Plaza Accord of 1985, and Louvre Accord of 1987 produce a massive expansion of credit within the Japanese economy.

As financial and property markets soared, businesses and individuals were drawn into a vortex of speculative investment.

Large manufacturers, for example, exploited newly licensed financial derivatives to compensate declining overseas revenues caused by the high yen with profits from "financial engineering" (zaitekku), using financial derivatives and other instruments to hedge against cross-border currency and interest rate risks.

As manufacturers reduced their dependence on indirect finance, banks solicited new borrowers with easy credit, making large new loans to the luxury end of the market, including condominiums, hotels, and golf courses.

Because MoF had recently lifted many regulations governing international transactions, the "bubble" also engendered global reverberations.

External developments, such as the "Big Bang" in the United Kingdom in the 1986, which deregulated the stock market there, opened up significant reulatory gaps between Tokyo and other international financial centers, with the result that large amounts of Japanese business were drawn overseas to cheaper and more advantageous locations.

Newly cash-rich Japaneses financial institutions ascended rapidly to highly prominent positions in the international financial community by pursuing aggressive strategies on low-margin lending and commissions.

Anonymous said...

If all else fail Paulson can ask China to pay it debt.

http://www.alipac.us/
ftopict-135120.html

China stiffing America for $100 billion in debt

While Chinese companies are in line to benefit directly from U.S. taxpayers' $700 billion-plus bailout of Wall Street, Fannie Mae, Freddie Mac and other financial institutions, Beijing is stiffing the U.S. for $100 billion or more in unpaid debt.

The status of the Chinese economy, including its repudiated debt, has prompted one analyst to warn of an "ominous threat" involving China's finances and suggest the possibility of "a dramatic reversal" for the "so-called Chinese Miracle."

One problem that should be addressed, he writes, is the $260 billion in sovereign debt owed U.S. and other investors which China has said it simply won't repay.

"The repayment obligation was inherited by the People's Republic of China, when the communists took control in 1949. The successor government doctrine of settled international law affirms continuity of obligations among international recognized successive governments," O'Brien said.

"The PRC is the internationally recognized successor government … which contracted the credit sovereign debt … and which had a loan agreement that states that such debt is intended to be 'a binding engagement upon the Republic of China and its successors.'"

The bonds, however, were excluded from a 1979 settlement of Chinese debts and in 1987, China even "concluded a discriminatory settlement accord with bondholders in Great Britain – an agreement that excluded from settlement any bonds held by non-UK citizens."

Then in 2006, the Chinese Ministry of Finance issued an official communiqué addressed to "the Embassy of the United States of America in China," in which the Chinese government formally repudiated China's defaulted full faith and credit sovereign debt and announced that it would not repay any debt held by American citizens, O'Brien said.

The repudiation still stands, even though the China Economic Review confirmed that major Chinese banks own $8 billion in Fannie Mae and Freddie Mac securities that are the targets of bailout provisions.

"Bank of China said last month it owned $7.5 billion in Fannie and Freddie bonds," the report continued. "The bank also held $5.2 billion in mortgage-backed securities guaranteed by the two agencies."

Those owners will be among the beneficiaries of the overall bailout plan assembled by the government and funded by taxpayers to "rescue" bad debt created by an agenda of loaning money to "subprime" recipients who may not have had the wherewithal to repay the loans.

Recipients of the U.S. taxpayers' generosity also may include various private Chinese interests with investments in American real estate and mortgage.

Anonymous said...

US investment-grade credit derivative index widens

http://www.reuters.com/article/
marketsNews/idUSN1036211420081010

The index widened to about 205.44 basis points from 198.25 basis points late Thursday, according to data from Markit Intraday.

http://www.markit.com/information/
products/category/indices/cdx.html

Anonymous said...

Maybe the G7 can bank role Lehman

http://www.forbes.com/
afxnewslimited/feeds/afx/2008/
10/07/afx5516585.html

Moody's cuts Lehman Derivative unit

Moody's Investors Service announced today that it has downgraded the Counterparty Rating of Lehman Brothers Derivative Products Inc. ('LBDP') to Baa3 with direction uncertain from Aaa on review for possible downgrade, and the Counterparty Rating of Lehman Brothers Financial Products Inc. ('LBFP') to Baa3 with direction uncertain from Aaa.

According to Moody's, the rating actions are the result of the voluntary bankruptcy filings of LBDP and LBFP on October 5, 2008 and the expectation that LBDP and LBFP will be unable to make scheduled payments as a result of the automatic stay caused by the bankruptcy filings.

Anonymous said...

This whole credit crisis is being measured by the TED SPREAD - G7 whole goal is to narrow TED SPREAD gap.

As Yen Carry Trade unwind the TED SPREAD gap will widen more.

http://www.dailyfx.com/story/bio1/
Stock_Markets_Fall__Japanese_Yen_
1223644673936.html

The credit crisis that began in the United States is now affecting the global financial system in full force and stock markets around the world have been selling off on speculation that the world economy could fall into a deep recession.

The LIBOR, a rate that banks use to charge each other for loans, rose to 4.82 percent and there is a growing concern among international investors that any government plan will fail to stabilize the credit markets.

The Japanese yen has been the main beneficiary of this lack of confidence in the financial system and the current environment of uncertainty and de-leveraging in financial markets makes high yielding currencies vulnerable to a complete collapse.

The key Treasury-Eurodollar (TED) spread continues to deteriorate, as yields on 3-Month Treasury Bills have fallen 16 basis points overnight and the LIBOR has gained 7bp.

Such rapid deterioration is hardly a sign of confidence in the financial system; the widened yield differential makes it clear that investors greatly prefer the safety of government debt despite exceedingly-low interest rates.

Progressively worse forex market conditions clearly signal that financial markets remain at a high level of stress.

Such episodes of market panic typically translate into a flight to safety across all traded financial markets, and the primary recipient of such funds in the currency world is the Japanese Yen. We see the Japanese Yen continue to soar against all major currency counterparts.

Indeed, the table below shows exactly how much the Yen has rallied since yesterday’s New York close. Continued distress in financial markets could only lead to further Yen strength.

http://www.dailyfx.com/export/
sites/dailyfx/story-images/2008/
10/currency/Volatility/
Forex_Volatility_2008-10-10_2.gif

Anonymous said...

When will YEN CARRY TRADE stop unwinding.

http://www.marketwatch.com/news/
story/japans-yen-track-week-
historic/story.aspx?guid=
%7B86BE6FE3-155F-44F5-963C
-96BFE76B55CA%7D&dist=msr_1

The yen continued its advance against the currencies of Japan's major trading partners Friday, gaining beyond the 100-level against the U.S. dollar, as investors continued to unwind carry trades amid heightened global risk aversion.

"It's risk aversion," said Haruya Ida, a foreign exchange analyst at Thomson Reuters IFR in Tokyo.

"The yen has taken on the cachet of a safe haven currency similar to the Swiss franc in the past simply because the Japanese banking system seems to be a little bit stronger than banking systems abroad."

He added currency traders were buying yen in spite of sharp declines in the Tokyo shares because of confidence in the outlook for the Japanese currency as a store of value.

Miss Goldbug said...

The stock market is going no where but down...for years.

Compare it to what is happening to house prices.

HP'ers know buying a house now is nothing but catching a falling knife. No great deals IMO until 2010-2014.

No economy - no rise in stock or house prices.

It's all very simple.

k.w. - Southern Ca. said...

Hurin.

You are unfortunately correct.

Throwing devaluating cash at a solvency problem just makes matters worse, but Paulson and
his cronies already know that - they're just trying to buy sometime for themselves - before the real sh*t hits the fan.

Make no mistake, this ship of ours is going down.

Housing should have never become speculative.


hurin said ...
Right now there are still a lot of fools around sitting on a stack of cash waiting to jump in when the market reaches the 'bottom'.

This is the same situation as in the early 1930's when the market experiences a number of 'dead cat bounces'.

But now as it was then, the fundamental problem is that people have to much debt and no realistic way of repaying it. Until all this bad debt has been purged from the system, there can be no recovery.

Government intervention is doomed to fail. This is a problem of solvency, and you can't fix a problem of solvency by adding more liquidity, just as you can't fix a broken dam by pouring more water into it.

Also things are going to get a lot worse than they are now. A number of really dumb people are happy grain prices are going down. Morons, what do they think will happen when farmers see interest rates go up and grain prices go down? THEY WILL GROW LESS FOOD!!! You think food prices are bad now? Just wait and see a year from now.

Anonymous said...

Too much bullishness on this board indicates we have not capitulated yet. You have money to go long. Since you have money this implies we have not reached bottom yet.

Anonymous said...

Only the TED SPREAD will tell you the truth now.

http://www.articlexplosion.com/
articledetail.php?artid=
125805&catid=52

As far as the impact of the bailout package is concerned, there is one key indicator which will assist you in cutting through the thick fog to be created by an excess of information through next week: the spread between 3-month US treasuries and 3-month LIBOR (London Interbank Offered Rate), commonly called the TED spread by inter-bank traders.

While Washington lawmakers fret about what is going to happen next, knowledgeable hedge fund and capital pool mangers are already engaged in re-pricing assets right across the spectrum; the deals concluded on Goldman Sachs and General Electric by Warren Buffet are useful examples in this regard.

Whatever happened to the concept of weighted average cost of capital, essentially incorporating equity, debt and hybrids? Well, for the present, the concept itself has been discarded, perhaps conveniently, and for very obvious reasons.

Firstly, those in control of the marketplace have succeeded in largely under-pricing debt and over-pricing equities since the late 1980s. Secondly, there is a widespread reluctance to recognize that quoted share prices, which are conditioned by options, shorts, futures, day-trading and leverage, over and above the credibility of business models, are not an adequate reflection of inherent risks.

Finally, corporate balance sheets prepared under existing regulatory regimes are incapable of disclosing whether debt service compliance and dividend capability is actually being generated by the core components of a business model or by residual surpluses from debenture or share issuances.

Anonymous said...

Will the G7 be able to stop Yen Carry Trade from unwinding to contain the TED SPREAD.

http://www.greenfaucet.com/
?q=node/3391

Until we have a functioning banking system again, there is no reason to expect any positive developments in equity markets.

The best signal of a relaxing credit system will be a falling TED spread:

At this moment, the TED spread is the most important indicator to watch, because until the banks can honestly claim some hope of solvency and are able and willing to resume something approximating normal functioning, any other market activity is epiphenomenal at best.

While the VIX ($VIX) deserves its popular title as the “fear index,” in this climate even it may be too broad a tool.

The perception banks have of each other is a more important factor right now, and the moderation of that perception remains a necessary condition for any market recovery, even in the short term.

keith said...

So what happens to the price of oil if Iran attacks Israel this weekend? Or takes out a US ship in the straits?

Me thinks we're getting a bit complacent, when some pretty unstable countries MUST have oil above $100

Ooh,what's that that just few by your window? Was it black?

Anonymous said...

So we have a G7 member that is not happy with US decision, and his decision will be one of the most critical to what happens to the YEN.

http://www.javno.com/en/world/
clanak.php?id=191415

Nakagawa, a former head of a lawmakers group devoted to resolving the abductees issue, was in Washington for a meeting of Group of Seven finance ministers and central bankers.

Finance Minister Shoichi Nakagawa called the U.S. decision "extremely regrettable" and said he doubted that Washington had consulted its ally Japan about the move in advance, Kyodo said.

Japan's finance minister called the United States' removal of North Korea from its terrorism blacklist as "extremely regrettable" and families of Japanese seized by Pyongyang expressed outrage and sorrow over the move, Kyodo news agency reported.

BuyPutsGuy said...

ONLY THING YOU NEED TO KNOW: ** OPTIONS EXPIRATION WEEK **

They will take the market up to levels where the options writers will not lose money. This is 9500-10500. Probably 10500. They always like the level before the last cascade. That's their breakeven strike.

They are going to screw over all the little guys buying insanely (VIX 75) overpriced put options.

Remember the 1000pt 2 day rally last month? Thu and Fri right at options expiration.

Since they need to rally 2000 pts, they may start early this week. 4 days at +500 each? Or all at once?

They go short, then sell you puts at the bottom in the panic, then take the market up with all their profit and keep the put premiums.

The proper move was to buy Oct calls on Fri at the lows. If Monday retests (my personal thought is *no* because Fri had the low + retest all in 1 day and 1000pt rally on volume shows you the true state of things) then buy calls hand over fist! If not, I suppose you could go long stocks instead.

I could be wrong, but I don't think I am. Have "they" lost control? Sure seems like it. But I think it's all smoke & mirrors. When everyone thinks they've lost control, that's probably when they in fact have the most.

So either sell your stocks on Monday and be a sheep, or buy when it is extremely hard and painful at 7900. We know what the crowd is doing.

Keep in mind every trader / hedge fund is just sitting there for a hint of a real bounce and it will be PANIC buying. That will look like +1000-2000 in 1 day at current volatility levels!

I could be wrong! So don't blame me. Do your own thinking.

BuyPutsGuy said...

Oh! I forgot to say, my previous comments are ONLY FOR A TRADE, FOR THIS WEEK ONLY. After Fri who knows what happens, and who cares. Get the profit on the insane trading this week. Long term we are DOWN. 8000 will be retested. The true-value long-term trend of the DJIA is 6000-8000. We could overshoot. However, 8000 in so short a time is really phenomenal and caught me (a pure bear) off-guard.

A rally is coming, maybe weeks maybe even months. Maybe not instantly, but soon. Then at least a retest of 8000, more likely a decent bit below. It will settle and start to do some sideways action eventually. VIX must come down. They must start the cycle of hosing both bulls & bears again. They're running out of bulls to fleece. Time to screw the bears.

Anonymous said...

Keith said: "We're a 24 hour news cycle, internet, McDonald's culture. We want our crash over in a day please."

Keith, you are SO right. The housing market as up and up for give or take 10 years, and suddenly everyone is calling or a bottom within months. It's total bullshit.

Last month my next door neighbors put in an application to more than double the size of their (soon to be former) cute home: make it into one of those 4 bedroom plus 'extra room', 'master suite' over sized, ugly monstrosities. One is retired and the other will retire in 1-2 years. I could give a crap but I can't help but wonder, as I sit in MY little 2 bedroom, if I'll never have the option of doing the same, even if I really need to if i have kids, because I'll be paying off THEIR bad judgment with huge tax bills.

Fools. And i guess I am to, for not over leveraging myself and running for 'average american', 'home owner relief' myself.

Miss Goldbug said...

I had a "shoe shine boy moment" yesterday at an estate sale. Spoke with a neighbor to the sale, while waiting for the estate to open.

This neighbor (a teacher at a local college) told me she owned the house across the street, and bought another property 8 years prior up the street as a 'rental'. When we talked about how bad the economy is and the markets, she told me she was margined on a stock, but that she only had 12k into it and might be losing alittle. She said the reason there was fierce selling in the stock market is because the media is scaring people about the economy.

I explained to her about forward earnings and that in a recession, those future earnings go 'poof' she didnt have an reply...

Funny how some people want to tell a perfect stanger their personal financial history...After that conversation, I knew I made the right decision to sell my stocks last Sept.

Ross said...

"Ooh,what's that that just few by your window? Was it black?"

Put away the sauce Keith. What in the world does that even mean?

Prediction: Rebound this week on foolish optimism

Anonymous said...

Keith you have it backwards - Israel is going to attack Iran!

formosan80 said...

The Guardian is calling it Black October and predicting that more than one million Britons will lose their jobs before Christmas. Talk about an implosion: http://www.guardian.co.uk/business/2008/oct/12/recession-unemploymentdata

Anonymous said...

Well unless we see yet another bank failure, I don't foresee the market going down. However, what I managed to gather of that last crazy wednasday, was that they had great expectations from the G7 meeting. So I think we'll have a rebound, but nothing like +10%

Anonymous said...

"So what happens to the price of oil if Iran attacks Israel this weekend?"

Keith,
Wherever you are, I think you might be drinking too much. (me too, but....)

Iran ain't attacking anybody.

More importantly, I think, as much fun as you're having watching all this come down, you're missing the real scoop.

The Real Scoop...

Mark my words...

This is a crisis not of banks, stocks, government, et al...

This is a crisis of Human Nature.

And, last I checked, Human Nature hasn't changed in a while... and best I can figure, Human Nature isn't changing anytime soon.

It's ok to have fun (we all need to have more fun, goddamit), but...

Ya gotta go deeper, Keith.

Well, no, you don't "gotta."

But you seem to have the capacity to do so, and given the opportunity (which you have), you'd be remiss to not take advantage of it.

This ain't no freak show, after all....

hp fan said...

Dude, dump your COP

Pigs get Slaughtered.

Anonymous said...

" dagan68 said...
You mean - BLACK TUESDAY?

I believe Monday is Columbus Day - and the markets and banks are closed
"
...
The New York Stock Exchange, NYSE, is open from Monday through Friday 9:30 a.m. to 4:00 p.m. ET.
NYSE, NYSE Arca, NYSE Bonds and NYSE Arca Options markets will observe the holidays below:




2008

New Year's Day
January 1
Martin Luther King, Jr. Day
January 21

Washington's Birthday/Presidents' Day*
February 18*

Good Friday
March 21

Memorial Day
May 26

Independence Day†
July 4†

Labor Day
September 1

Thanksgiving Day†
November 27†

Christmas†
December 25†
http://tinyurl.com/36tx3g

Anonymous said...

Hmm, you want conspiracy? Go to moneycentral.msn.com and try to bring up a chart of more than the last 10 days of the Dow Jones Industrial Avg ($INDU). Like try the 1M or 3M chart. Or try entering in the dates of 1929. These things worked on Fri. All day Sat these charts were offline. I can't find a way to bring up 1929 DJIA history on yahoo either. Bizarre!

Lost Cause said...

Rally on light trading.

But the trend is enevitable. We are going to see some real bad days this month, if we are lucky. If we are not so lucky, we will see them until the end of the year.

West Coast Willie said...

Keith

Last week was a rather humbling experience. I was riding the whale with a net short position but went long around Wednesday and proceeded to get shallacked. It was a buzzsaw. As Barton Biggs said today, this market may be uninvestible.

That said, and with the disclaimer that neither I nor anyone else on this board truly has the slightest idea what is going to happen next,
I am sticking a toe in next week on something that got thrown out with the bathwater in last week's indiscrimate selling.

Something with some time value like an April Vix call. I mean Vix at 70? Come on.

Thankfully, some of us sold our houses before the music stopped because the double whammy effect of watching your retirement money and your house equity disappear is probably too much for many people to stomach. Somebody in their 50s is going to have a very hard time coming back from that.

Silver lining? Maybe this was what it took to ensure that the first black man is elected president notwithstanding scurrilous, race baiting, fascist like hate spewing from the open sewer that is a Palin rally. McCain saw what he was creating yesterday and finally started to tamp it down. And he better knock that shit off or he is going to be a pariah when he goes back to the Senate.

keith said...

Anyone heard any shoe shine boys talking about opening a trading account so they can buy put options or go short the market?

That'd be a nice sign

That said, seeing 'buy gold' infomercials is a bit troubling. Any thoughts on the yellow stuff?

Anonymous said...

"Silver lining? Maybe this was what it took to ensure that the first black man is elected president "

What dumb reason to wish for the destruction that our financial system is going through. What an idiot!

The reason we have never had a viable black candidate up until now is that all the previous candidates have people like Jessie Jackson who has spewed more hate with his anti-Jewish comments that anything McCain's supporters have said.

Anonymous said...

From what I'm reading, the Lehman's sale went dismally. So it looks like everyone is going to be selling and moving to cash on Monday.

Anonymous said...

That said, seeing 'buy gold' infomercials is a bit troubling. Any thoughts on the yellow stuff?

------------------------------

I would not worry about a gold infomercial. Start to worry when soccer moms are talking about buying gold.

Physical gold is a bargain to me at these prices. I fully expect it to go to at least $2,000 an ounce by 2010.

Anonymous said...

"Only the TED SPREAD will tell you the truth now."

Would you please shut the f*ck up, go away, and get a life!

The Open Thread was done away with because you, like an idiot, kept posting your mindless copy and paste artilces about market technicalities that no one cares about.

West Coast Willie said...

Anonymous

Nobody said they wished for the destruction of the financial system moron. But if the market wasn't in full meltdown,jackasses like you would be braying about how Obama isn't fit to be president because he is an arab or a terrorist, take your pick. The fact that people have something much bigger to fear has caused the Rove slime machine to seize up and put Obama 10 points ahead in the polls. Get it?

Anonymous said...

The PPT Zionists will try to pump.

Anonymous said...

.




BLACK WEDNESDAY, SINCE EVERYONE IS EXPECTING MONDAY AND TUESDAY.




.

Anonymous said...

"But if the market wasn't in full meltdown,jackasses like you would be braying about how Obama isn't fit to be president because he is an arab or a terrorist, take your pick."

You have no idea how I would re-act under any circumstance, so save your speculative arguments for those with single-digit IQs. And your calling someone a "Jackass" merely for disagreeing with you shows how immature you are.

You were challenged for implying America would not elect a black president if we not in dire economic times. Like many people on the left, you have the narcissistic belief that you are the only non-racist around. The fact that America would never elect someone like Jessie Jackson or Al Sharpton does not make America racist. If Colin Powell had run for President in 2000, he would have won easily.

It's true that Obama would not make it if the financial system was not in the chaos that it is in today, but neither would his white running mate, Joe Biden. It has nothing to do with skin color and everything to do with their radical liberal views, which include open borders and using tax-payer money to pay down the mortgage principal of people who bought more house than they could afford. However, tough economic times allow for people with more radical views to get into office, which has always been the case.

Also, I am no McCain or Bush supporter and I am not a partisan shill. However, when the proper analysis of what lead us to this financial crisis in done, there will be plenty of blame to go around, so don't get the ideal one party is holier than the other.

Anonymous said...

Gold would be much higher if it were not suppressed. It is very, very tough to find physical gold and silver anywhere near spot, which is controlled in NY (for now.) Silver on eBay is selling for DOUBLE the price in NY! Gold is selling for about a 30-40% premium. The boys in NY are subsidizing you. And when the big money is finished buying long at cheaper prices (it probably already is long) look out above!

Jim Rogers says the current actions of the Fed and Treasury will create an inflationary holocaust. I agree.

Tyrone said...

Any thoughts on the yellow stuff?

It isn't gold unless you take physical possession. And you just might need that possession.

Anonymous said...

Equities will bounce on Monday, possible into midweek. It will be a fake rally as non-experts will think they are smart and call the bottom. Market likely consolidates and fades lower. A bottom will look more like a W formation than a V. If you are short cover. If you are out of the market wait. If you are looking for bargains you have many months ahead and can take your time -