**(Market note, they'll hold up market for FED meeting.....still in range)
http://www.nytimes.com/2008/03/07/books/07book.html?_r=2&oref=slogin&pagewanted=print excerpt from ‘GUSHER OF LIES”
Also
Oil For WarThursday, March 13, 2008 - Ron Smith
Earlier this week, I mentioned an article in The American Conservative that absolutely blew me away by revealing the astounding amount of fuel being used to continue our failed occupation of Iraq.
Robert Bryce, the author of the piece, informs us that after invading one of the most petroleum-rich countries on the planet, the mighty U.S. military is running on empty, using more than five thousand tanker trucks to haul JP-8 gas – a blended jet fuel used to run both vehicles and aircraft – into Iraq, mostly from a huge refinery complex in Kuwait, but with some that’s run in from Turkey.
Last year alone, says Bryce, who is the managing editor of “Energy Tribune” magazine, the American forces in Iraq burned through more than 1.1 billion gallons of fuel.
“In November 2006,” says Bryce, “a study produced by the U.S. Military Academy estimated that delivering one gallon of fuel to U.S. soldiers in Iraq cost American taxpayers $42 – and that doesn’t include the costs of the fuel itself.”
Bottom line: In the war that Paul Wolfowitz famously predicted would “pay for itself,” the U.S. is spending $923 million per week on fuel-related logistics.
Why is this important? Bryce says, “While the U.S. military chases its own fuel tail in Iraq, a country that sits atop 115 billion barrels of oil – about 9.5 percent of the world’s total – the global energy industry is racing forward with new alliances and deals, many of which would have been unthinkable before the invasion.”
The global balance of power is shifting dramatically according to his analysis, in ways that indicate the effectiveness of militarism in controlling global energy trends is declining. Far from being the sole superpower of recent legend, the U.S. is flailing about in a world where the balance of power is realigning itself in ways that will leave America’s influence substantially diminished.
So much for those best-laid plans, you know, the ones where we invade Iraq and demonstrate to the entire world the futility of opposing our imperial desires.
Unfortunately, “Oil for War,” the article in question, isn’t yet available Online. But we will be talking this afternoon with Robert Bryce about it and also about his new book, “Gusher of Lies: The Dangerous Delusions of Energy Independence.”
WBAL Radio - Baltimorehttp://wbal.com/
Thursday, March 13, 2008
Saturday, March 01, 2008
FOOLS GOLD
It isn't ALWAYS about what you make, it's about what you DONT lose.
HEAVY SELLING IS COMING< YOU KNOW IT!! I think ususally you get a feeble rebound from 90% down day, we should get EXCELLENT short entry if not in one or add....or not
WHich at some point will lead to a pity rebound of some repute....we can try to find that support level. We already know I think which ETF'S to play.
I think gold is set up for a NASTY retreat, which will lead to one last amazing rise.
In face of dying dollar BELOW ANY KNOWN SUPPORT or known......with only a blind, impotent fool denying inflation....what will FED DO?
As the masses, and most will NEVER wise up to gold......they havent and wont....it will be the playa's betting agaisnt themselves as to how far it can be pushed......then no support and crash......the masses dont see this coming (DOW).....unlike gold, they will eventually DO SOMETHING PANIC and in the FACE of DIRE NEWS.....we wait to buy
Remember, in 70's we did not have China factor, we had "TOO MAN CHASING TOO FEW GOODS" BAMMMMMMMMMMMMMMMMMMMMMMM
Now we have the world's MANUFACTURING KING EXPORTING RISING COSTS INFLATION....from prosperity.....rising wages....SOARING COMMODITY PRICES..............I am on front lines as M2, they can NO Longer eat nor contain the rising costs of raw materials...shipping costs.....as the worst case we have SCANT WAGE GROWTH AND NEGATIVE SAVINGS RATE DEFLATING HOUSING MARKET OIL CRISIS FALLING SPX PROFITS RISING CREDIT DELIQUENCIES RISING TAXES SUB PRIME CONTAGION WORLWIDE FALING WORLD ECONOMIES A US RESERVE CURRENCY FALLING BELOW ANY PREVIOUS KNOWN VALUE
Can you spell S C R E W E D
Duratek
HEAVY SELLING IS COMING< YOU KNOW IT!! I think ususally you get a feeble rebound from 90% down day, we should get EXCELLENT short entry if not in one or add....or not
WHich at some point will lead to a pity rebound of some repute....we can try to find that support level. We already know I think which ETF'S to play.
I think gold is set up for a NASTY retreat, which will lead to one last amazing rise.
In face of dying dollar BELOW ANY KNOWN SUPPORT or known......with only a blind, impotent fool denying inflation....what will FED DO?
As the masses, and most will NEVER wise up to gold......they havent and wont....it will be the playa's betting agaisnt themselves as to how far it can be pushed......then no support and crash......the masses dont see this coming (DOW).....unlike gold, they will eventually DO SOMETHING PANIC and in the FACE of DIRE NEWS.....we wait to buy
Remember, in 70's we did not have China factor, we had "TOO MAN CHASING TOO FEW GOODS" BAMMMMMMMMMMMMMMMMMMMMMMM
Now we have the world's MANUFACTURING KING EXPORTING RISING COSTS INFLATION....from prosperity.....rising wages....SOARING COMMODITY PRICES..............I am on front lines as M2, they can NO Longer eat nor contain the rising costs of raw materials...shipping costs.....as the worst case we have SCANT WAGE GROWTH AND NEGATIVE SAVINGS RATE DEFLATING HOUSING MARKET OIL CRISIS FALLING SPX PROFITS RISING CREDIT DELIQUENCIES RISING TAXES SUB PRIME CONTAGION WORLWIDE FALING WORLD ECONOMIES A US RESERVE CURRENCY FALLING BELOW ANY PREVIOUS KNOWN VALUE
Can you spell S C R E W E D
Duratek
Friday, February 29, 2008
BEAR CROSSING SIGHTED
IMHO I THINK WE ARE IN early stages OF A nasty bear market!! as above chart elaborates, today was NASTY and over 90% down volume, NONE of the rally days could muster that.
I do not post much anymore because most of my loyal readers just lurk, I honestly don't know how many ready my blog. I get busy, I own a company.
But I'll post whenI can.
Is Bernanke FEEBLE or what? You had bubble in 90's, you reinflated with REDICULOUS low rates in the bull run of 2003-2007, that is OVER. But all it created was MORE BUBBLES and INFLATION. It killed manufacturing.
The infection known as "sub prime" was shipped ALL OVER THE WORLD...where the hell was the FED? or anyone? ALLOWED to fester rampant speculation and now look at the mess!
BANKS WONT LEND, M and A dead, CDO'S DEAD......FED trying same old tired tricks (they got nothing else) lowering rates again....but this time it isnt any fun!
Where is the money going? COMMODITIES!!!!!!!!!!! loo at OIL, GOLD WHEAT etc...damnit.
But good ole Ben isnt worried about inflation? IDIOT! US DOLLAR isnt worth wiping your ass with it my friends!
LISTEN to RON PAUL!!
http://www.contraryinvestor.com/mo.htm here's another bubble there another bubble.....no STEADY EDDY GROWTH JUST STUPID BUBBLES
As rates fall (short end) Long rates WERE stubborn but FEAR send the HERD there last few days...safety in Bonds....a big 3.6% 10 year whoopieee.
You got a FED just follows market, all they do and denies inflation, not worried about $100 OIL maybe $120 but not $100 oil. $970 GOLD ( setting all time highs) they cant talk inflation away..but who is really listening anyway?
Mono line rumors each day some bad most promise buyout or something.....look EVEN Warren BUffet won't touch them! only wants the good stuff?
Bank gets nationlized in England...Northern Rock
LONDON (AP) -- U.K. treasury chief Alistair Darling said Sunday that struggling bank Northern Rock PLC will be nationalized after the government rejected two private takeover bids.
Darling told a news conference that the ailing mortgage lender would be placed under temporary public ownership because both bids had failed to meet the government's criteria for protecting taxpayers.
"The new board and the company will operate at arm's length from the government, with complete commercial autonomy for their decisions," Darling said.
Darling told a news conference that the ailing mortgage lender would be placed under temporary public ownership because both bids had failed to meet the government's criteria for protecting taxpayers.
"The new board and the company will operate at arm's length from the government, with complete commercial autonomy for their decisions," Darling said.
and this
NEW YORK (Fortune) -- Not long ago, Goldman Sachs alums Geoff Grant and Ron Beller looked like superstars. A prescient wager on the collapse of the subprime mortgage bond market generated last year a whopping 87 percent return for one of their hedge funds.
The twosome, who run London-based Peloton Partners, aren't looking so shrewd these days. They've been forced to liquidate their once high-flying ABS fund after gambling big on a mortgage bond rebound that didn't materialize. The $1.8 billion fund's collapse comes after a series of recent trades dropped sharply in value, leading to margin calls from creditors that the firm was unable to meet.
The ABS fund's implosion, coming just three years after Peloton Partners was formed, highlights the steep challenges that hedge funds face amid the credit crisis gripping Wall Street. Last week D.B. Zwirn & Co shut down its two biggest hedge funds amid investor defections. Citigroup halted earlier this month withdrawals from one of its hedge funds.
The twosome, who run London-based Peloton Partners, aren't looking so shrewd these days. They've been forced to liquidate their once high-flying ABS fund after gambling big on a mortgage bond rebound that didn't materialize. The $1.8 billion fund's collapse comes after a series of recent trades dropped sharply in value, leading to margin calls from creditors that the firm was unable to meet.
The ABS fund's implosion, coming just three years after Peloton Partners was formed, highlights the steep challenges that hedge funds face amid the credit crisis gripping Wall Street. Last week D.B. Zwirn & Co shut down its two biggest hedge funds amid investor defections. Citigroup halted earlier this month withdrawals from one of its hedge funds.
***D
Wednesday, February 13, 2008
RETIAL SALES SPIKES SPX FUTURES (BUT!!!!)
http://www.reuters.com/article/economicNews/idUSN1241744420080213
WASHINGTON, Feb 13 (Reuters) - Sales at U.S. retailers rose 0.3 percent in January, which was an unexpected pickup that partly reflected stronger sales of new cars and gasoline, according to a Commerce Department report on Wednesday.
January's sales increase followed a 0.4 percent decline in December and was contrary to Wall Street analysts' forecasts for a 0.2 percent decline.
Excluding autos, January sales still rose 0.3 percent, reversing a 0.3 percent decline in December sales. Wall Street analysts were expecting a 0.2 percent gain in sales excluding autos.
Despite the higher headline number for sales, there were declines in many categories that implied consumer spending was being pinched. Furniture sales fell 0.5 percent in January, building material sales were down 1.7 percent and department store sales declined by 1.1 percent.
Many analysts think the slowing U.S. economy is headed into recession if not already there and are closely watching for signs that consumers, who fuel 70 percent of national economic activity, will keep scaling back spending.
Gasoline sales rose 2 percent in January after being flat in December. But higher sales numbers can simply reflect increased sales prices and the report does not specify whether the volume of gasoline sales was up from December.
Excluding gasoline, January retail sales rose 0.1 percent.
(Reporting by Glenn Somerville, editing by Joanne Morrison)
DOMAIN FURNITURE 17 stores going PHTTTTTTTT!!!!!!
Duratek
WASHINGTON, Feb 13 (Reuters) - Sales at U.S. retailers rose 0.3 percent in January, which was an unexpected pickup that partly reflected stronger sales of new cars and gasoline, according to a Commerce Department report on Wednesday.
January's sales increase followed a 0.4 percent decline in December and was contrary to Wall Street analysts' forecasts for a 0.2 percent decline.
Excluding autos, January sales still rose 0.3 percent, reversing a 0.3 percent decline in December sales. Wall Street analysts were expecting a 0.2 percent gain in sales excluding autos.
Despite the higher headline number for sales, there were declines in many categories that implied consumer spending was being pinched. Furniture sales fell 0.5 percent in January, building material sales were down 1.7 percent and department store sales declined by 1.1 percent.
Many analysts think the slowing U.S. economy is headed into recession if not already there and are closely watching for signs that consumers, who fuel 70 percent of national economic activity, will keep scaling back spending.
Gasoline sales rose 2 percent in January after being flat in December. But higher sales numbers can simply reflect increased sales prices and the report does not specify whether the volume of gasoline sales was up from December.
Excluding gasoline, January retail sales rose 0.1 percent.
(Reporting by Glenn Somerville, editing by Joanne Morrison)
DOMAIN FURNITURE 17 stores going PHTTTTTTTT!!!!!!
Duratek
Thursday, February 07, 2008
FINANCIAL MELTDOWN
http://www.rgemonitor.com/blog/roubini MUST READ TO INFORM
The first quarter that the credit crunch should directly hit The CEO of accounting firm PricewaterhouseCoopers expects more non-financial U.S. companies to report write-downs linked to the credit crisis, showing the problem has the potential to infect a wide swath of corporate America.‘It's not just in banks,' CEO Samuel DiPiazza told reporters late on Tuesday. ‘These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions.'‘We are having to deal with this with thousands of companies, not just a handful of big banks,' he said, and added that a ‘first wave' of write-downs was likely in the current audit cycle this quarter.Last month Bristol-Myers Squibb Co became among the first companies outside the financial sector to disclose its exposure to the world-wide credit crisis. Over the last few months, other non-financial companies such as networking-equipment maker Ciena Corp and software company Lawson Software Inc have also reported write-downs related to the credit crunch and the housing sector meltdown.
**BEING INFORMED MIGHT SAVE YOUR ASS!
my email to friends on Cramer this AM
Yeah, and this AM they trot out that idiot CRAMER......who each time he speaks sounds less credable and more carnival like.....CNBC is w/o any merit except amusement....surely they wont have Roubini on again!!
Yeah, how do they WARN their liseners to mover thier assets into a TREASURY MM as even reg MM's can fail?? so it makes you think what good is ANY TIP they give on flip side when all know at same time? is why they always PUKE afterwards.
WHy arent they asking that carnival barker why all his picks have lost fortunes for his lemmings? where did all the BOOYAH'S GO??
WHY did RR say we have great worldwide global boom coming at peak of mkt?
did you see the execution of NYX NMX and CME last night!!!!
WILL losses overseas cause liquidation of US assets?
ANOTHER inter-meeting cut? SPELLS? PANIC AT FED LOSS OF CRED?
WHY doesnt BB see a bear mkt? WHY DID MOST GURU'S underestimate the credit crisis?
I can hear that ahole downstairs...Ill shut him off, go in basemnt and play some blues! GREATEST story never told? was the liars den of thieves.... CSCSO WARNING SOBERING coming from the biggest tech smiler in bunch.. and it appears the few of us, avg Joe's are amng an elite group of mkt tech's that did not fall asleep at the wheel..
I have ALL my assets in a TREASURY MM for protection...but hey that's just me.
TURN OFF CNBC and start thinking for yourselves!
D
The first quarter that the credit crunch should directly hit The CEO of accounting firm PricewaterhouseCoopers expects more non-financial U.S. companies to report write-downs linked to the credit crisis, showing the problem has the potential to infect a wide swath of corporate America.‘It's not just in banks,' CEO Samuel DiPiazza told reporters late on Tuesday. ‘These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions.'‘We are having to deal with this with thousands of companies, not just a handful of big banks,' he said, and added that a ‘first wave' of write-downs was likely in the current audit cycle this quarter.Last month Bristol-Myers Squibb Co became among the first companies outside the financial sector to disclose its exposure to the world-wide credit crisis. Over the last few months, other non-financial companies such as networking-equipment maker Ciena Corp and software company Lawson Software Inc have also reported write-downs related to the credit crunch and the housing sector meltdown.
**BEING INFORMED MIGHT SAVE YOUR ASS!
my email to friends on Cramer this AM
Yeah, and this AM they trot out that idiot CRAMER......who each time he speaks sounds less credable and more carnival like.....CNBC is w/o any merit except amusement....surely they wont have Roubini on again!!
Yeah, how do they WARN their liseners to mover thier assets into a TREASURY MM as even reg MM's can fail?? so it makes you think what good is ANY TIP they give on flip side when all know at same time? is why they always PUKE afterwards.
WHy arent they asking that carnival barker why all his picks have lost fortunes for his lemmings? where did all the BOOYAH'S GO??
WHY did RR say we have great worldwide global boom coming at peak of mkt?
did you see the execution of NYX NMX and CME last night!!!!
WILL losses overseas cause liquidation of US assets?
ANOTHER inter-meeting cut? SPELLS? PANIC AT FED LOSS OF CRED?
WHY doesnt BB see a bear mkt? WHY DID MOST GURU'S underestimate the credit crisis?
I can hear that ahole downstairs...Ill shut him off, go in basemnt and play some blues! GREATEST story never told? was the liars den of thieves.... CSCSO WARNING SOBERING coming from the biggest tech smiler in bunch.. and it appears the few of us, avg Joe's are amng an elite group of mkt tech's that did not fall asleep at the wheel..
I have ALL my assets in a TREASURY MM for protection...but hey that's just me.
TURN OFF CNBC and start thinking for yourselves!
D
Wednesday, January 30, 2008
YHOO DIRECTOR WAS SELLLER
http://finance.yahoo.com/q/it?s=YHOO Terry Semel between Aug and Oct 2007 sold nearly $100 M of YHO stock! must be nice to be insider......bag holder lemmings bought it...now look at it!
D
D
20 YEARS IN THE MAKING
http://prudentbear.com/index.php/CreditBubbleBulletinHome
Doug Noland's astutue credit bubble report, conclusion scroll down to above title at end of report.
Big Ben on the m0und this PM, big deal, I suspect when FED Out of way so will excuses for buying thism kt.
D
Doug Noland's astutue credit bubble report, conclusion scroll down to above title at end of report.
Big Ben on the m0und this PM, big deal, I suspect when FED Out of way so will excuses for buying thism kt.
D
Tuesday, January 29, 2008
BALTIC DRY INDEX SINKING LIKE TITANIC
BDI peaked about same time the stock market did. From WickpediaBaltic Dry Index
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The Baltic Dry Index is an index covering dry bulk shipping rates and managed by the Baltic Exchange in London. According to Baltic Exchange, the index provides:
an assessment of the price of moving the major raw materials by sea. Taking in 40 shipping routes measured on a timecharter and voyage basis, the index covers supramax, panamax and capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.
The index is made up of an average of the Baltic Supramax, Panamax and Capesize indices. These indices are based on professional assessments made by a panel of international shipbroking companies.
Since the cost of shipping varies with the amount of cargo that is being shipped (supply and demand), and since dry bulk is usually goods that are precursors to production (like cement, coal, and iron ore), the index is also seen as a good economic indicator of future economic growth and production.
It is my own opinion that ALL we are seeing is a bear market bounce, until proven otherwise.
Fed tomorrow, WHO doesnt think they will pander to markets demand, they dictate nothing.
50 basis is what is being DEMANDED, IMHO anything less will be sold.
VLO and other refiners are bouncing, oversold restaurants have bounced like Darden, and Calif Pizza Kitchen, Home Builders and some banks catching bids along with commodities.
We are nearing resistance in the SPX of which the 1370 -1380 are should not be broken this time around.....I would reasess if it is.
Duratek
Saturday, January 26, 2008
SYSTEMIC FINANCIAL ARMAGEDON
NOLAND:
I’ll stick with the view that an unfolding breakdown in various trading models and hedging strategies is at risk of precipitating a crisis of confidence for the leveraged speculating community. I suspect hedge fund trading was much more responsible for chaotic global securities markets this week than a rogue French equities trader. There is, unfortunately, little prospect for markets to calm down anytime soon. There is no quick or easy fix to any of the myriad current problems – seized up securitization markets, sinking housing prices, faltering bond insurers, counterparty issues, a crisis in confidence for “Wall Street finance”, or acute economic vulnerability - to name only the most obvious. Again, they’ve been More than 20 Years in the Making.
Financial Economists Roundtable
Statement on Derivative Markets and Financial Risk
September 26, 1994 *****(YES 1994 !!!!!!!!!!!!)
This concern, no doubt, partly stems from the sheer size of derivatives markets in general and to the ballooning OTC derivatives market in particular. The General Accounting Office (GAO) reports that at year-end 1992 the notional value of outstanding futures, forward, options and swap contracts alone totalled more than $17 trillion, up from $7 trillion in 1989. Another reason for concern about derivatives is the seemingly impenetrable complexity of some of these instruments. This complexity has created an aura of mystery about derivatives markets, and has fostered a fear that a miscalculation by someone, or an undetected but vital flaw in the market or regulatory system, could trigger failures cascading into a financial market meltdown.
The GAO Report, the latest of these, contains thmost provocative policy recommendations.
The GAO Report recommends additional regulation of both derivatives dealers and end-users of derivatives. The study concludes that OTC derivatives could pose a systemic risk to financial markets if a major OTC dealer were to default on its counterparty (or contractual) obligations. It also finds that certain "unregulated" dealers, such as those affiliated with securities and insurance firms, have created a potentially dangerous "regulatory gap" that needs closing.
http://www.freemarketnews.com/Analysis/178/3889/2006-02-22.asp?nid=3889&wid=178
First, the triggering event or events cause sharp and sudden declines in one or more classes of asset prices. The decline in asset prices is sufficiently steep to raise questions about the creditworthiness of major counterparties or institutions such that the analytical distinction between market risk and credit risk blurs as market risk and credit risk feed on each other.
Second, the combination of falling asset prices and the erosion of creditworthiness causes market participants to commence risk mitigation efforts such as position liquidations which - while perfectly reasonable at the micro level - add to macro pressures on asset prices wjich in turn trigger the initial evaporation of market liquidity for one or more classes of assets. The evaporation of asset liquidity aggravates both market and credit risk and begins to call into question balance sheet liquidity for some institutions. Investor position liquidations intensify these pressures.
Third, in these circumstances, once seemingly generous amounts of margin or collateral are rapidly called into question, thereby dramatically elevating credit concerns. The escalation of credit concerns further influences the defensive behavior of financial market participants, all of which acts to reinforce the cumulating the adverse market dynamics. Hence a financial crisis with systemic risks is at hand.
http://www.safehaven.com/article-4096.htm
In truth, while no one can say for certain when the day of reckoning will arrive, it seems a good bet that if some of those who are in a position to know are worried about the derivatives market and the associated systemic risks, you should be, too.
One of the difficulties people have with understanding this particular disaster-in-the making is its complexity and seeming irrelevance to their day-to-day lives. Unlike an earthquake or a car bomb, a derivatives-inspired financial meltdown won't to lead to leveled buildings or bloodshed, at least initially. Yet, the toxic fallout will likely be as painful, long-lasting, and difficult to overcome as any of the more widely discussed scenarios.
What makes the coming debacle even more difficult to comprehend is that it stems from a long chain of seemingly benign interactions and financial relationships. Indeed, despite the fact that the modern derivatives market has flourished because of big money, complex technology, and highly-paid talent, the culprit when it all goes wrong is likely to be simple: human emotions -- fear and greed -- run amok.
For most people, the term "derivative" has little meaning. In many cases, the mere mention of the word is enough to cause eyes to glaze over. That is partly because these financial instruments are somewhat ethereal. They are, in other words, largely created out of thin air. Practically speaking, they have no value in and of themselves.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1303
According to Ramaswamy, it is unlikely that trouble related to a single company like Delphi will spill over to the broad markets, but he said it would be worrisome if a large number of companies ran into serious difficulties. And Rosen noted there is a lot of dry tinder on the forest floor -- a mushrooming issuance of low-rated, high-risk debt. "I will be shocked if we don't see a significant rise in default rates over the next 18 months," he said.
If that happens, it will be easier to determine whether credit derivatives are making the world a safer place -- or a more dangerous one.
OTC and exchange-traded
Broadly speaking there are two distinct groups of derivative contracts, which are distinguished by the way they are traded in market:
Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the total outstanding notional amount is USD 516 trillion (as of June 2007)[1].
Exchange-traded derivatives (ETD) are those derivatives products that are traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. The world's largest[2] derivatives exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options), Eurex (which lists a wide range of European products such as interest rate & index products), and CME Group (made up of the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of Trade). According to BIS, the combined turnover in the world's derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of derivative instruments also may trade on traditional exchanges. For instance, hybrid instruments such as convertible bonds and/or convertible preferred may be listed on stock or bond exchanges. Also, warrants (or "rights") may be listed on equity exchanges. Performance Rights, Cash xPRTs(tm) and various other instruments that essentially consist of a complex set of options bundled into a simple package are routinely listed on equity exchanges. Like other derivatives, these publicly traded derivatives provide investors access to risk/reward and volatility characteristics that, while related to an underlying commodity, nonetheless are distinctive.
THERE IT IS
Duratek
I’ll stick with the view that an unfolding breakdown in various trading models and hedging strategies is at risk of precipitating a crisis of confidence for the leveraged speculating community. I suspect hedge fund trading was much more responsible for chaotic global securities markets this week than a rogue French equities trader. There is, unfortunately, little prospect for markets to calm down anytime soon. There is no quick or easy fix to any of the myriad current problems – seized up securitization markets, sinking housing prices, faltering bond insurers, counterparty issues, a crisis in confidence for “Wall Street finance”, or acute economic vulnerability - to name only the most obvious. Again, they’ve been More than 20 Years in the Making.
Financial Economists Roundtable
Statement on Derivative Markets and Financial Risk
September 26, 1994 *****(YES 1994 !!!!!!!!!!!!)
This concern, no doubt, partly stems from the sheer size of derivatives markets in general and to the ballooning OTC derivatives market in particular. The General Accounting Office (GAO) reports that at year-end 1992 the notional value of outstanding futures, forward, options and swap contracts alone totalled more than $17 trillion, up from $7 trillion in 1989. Another reason for concern about derivatives is the seemingly impenetrable complexity of some of these instruments. This complexity has created an aura of mystery about derivatives markets, and has fostered a fear that a miscalculation by someone, or an undetected but vital flaw in the market or regulatory system, could trigger failures cascading into a financial market meltdown.
The GAO Report, the latest of these, contains thmost provocative policy recommendations.
The GAO Report recommends additional regulation of both derivatives dealers and end-users of derivatives. The study concludes that OTC derivatives could pose a systemic risk to financial markets if a major OTC dealer were to default on its counterparty (or contractual) obligations. It also finds that certain "unregulated" dealers, such as those affiliated with securities and insurance firms, have created a potentially dangerous "regulatory gap" that needs closing.
http://www.freemarketnews.com/Analysis/178/3889/2006-02-22.asp?nid=3889&wid=178
First, the triggering event or events cause sharp and sudden declines in one or more classes of asset prices. The decline in asset prices is sufficiently steep to raise questions about the creditworthiness of major counterparties or institutions such that the analytical distinction between market risk and credit risk blurs as market risk and credit risk feed on each other.
Second, the combination of falling asset prices and the erosion of creditworthiness causes market participants to commence risk mitigation efforts such as position liquidations which - while perfectly reasonable at the micro level - add to macro pressures on asset prices wjich in turn trigger the initial evaporation of market liquidity for one or more classes of assets. The evaporation of asset liquidity aggravates both market and credit risk and begins to call into question balance sheet liquidity for some institutions. Investor position liquidations intensify these pressures.
Third, in these circumstances, once seemingly generous amounts of margin or collateral are rapidly called into question, thereby dramatically elevating credit concerns. The escalation of credit concerns further influences the defensive behavior of financial market participants, all of which acts to reinforce the cumulating the adverse market dynamics. Hence a financial crisis with systemic risks is at hand.
http://www.safehaven.com/article-4096.htm
In truth, while no one can say for certain when the day of reckoning will arrive, it seems a good bet that if some of those who are in a position to know are worried about the derivatives market and the associated systemic risks, you should be, too.
One of the difficulties people have with understanding this particular disaster-in-the making is its complexity and seeming irrelevance to their day-to-day lives. Unlike an earthquake or a car bomb, a derivatives-inspired financial meltdown won't to lead to leveled buildings or bloodshed, at least initially. Yet, the toxic fallout will likely be as painful, long-lasting, and difficult to overcome as any of the more widely discussed scenarios.
What makes the coming debacle even more difficult to comprehend is that it stems from a long chain of seemingly benign interactions and financial relationships. Indeed, despite the fact that the modern derivatives market has flourished because of big money, complex technology, and highly-paid talent, the culprit when it all goes wrong is likely to be simple: human emotions -- fear and greed -- run amok.
For most people, the term "derivative" has little meaning. In many cases, the mere mention of the word is enough to cause eyes to glaze over. That is partly because these financial instruments are somewhat ethereal. They are, in other words, largely created out of thin air. Practically speaking, they have no value in and of themselves.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1303
According to Ramaswamy, it is unlikely that trouble related to a single company like Delphi will spill over to the broad markets, but he said it would be worrisome if a large number of companies ran into serious difficulties. And Rosen noted there is a lot of dry tinder on the forest floor -- a mushrooming issuance of low-rated, high-risk debt. "I will be shocked if we don't see a significant rise in default rates over the next 18 months," he said.
If that happens, it will be easier to determine whether credit derivatives are making the world a safer place -- or a more dangerous one.
OTC and exchange-traded
Broadly speaking there are two distinct groups of derivative contracts, which are distinguished by the way they are traded in market:
Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the total outstanding notional amount is USD 516 trillion (as of June 2007)[1].
Exchange-traded derivatives (ETD) are those derivatives products that are traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. The world's largest[2] derivatives exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options), Eurex (which lists a wide range of European products such as interest rate & index products), and CME Group (made up of the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of Trade). According to BIS, the combined turnover in the world's derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of derivative instruments also may trade on traditional exchanges. For instance, hybrid instruments such as convertible bonds and/or convertible preferred may be listed on stock or bond exchanges. Also, warrants (or "rights") may be listed on equity exchanges. Performance Rights, Cash xPRTs(tm) and various other instruments that essentially consist of a complex set of options bundled into a simple package are routinely listed on equity exchanges. Like other derivatives, these publicly traded derivatives provide investors access to risk/reward and volatility characteristics that, while related to an underlying commodity, nonetheless are distinctive.
THERE IT IS
Duratek
Friday, January 25, 2008
GOODBYE BULL MKT
http://market-ticker.denninger.net/2008/01/goodbye-bull-market.html super video! well done Denninger
DON'T BE DUPED!!!! OPEN YOUR EYES, WE are being FUCKED WITH! And SOLD OUT!
D
DON'T BE DUPED!!!! OPEN YOUR EYES, WE are being FUCKED WITH! And SOLD OUT!
D
Wednesday, January 23, 2008
CRAMER UNDRESSED AS CARNIVAL BARKER!!!!!
http://www.youtube.com/watch?v=SGkrNJ19DSU MUST SEE! LMAO!!!! Thank you RIck Santelli. WHAT IDIOT LEMMING FOLLOWS THIS JERK? OE CNBC
Duratek
Duratek
Monday, January 21, 2008
"IT'S THE END OF THE WORLD AS WE KNOW IT"
Foreign markets crashing and burning this MLK day, Tuesday will be awful on the US exchanges, maybe even crash like.
Those who insure against losses (AMBAC) are bankrupt themselves....leaving maybe $1 Trillion up in the air.The financial system is seizing up and there is nothing the FED (reason for problem)or Bush can do, and you dont want to be LONG here or standing in the way.....you just want to survive and protect what you got!!!
http://economicrot.blogspot.com/2007/12/kondratieff-winter.html Great blog for Kondratief background
http://www.itulip.com/forums/archive/index.php?t-85.html talk on derivitives
http://www.cross-currents.net/charts.htm great unwinding
http://www.contraryinvestor.com/mo.htm JAN ISSUE
Duratek
Those who insure against losses (AMBAC) are bankrupt themselves....leaving maybe $1 Trillion up in the air.The financial system is seizing up and there is nothing the FED (reason for problem)or Bush can do, and you dont want to be LONG here or standing in the way.....you just want to survive and protect what you got!!!
http://economicrot.blogspot.com/2007/12/kondratieff-winter.html Great blog for Kondratief background
http://www.itulip.com/forums/archive/index.php?t-85.html talk on derivitives
http://www.cross-currents.net/charts.htm great unwinding
http://www.contraryinvestor.com/mo.htm JAN ISSUE
Duratek
Thursday, January 17, 2008
THE COMING BEARISH STORM
@@@CLICK CHART TO ENLARGEIt's different this time folks IMHO, I think its telling this is the worst start to a year in HISTORY of the stock market.
I am in 100% CASH, and I'll wait til the smoke clears. BEN BOMBED
I was warning in DECEMBER and long before that, I only pray someone was listening
> http://www.cnbc.com/id/22706231/site/14081545 Cramers rant
D
Tuesday, January 15, 2008
LOOK IN THE MIRROR, IS THAT FUR YOU SEE?
click to enlarge*
This thing is snowballing, rally it might, it has tried, We are in BEAR territory my friends
D
Monday, January 14, 2008
TIME TO BUY? TIME TO HIDE?
http://www.cnbc.com/id/15840232?video=623459009&play=1 must see video Peter Thiel CNBC interview
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm I do not like this index is falling signs of world economy slowing?
Mortgage Crisis to Corporate Debt Crisis:
http://prudentbear.com/index.php/CreditBubbleBulletinHome
The financial system fell under intense stress Wednesday. The epicenter of the crisis was in the “Credit default swap,” or CDS market, and “contagion” fears were building quite a head of steam. The pricing for Countrywide Financial default protection (5-yr CDS) surged a huge 469 basis points to a record 1,610 bps (it would cost $16,100 annually for 5-yrs to insure $100,000 of Countrywide debt against default). For perspective, Countrywide default protection was priced at a mere 30 bps one year ago and didn’t even trade above 600 during the subprime crisis this past summer and autumn. Rescap CDS surged an astounding 1,360 bps Wednesday to 3,746. This was up from the year earlier 95 bps. MBIA CDS increased 85bps to 849 (year ago 87) and Ambac 89 bps to 841 (year ago 70bps). Washington Mutual CDS increased 61 bps to 611 (year ago 54bps). Many indices of corporate debt spreads rose to their widest levels in years.
In the old Greenspan days, Wednesday’s circumstance would have most-likely beckoned a “surprise” inter-meeting Fed rate cut. There were rumors for as much. And while chairman Bernanke did not ease rates, Thursday morning he provided the markets the next best thing: “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.” Bernanke didn’t plan on rambling down the Greenspan path. Actually, I believe he and other members of the FOMC would have preferred to avoid it – resist responding directly to Wall Street pleas for aggressive Federal Reserve accommodation. “Let the chips fall…”, as they say. But the Fed now knows what many on Wall Street have understood since this summer: The U.S. Credit system and economy are extraordinarily fragile and the Fed simply will not risk sitting back and watching an implosion without resorting to extreme measures. If nothing else, inter-meeting “surprise” rates cuts are back on the table. Wall Street must be quite relieved to know this mechanism is available in the event market selling pressure turns unwieldy.
This week brought back memories of the 2002 Debt Crisis. Weighed down by the telecom debt collapse, Enron, and other frauds, intensifying Corporate Debt problems late in the year were at risk of smothering the consumer sector. The nexus at the time was the auto finance subsidiaries and Household International. Consumer finance Corporate Debt spreads were widening significantly, and Household, in particular, was facing a liquidity crisis in early November. The failure of a major financial institution at that juncture would have created a major systemic issue.
Well, on November 14 HSBC agreed to buy (bailout) Household International. A week later, FOMC governor Bernanke gave his now (in)famous “Deflation: Making sure ‘it’ doesn't happen here” speech. With rates at 1.0% (until June 2004!), the Fed was now publicly discussing “electronic printing presses,” “helicopters” and other “unconventional measures.” Wall Street was trumpeting “deflation” risk. Sure enough, the crisis was soon resolved and Wall Street was emboldened to perpetuate history’s greatest Credit inflation and Mortgage fiasco.
The tables have been turned these days, with the Mortgage Crisis now evolving into a full-fledged Corporate Debt Crisis. The key nexus this time around has been Wall Street “structured finance,” especially as it relates to the major Mortgage lenders (certainly including Countrywide, Rescap/GMAC, and Washington Mutual) and the “financial guarantors (in particular, MBIA and Ambac). The unfolding Mortgage implosion has destroyed the value of innumerable “structured products;” has annihilated legions of mortgage companies; has impaired scores of major lenders; has severely battered general market confidence; and this week was in the process of taking down a few huge mortgage companies. Institutions with enormous liabilities to the “money,” “repo,” securitization, and derivative markets – not to mention large borrowings from the FHLB system - were in serious jeopardy. The risk of a domino implosion in the Credit default market and the “financial guarantor” industry had become a very real possibility. System Risk Intermediation was in peril.
The Fed responded with what the market has interpreted as a promise of aggressive rate cuts, while Bank of America has apparently for now resolved the Countrywide debt issue. Citigroup’s stock rallied on rumors of a major new investment from Prince Alwaleed and others. Washington Mutual’s stock price rallied sharply on rumors of merger talks with JPMorgan. Countrywide’s stock surged as CDS prices collapsed, a dynamic sure to have caused considerable grief to those shorting the stock to hedge against default protection written.
Curiously, the general market took little comfort from developments. A case can be made that the rally in CDS and financial stocks was destabilizing for much of the leveraged speculating community (including “market neutral” and “quants”) keen to short financial stocks against (now sinking) technology shares. Overall, the market was hammered, while MBIA and Ambac CDS prices barely budged from record levels. Friday's market was one of those that surely caused havoc for numerous sophisticated trading strategies. And it is worth noting that an index of Junk bond spreads to Treasuries actually widened an additional 4 basis points to 603 bps, rising this week above 600 for the first time since – not coincidently - the 2002 Debt Crisis.
But the general environment is nothing like 2002, and I don’t expect Fed words and actions – in concert with financial bailouts - to have similar effects. For one, 13% household mortgage debt growth in 2002 provided powerful financial and economic stimulus that will not be forthcoming in 2008. With consumer Credit relatively stable, 2002’s Corporate Debt Crisis was not a serious systemic issue. Moreover, “Wall Street finance” was in an aggressive expansionary mode and the global banking community was developing quite a hankering to participate in the U.S. Credit Bubble. The economy was emerging from a shallow recession.
The world is a much different place today. The Mortgage Finance Bubble is a bust, Wall Street finance is imploding, and foreign financial institutions are keen to cut and run from the business of providing U.S. Credit. Countrywide’s mortgage problems will be absorbed – along with so many other risks – by our own highly vulnerable domestic banking system. Worse yet, the economy is quickly succumbing to recessionary forces. With a high degree of confidence we can proclaim that the Mortgage Crisis has now evolved into a Corporate Debt Crisis – and this crisis will not be resolved anytime soon – by rates, by helicopters, or by bailouts.
Unlike 2002, today’s Credit crisis is systemic. Consumer and financial sector fragilities – the heart of our Credit system - are now impaired to the point of imperiling the capacity of the Credit system to finance business spending and intermediate corporate lending risk. To be sure, prospects for a faltering U.S. consumer sector, massive financial sector Credit losses, and an imminent economic downturn have quite negative ramifications for business lending and valuations. In particular, unfolding dislocation in the CDS and Credit “insurance” markets will severely restrict Credit Availability for small, medium and large firms – especially those less than top-tier borrowers.
I’ll go further and suggest that a severe tightening of Financial Conditions has abruptly made many business borrowing plans unviable; many a balance sheet and debt load untenable; and vast numbers of business strategies - crafted in altogether different financial and economic times - much less viable. Some companies will make the necessary adjustments and many will not. The unfolding backdrop definitely makes a lot of stock buyback plans imprudent and growth strategies highly risky. The aggressive risk-taking business manager – having previously capitalized on the protracted boom - will now be at a similar handicap to that which afflicted the zealous home buyer and lender.
For those searching for explanations behind the stock market’s dismal start to the New Year, I suggest contemplating the many serious ramifications of the Mortgage Crisis having now evolved into an Incurable Corporate Debt Crisis. This week, the Bursting Credit Bubble passed another significant inflection point – one perhaps subtle but with major economic consequences.
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm I do not like this index is falling signs of world economy slowing?
Mortgage Crisis to Corporate Debt Crisis:
http://prudentbear.com/index.php/CreditBubbleBulletinHome
The financial system fell under intense stress Wednesday. The epicenter of the crisis was in the “Credit default swap,” or CDS market, and “contagion” fears were building quite a head of steam. The pricing for Countrywide Financial default protection (5-yr CDS) surged a huge 469 basis points to a record 1,610 bps (it would cost $16,100 annually for 5-yrs to insure $100,000 of Countrywide debt against default). For perspective, Countrywide default protection was priced at a mere 30 bps one year ago and didn’t even trade above 600 during the subprime crisis this past summer and autumn. Rescap CDS surged an astounding 1,360 bps Wednesday to 3,746. This was up from the year earlier 95 bps. MBIA CDS increased 85bps to 849 (year ago 87) and Ambac 89 bps to 841 (year ago 70bps). Washington Mutual CDS increased 61 bps to 611 (year ago 54bps). Many indices of corporate debt spreads rose to their widest levels in years.
In the old Greenspan days, Wednesday’s circumstance would have most-likely beckoned a “surprise” inter-meeting Fed rate cut. There were rumors for as much. And while chairman Bernanke did not ease rates, Thursday morning he provided the markets the next best thing: “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.” Bernanke didn’t plan on rambling down the Greenspan path. Actually, I believe he and other members of the FOMC would have preferred to avoid it – resist responding directly to Wall Street pleas for aggressive Federal Reserve accommodation. “Let the chips fall…”, as they say. But the Fed now knows what many on Wall Street have understood since this summer: The U.S. Credit system and economy are extraordinarily fragile and the Fed simply will not risk sitting back and watching an implosion without resorting to extreme measures. If nothing else, inter-meeting “surprise” rates cuts are back on the table. Wall Street must be quite relieved to know this mechanism is available in the event market selling pressure turns unwieldy.
This week brought back memories of the 2002 Debt Crisis. Weighed down by the telecom debt collapse, Enron, and other frauds, intensifying Corporate Debt problems late in the year were at risk of smothering the consumer sector. The nexus at the time was the auto finance subsidiaries and Household International. Consumer finance Corporate Debt spreads were widening significantly, and Household, in particular, was facing a liquidity crisis in early November. The failure of a major financial institution at that juncture would have created a major systemic issue.
Well, on November 14 HSBC agreed to buy (bailout) Household International. A week later, FOMC governor Bernanke gave his now (in)famous “Deflation: Making sure ‘it’ doesn't happen here” speech. With rates at 1.0% (until June 2004!), the Fed was now publicly discussing “electronic printing presses,” “helicopters” and other “unconventional measures.” Wall Street was trumpeting “deflation” risk. Sure enough, the crisis was soon resolved and Wall Street was emboldened to perpetuate history’s greatest Credit inflation and Mortgage fiasco.
The tables have been turned these days, with the Mortgage Crisis now evolving into a full-fledged Corporate Debt Crisis. The key nexus this time around has been Wall Street “structured finance,” especially as it relates to the major Mortgage lenders (certainly including Countrywide, Rescap/GMAC, and Washington Mutual) and the “financial guarantors (in particular, MBIA and Ambac). The unfolding Mortgage implosion has destroyed the value of innumerable “structured products;” has annihilated legions of mortgage companies; has impaired scores of major lenders; has severely battered general market confidence; and this week was in the process of taking down a few huge mortgage companies. Institutions with enormous liabilities to the “money,” “repo,” securitization, and derivative markets – not to mention large borrowings from the FHLB system - were in serious jeopardy. The risk of a domino implosion in the Credit default market and the “financial guarantor” industry had become a very real possibility. System Risk Intermediation was in peril.
The Fed responded with what the market has interpreted as a promise of aggressive rate cuts, while Bank of America has apparently for now resolved the Countrywide debt issue. Citigroup’s stock rallied on rumors of a major new investment from Prince Alwaleed and others. Washington Mutual’s stock price rallied sharply on rumors of merger talks with JPMorgan. Countrywide’s stock surged as CDS prices collapsed, a dynamic sure to have caused considerable grief to those shorting the stock to hedge against default protection written.
Curiously, the general market took little comfort from developments. A case can be made that the rally in CDS and financial stocks was destabilizing for much of the leveraged speculating community (including “market neutral” and “quants”) keen to short financial stocks against (now sinking) technology shares. Overall, the market was hammered, while MBIA and Ambac CDS prices barely budged from record levels. Friday's market was one of those that surely caused havoc for numerous sophisticated trading strategies. And it is worth noting that an index of Junk bond spreads to Treasuries actually widened an additional 4 basis points to 603 bps, rising this week above 600 for the first time since – not coincidently - the 2002 Debt Crisis.
But the general environment is nothing like 2002, and I don’t expect Fed words and actions – in concert with financial bailouts - to have similar effects. For one, 13% household mortgage debt growth in 2002 provided powerful financial and economic stimulus that will not be forthcoming in 2008. With consumer Credit relatively stable, 2002’s Corporate Debt Crisis was not a serious systemic issue. Moreover, “Wall Street finance” was in an aggressive expansionary mode and the global banking community was developing quite a hankering to participate in the U.S. Credit Bubble. The economy was emerging from a shallow recession.
The world is a much different place today. The Mortgage Finance Bubble is a bust, Wall Street finance is imploding, and foreign financial institutions are keen to cut and run from the business of providing U.S. Credit. Countrywide’s mortgage problems will be absorbed – along with so many other risks – by our own highly vulnerable domestic banking system. Worse yet, the economy is quickly succumbing to recessionary forces. With a high degree of confidence we can proclaim that the Mortgage Crisis has now evolved into a Corporate Debt Crisis – and this crisis will not be resolved anytime soon – by rates, by helicopters, or by bailouts.
Unlike 2002, today’s Credit crisis is systemic. Consumer and financial sector fragilities – the heart of our Credit system - are now impaired to the point of imperiling the capacity of the Credit system to finance business spending and intermediate corporate lending risk. To be sure, prospects for a faltering U.S. consumer sector, massive financial sector Credit losses, and an imminent economic downturn have quite negative ramifications for business lending and valuations. In particular, unfolding dislocation in the CDS and Credit “insurance” markets will severely restrict Credit Availability for small, medium and large firms – especially those less than top-tier borrowers.
I’ll go further and suggest that a severe tightening of Financial Conditions has abruptly made many business borrowing plans unviable; many a balance sheet and debt load untenable; and vast numbers of business strategies - crafted in altogether different financial and economic times - much less viable. Some companies will make the necessary adjustments and many will not. The unfolding backdrop definitely makes a lot of stock buyback plans imprudent and growth strategies highly risky. The aggressive risk-taking business manager – having previously capitalized on the protracted boom - will now be at a similar handicap to that which afflicted the zealous home buyer and lender.
For those searching for explanations behind the stock market’s dismal start to the New Year, I suggest contemplating the many serious ramifications of the Mortgage Crisis having now evolved into an Incurable Corporate Debt Crisis. This week, the Bursting Credit Bubble passed another significant inflection point – one perhaps subtle but with major economic consequences.
Tuesday, January 08, 2008
BROKEBACK MARKET
CLICK CHART TO ENLARGECountrywide (CFC 5.57, -2.07) is preparing to file bankruptcy as soon as this week, according to Bloomberg.com.
Meanwhile, bond insurers got hit after reports indicated Morgan Stanley cut its bond insurers profit outlook. MBIA (MBI 13.46, -4.16) and Ambac (ABK 19.59, -3.89) shed 22% and 17% respectively.
I heard last 1/2 hour (was out of office after 1:30) consumer credit report was out...instead of $8B they put on $15B on credit cards.....sinking...
Just read my back posts to any new reader, you will see why I was worth reading.....and when I said what I said.
We are teetering at the precipice, and oversold hasnt brought the snap back rally expected...I think the market is saying more danger ahead, all laundry not aired, and it appears a BEAR MKT IS UPON US.
Duratek
Sunday, December 16, 2007
FINANCIAL TSUNAMI
CREDIT BUBBLE by DOUG NOLAND
excerpt from above:
CPI may have remained tame, but massive Credit-induced Current Account Deficits and the depreciating dollar set in motion Credit and asset Bubble dynamics in economies around the globe.
Today, the Fed confronts bursting Credit Bubbles throughout Wall Street finance, with resulting acute asset market vulnerability. Yet the unusual structures that permeate the U.S. Financial Sector at this time foster continuing rampant inflationary Credit creation. First of all, “money-like” financial sector liabilities (i.e. agencies, “repos”, and bank/money fund deposits) are proving thus far sufficient to sustain Bubble economy excesses. Second, the global recycling of ongoing massive Current Account Deficits and speculative outflows ensures over-liquefied markets (and artificially low interest rates!), including key U.S. debt instruments such as Treasuries, agencies and other perceived low-risk securities. Bubble dynamics proliferate in the face of a Wall Street bust.
The extreme divergence in liquidity conditions between bursting Bubbles in Wall Street finance and still rapidly inflating Bubbles in “money-like” Financial Sector Liabilities poses both a major quandary and policy dilemma. Aggressive rate cuts would definitely further stoke the powerful Bubbles inflating in GSE, “repo”, money fund, and bank deposit liabilities. Such ongoing Financial Sector Debt expansion would likely sustain destabilizing liquidity outflows to the world, further fueling myriad global bubbles and worsening an already problematic global inflationary backdrop. A rapidly expanding U.S. Financial Sector (with the accompanying heavy risk intermediation burden associated with transforming highly risky loans into perceived safe liabilities) also significantly increases the risk of an eventual catastrophic breakdown in U.S. and international financial systems. Besides, it is likely that lower rates would have only minimal effect on the investor and speculator revulsion that has taken hold throughout the Wall Street securitization marketplace.
Those arguing for a Greenspan-style rate collapse fail to appreciate the extraordinary circumstances and risks that have accumulated from years of Reckless Credit Bubble Excess. The outcry for an audacious policy response to avert a recession is misguided. Importantly, today’s rampant Financial Sector expansion is unsustainable. There are today acute inflationary risks to go with major financial system stability issues. While the dislocation will be substantial, the sooner the Bubble in Financial Credit is reined in the better. We are today in the midst of dangerous “blow-off” excesses in “money-like” Financial Sector liability issuance. Few seem to appreciate that such a circumstance places the stability of the “bedrock” of the entire U.S. and global financial system at considerable risk. Wall Street is clamoring for a rate collapse and bold inflation in “money” to bailout its faltering securitization markets. At this point, this would equate to throwing massive (relatively) good “money” after bad - ensuring that a dreadful situation festers into a historic calamity. The least bad course for central bank policymaking would be to hold the line on rates, while injecting liquidity as necessary as part of a program to check Credit excess and permit the economy to commence its desperately needed adjustment period.
BDI price paid to ship BULK RAW MATERIALS (end up as finished goods) is correcting and has broken uptrend line.
NOV SHEPHERD INV NEWSLETTER Shows relationship of housing to economy at large.
Finiancials added to record SPX profits on way up, and ALL the trickle down industries and companies associated with mortgages, housing, and construction (commodities) and housing is most important component to our economy, as it unravels, what effect to economy do you think it will have? to SPX profits?
MAJOR US AND FOREIGN BANKS are reporting huge loan writedowns, and there is one of many questions remain.....how much more of this BAD PAPER, and OFF RECORD BOOKS BAD INVESTMENT remains?
DECEMBER usually a BULLISH month is running into trouble as we head for XMAS, my research show usually by late Jan market reaches at least a short term high and experiences a correction.
Buying enthusiasm has waned, volume on the rallies has fallen as it rises on the declines. Less and less SECTORS contribute to these same rallies and more and more have fallen into bearish looking trends.
I would argue my friends that the OLD BULL MKT has topped, even as theh FED tries to reflate, long interest rates instead are rising, dollar firms (for now) and in my best estimation we have enterred another Bear Market, where preservation of capital is more important than growing it.
I choose to take a very defensive posture, with little equity exposure, and mostly Treasury Money Market Funds (not the typical unguaranteed MM).
Talk to your financial advisor and look over what you are invested in and decide if their council is sound, voice your concerns if any. I don't think sitting around doing nothing will work out.
One could argue over time the market in last 100 years always goes up, but it also shows during long Bear Markets getting the right allocation can be critical over that period.
JMHO
Duratek
excerpt from above:
CPI may have remained tame, but massive Credit-induced Current Account Deficits and the depreciating dollar set in motion Credit and asset Bubble dynamics in economies around the globe.
Today, the Fed confronts bursting Credit Bubbles throughout Wall Street finance, with resulting acute asset market vulnerability. Yet the unusual structures that permeate the U.S. Financial Sector at this time foster continuing rampant inflationary Credit creation. First of all, “money-like” financial sector liabilities (i.e. agencies, “repos”, and bank/money fund deposits) are proving thus far sufficient to sustain Bubble economy excesses. Second, the global recycling of ongoing massive Current Account Deficits and speculative outflows ensures over-liquefied markets (and artificially low interest rates!), including key U.S. debt instruments such as Treasuries, agencies and other perceived low-risk securities. Bubble dynamics proliferate in the face of a Wall Street bust.
The extreme divergence in liquidity conditions between bursting Bubbles in Wall Street finance and still rapidly inflating Bubbles in “money-like” Financial Sector Liabilities poses both a major quandary and policy dilemma. Aggressive rate cuts would definitely further stoke the powerful Bubbles inflating in GSE, “repo”, money fund, and bank deposit liabilities. Such ongoing Financial Sector Debt expansion would likely sustain destabilizing liquidity outflows to the world, further fueling myriad global bubbles and worsening an already problematic global inflationary backdrop. A rapidly expanding U.S. Financial Sector (with the accompanying heavy risk intermediation burden associated with transforming highly risky loans into perceived safe liabilities) also significantly increases the risk of an eventual catastrophic breakdown in U.S. and international financial systems. Besides, it is likely that lower rates would have only minimal effect on the investor and speculator revulsion that has taken hold throughout the Wall Street securitization marketplace.
Those arguing for a Greenspan-style rate collapse fail to appreciate the extraordinary circumstances and risks that have accumulated from years of Reckless Credit Bubble Excess. The outcry for an audacious policy response to avert a recession is misguided. Importantly, today’s rampant Financial Sector expansion is unsustainable. There are today acute inflationary risks to go with major financial system stability issues. While the dislocation will be substantial, the sooner the Bubble in Financial Credit is reined in the better. We are today in the midst of dangerous “blow-off” excesses in “money-like” Financial Sector liability issuance. Few seem to appreciate that such a circumstance places the stability of the “bedrock” of the entire U.S. and global financial system at considerable risk. Wall Street is clamoring for a rate collapse and bold inflation in “money” to bailout its faltering securitization markets. At this point, this would equate to throwing massive (relatively) good “money” after bad - ensuring that a dreadful situation festers into a historic calamity. The least bad course for central bank policymaking would be to hold the line on rates, while injecting liquidity as necessary as part of a program to check Credit excess and permit the economy to commence its desperately needed adjustment period.
BDI price paid to ship BULK RAW MATERIALS (end up as finished goods) is correcting and has broken uptrend line.
NOV SHEPHERD INV NEWSLETTER Shows relationship of housing to economy at large.
Finiancials added to record SPX profits on way up, and ALL the trickle down industries and companies associated with mortgages, housing, and construction (commodities) and housing is most important component to our economy, as it unravels, what effect to economy do you think it will have? to SPX profits?
MAJOR US AND FOREIGN BANKS are reporting huge loan writedowns, and there is one of many questions remain.....how much more of this BAD PAPER, and OFF RECORD BOOKS BAD INVESTMENT remains?
DECEMBER usually a BULLISH month is running into trouble as we head for XMAS, my research show usually by late Jan market reaches at least a short term high and experiences a correction.
Buying enthusiasm has waned, volume on the rallies has fallen as it rises on the declines. Less and less SECTORS contribute to these same rallies and more and more have fallen into bearish looking trends.
I would argue my friends that the OLD BULL MKT has topped, even as theh FED tries to reflate, long interest rates instead are rising, dollar firms (for now) and in my best estimation we have enterred another Bear Market, where preservation of capital is more important than growing it.
I choose to take a very defensive posture, with little equity exposure, and mostly Treasury Money Market Funds (not the typical unguaranteed MM).
Talk to your financial advisor and look over what you are invested in and decide if their council is sound, voice your concerns if any. I don't think sitting around doing nothing will work out.
One could argue over time the market in last 100 years always goes up, but it also shows during long Bear Markets getting the right allocation can be critical over that period.
JMHO
Duratek
Friday, December 07, 2007
FED WATCH
CME Group Fed Watch – December 7, 2007
In advance of next week's Federal Open Market Committee meeting on December 11, the CME Group will be reporting daily rate change probabilities in the FOMC's federal funds target rate, as indicated by the 30-Day Federal Funds futures contract. The 30-Day Federal Funds futures contract is a key benchmark interest rate barometer that reflects the forward overnight effective rate for excess reserves that are traded among commercial banks in the U.S. federal funds market.
Based upon the December 7 market close, the 30-Day Federal Funds futures contract for the December 2007 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 4-1/2 percent to 4-1/4 percent at the FOMC meeting on December 11.
In addition, the 30-Day Federal Funds futures contract is pricing in a 41 percent probability of a further 25-basis point decreasein the target rate to 4 percent (versus a 59 percent probability of just a 25-basis point rate decrease).
In advance of next week's Federal Open Market Committee meeting on December 11, the CME Group will be reporting daily rate change probabilities in the FOMC's federal funds target rate, as indicated by the 30-Day Federal Funds futures contract. The 30-Day Federal Funds futures contract is a key benchmark interest rate barometer that reflects the forward overnight effective rate for excess reserves that are traded among commercial banks in the U.S. federal funds market.
Based upon the December 7 market close, the 30-Day Federal Funds futures contract for the December 2007 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 4-1/2 percent to 4-1/4 percent at the FOMC meeting on December 11.
In addition, the 30-Day Federal Funds futures contract is pricing in a 41 percent probability of a further 25-basis point decreasein the target rate to 4 percent (versus a 59 percent probability of just a 25-basis point rate decrease).
Monday, December 03, 2007
PROFIT RECESSION?
http://www.bloomberg.com/apps/news?pid=20601103&sid=aZi6pAy35zW4&refer=us#
SO stocks worth bidding up as profuts are falling??
D
SO stocks worth bidding up as profuts are falling??
D
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