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CNBC "Existing homes sales up much more than expected". Buy buy buy.....


I say BS! BS! BS!...........

Hank Paulson's TARP(bailout money) is being used for balance sheets and acquisitions, not for lending. This is our tax money!

Still don't have transparency or trust.
 
350zCommTech said:
I'll be out golfing, again.:)
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Wish I could go... Very jealous :)

Got work but it would be ideal on the panhandle for a low score... had heavy rains last night and the sun is due to break through around lunch. The greenskeepers won't have a chance to mow so the greens will be slow. Geez, I'm gonna end up talking myself into a mystery illness ... golfitis anyone?
 
Minnow said:
Wish I could go... Very jealous :)

Got work but it would be ideal on the panhandle for a low score... had heavy rains last night and the sun is due to break through around lunch. The greenskeepers won't have a chance to mow so the greens will be slow. Geez, I'm gonna end up talking myself into a mystery illness ... golfitis anyone?
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I froze my balls off today. 54% and some wind. I had one of my worst game ever. It didn't warm up until we were just about done.

As for the market, looks like they are trying to slow down this crash. The Yen appeared to have been manipulated. No way it could have recovered that much due to existing home sales. The main problem is that the market has finally broken out and down from the triangle. Targets are S&P 700 then 600. The sell off in the last few minutes and into the close was not good. Monday might be ugly.
 
350zCommTech said:
I froze my balls off today. 54% and some wind. I had one of my worst game ever. It didn't warm up until we were just about done.

As for the market, looks like they are trying to slow down this crash. The Yen appeared to have been manipulated. No way it could have recovered that much due to existing home sales. The main problem is that the market has finally broken out and down from the triangle. Targets are S&P 700 then 600. The sell off in the last few minutes and into the close was not good. Monday might be ugly.
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Sorry to hear about the bad score but... a bad day on the course is better than a good day at work. Keep on working on that short game -- rain or shine!!!:D

Just my take on that whole yen thing... I'm guessing the hedge funds had one or two yen positions (just to be conservative ;)) and forced liquidations means everything must go. With the oligarchy that is the Japanese banking structure and with many of the "isolationist" leanings coming back in some of their politics, who the heck is going to buy Japanese exports and who is going to prevent further unwinding of that carry trade? That isn't rhetorical, I really want to know... cuz they're probably in for more pain than us and that's really a shame. Do you see flaws in this logic?

I do see more pain for us with the whole bond bad to worse case scenario. I just want to catch those very few days of market euphoria but Ben, Hank, and Congress have their own agenda so, I guess I'll put the old gunslinger mentality away for awhile. One of these days I'll join the autotracker.

Have a nice weekend everyone. Fairways and greens :)
 
Minnow said:
Just my take on that whole yen thing... I'm guessing the hedge funds had one or two yen positions (just to be conservative ;)) and forced liquidations means everything must go. With the oligarchy that is the Japanese banking structure and with many of the "isolationist" leanings coming back in some of their politics, who the heck is going to buy Japanese exports and who is going to prevent further unwinding of that carry trade? That isn't rhetorical, I really want to know... cuz they're probably in for more pain than us and that's really a shame. Do you see flaws in this logic?
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No flaws, you are spot on. Toyota just reported their first losing quarter or something a few days. Export driven countries like China and Japan are going to be in for some serious pain.

You have a good weekend too Minnow.:)
 
Excellent article.

The author explains the Yen carry trade and also the markets latest instrument, the Dollar carry trade. Thank you Bernanke.:D

$4.1 Billion Investor Funds Frozen

By Dan Denning • October 24th, 2008

Before we get to how much worse the global financial crisis of 2008 could get, what about the local market? The great cash freeze of 2008 is upon us. Today's Australian papers tell how fund managers AXA, Perpetual, and Australian Unity have frozen redemptions from their mortgage funds. Uh oh.
At least $4.1 billion in investor funds have been frozen overnight. It's an effort to halt the migration of investors from non-guaranteed mortgage funds toward government guaranteed bank accounts. Notice that those seeking redemptions are not referred to as "depositors" but as "investors."

That's a crucial distinction. The funds management industry in Australia (and around the world, to be fair) has thrived by promising investors income, capital gains and safety. Normally you'd expect to get only one or two of those benefits from a single investment. But getting all three?
Hmm. You can find a holy trinity in theology-where one entity can exist in three different forms (Father, Son, Holy Ghost). But in the investment world, we've yet to see any single kind of messiah investment than be all things at all times to all investors.

But enough of theology. What you're seeing now is a financial effect with a political cause. Investors are behaving in a perfectly rational manner by shifting their assets from uninsured vehicles to insured bank accounts. If the government wants to change the behaviour (other than the simple coercion of freezing redemptions, the rational action taken by the fund managers) then it needs to change the incentives.
That is, the fund managers either need to guarantee their products or secure some kind of emergency funding from the government or the Reserve Bank to ensure account holders they'll be able to get their money back. Meanwhile, the unintended consequences will continue to unfold. If the mortgage funds provide funding for commercial and residential property development, won't those funds now be much harder to get? That won't be good for property...

Over in the share markets, the ASX opened with cautious optimism, following New York's overnight lead again. But it has since turned down. About the only interesting observation we can make is that BHP is providing the most encouraging and discouraging news of the day.
The discouraging news is that its share price looks set to fall below $24. Investors are worried that crashing steel prices will slow demand for iron ore and coking coal-the two big pillars of Aussie (and BHP) export earnings (although don't forget BHP is Australia's largest oil producer too). As BHP goes, so goes the All Ords. Down.

The good news? Don Argus is doing exactly what Diggers and Drillers editor Al Robinson said he would. He's making a shopping list of cash-strapped juniors that are looking for a savoir. Argus told investors, "We believe our balance sheet places us in a unique position in the resources sector to take full advantage of not only the recovery when it occurs, but also in capitalising on opportunities that will no doubt arise in this cash-strapped external environment."

The big fish have an empty belly and a full wallet. They'll be dining on the juniors soon.
A quick note on gold at the Perth Mint. There is gold at the Mint, of course. It's just that most of it is not for sale. It's in allocated and unallocated accounts which belong to the Mint's customers. The Minters can't just take someone else's gold and turn it into new bars or coins. Because, you know, it's someone else's gold. As far as we know, the only gold coins currently for sale are the 1oz coins.

Finally, let's take a step back from the day to day trading action and remember what's going on. The bankruptcy of Lehman Brothers has kick started a giant global de-leveraging. It's driving the yen and the dollar up, while commodities, shares, and nearly everything else goes down.
"The dollar and the yen are rising in a massive, global short squeeze as investors and speculators are forced to delever," writes Randall Forsyth in Barrons. "Borrowings effectively are short sales of a currency. Repayment means covering those shorts, or buying back those currencies. Both the dollar and the yen have been used to fund investments, so they're the objects of buying-not as vote of confidence in the U.S. or Japan, but forced short-covering."

All those borrowed dollars and yen found their way into shares and commodities. But who borrowed them? Hedge funds mostly (hedge funds run by banks, insurance companies, and private individuals). And how do you repay borrowed money? You have to sell your assets.
It's tempting to call the massed selling of stocks irrational. But this is based on some investors looking at stock valuations and finding them cheap on an earnings basis, or looking at the cash on the balance sheet. But what you have here are extremely motivated sellers. They HAVE to sell. It's all quite rational.

Normally, when the seller has to sell, it's a very good time to be a buyer, hence Buffett's chest-thumping op-ed piece. But you don't want to be a buyer if there's more forced selling in the pipeline. And that is now the key question in the market.
How much leverage is left to be unwound?

Well, before the crisis hit, hedge funds controlled US$2.4 trillion in investor funds. They would have used that to borrow trillions more (with leverage ratios of 10-1, 20-1, and 100-1). This explains how much "value" was added to global stock and commodity markets since 2003-and how quickly it's disappeared as access to credit evaporated for hedge funds and they faced margin calls AND bans on short selling.
The result? All those assets purchased by hedge funds with borrowed money are being liquidated. And the funds that were not hedged at all (long-only, with massive leverage) are not long for this earth. Who are they going to take with them?

``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Emmanuel Roman, co-chief executive officer of GLG Partners Inc., told investors at a hedge fund conference in London. "This will go down in the history books as one of the greatest fiascos of banking in 100 years."
True that.

Governments want to regulate hedge funds. They've already begun to do so by preventing them from shorting. But remember, if a hedge fund can't short, it can't really hedge. Performance suffers. Investor redemptions increase.

The more hedge fund investors want their money back, the more selling in the markets. The very regulation designed to prevent falling stock prices via short selling may accelerate falling stock prices via hedge fund redemptions.

In fact, only the lock-ups by hedge funds which prevent investors from getting their money back are preventing an even greater pace of redemptions. But when those lock-ups expire, watch out. That's assuming the funds are still operating and haven't suffered irreversible losses.
Either way, you see how a new low on the markets is entirely possible. Our prediction? Stock markets are going to get a hefty global bounce in November. There are at least three events on the horizon that could provide the boost.

First, if Obama is elected, you have the end of uncertainty about the U.S. election (and some highly irrational optimism that things will now be different, better, and nicer). Second, you'll get a new stimulus plan from the Democratic Congress in the U.S., which should give stocks a bit of a kick. And third, the big G20 meeting in Washington Kevin Rudd is headed too. Something that looks and feels good should come from that.

Those three factors may conspire to produce a convincing looking bear-market rally into Christmas. That would be the sucker's rally of 1929-1930. Or, we could be dead wrong and deleveraging may simply overwhelm everything else. It's also possible, of course, that the bulk of the hedge fund deleveraging has already taken place. But we're not counting on it.

Dan Denning
for The Daily Reckoning Australia http://www.dailyreckoning.com.au/investor-funds-frozen-overnight/2008/10/24/
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Warning to Buy and Holders: Do not read this. It's more doom and gloom. Continue buying and hoping.:D

Europe on the brink of currency crisis meltdown

The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.

By Ambrose Evans-Pritchard
Last Updated: 10:52AM GMT 26 Oct 2008

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.
Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.

Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.
Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.

Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.

Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns.

The IMF’s experts drafted a report two years ago – Asia 1996 and Eastern Europe 2006 – Déjà vu all over again? – warning that the region exhibited the most dangerous excesses in the world.

Inexplicably, the text was never published, though underground copies circulated. Little was done to cool credit growth, or to halt the fatal reliance on foreign capital. Last week, the silent authors had their moment of vindication as Eastern Europe went haywire.

Hungary stunned the markets by raising rates 3pc to 11.5pc in a last-ditch attempt to defend the forint’s currency peg in the ERM.

It is just blood in the water for hedge funds sharks, eyeing a long line of currency kills. “The economy is not strong enough to take it, so you know it is unsustainable,” said Simon Derrick, currency strategist at the Bank of New York Mellon.
Romania raised its overnight lending to 900pc to stem capital flight, recalling the near-crazed gestures by Scandinavia’s central banks in the final days of the 1992 ERM crisis – political moves that turned the Nordic banking crisis into a disaster.

Russia too is in the eye of the storm, despite its energy wealth – or because of it. The cost of insuring Russian sovereign debt through credit default swaps (CDS) surged to 1,200 basis points last week, higher than Iceland’s debt before Götterdammerung struck Reykjavik.

The markets no longer believe that the spending structure of the Russian state is viable as oil threatens to plunge below $60 a barrel. The foreign debt of the oligarchs ($530bn) has surpassed the country’s foreign reserves. Some $47bn has to be repaid over the next two months.

Traders are paying close attention as contagion moves from the periphery of the eurozone into the core. They are tracking the yield spreads between Italian and German 10-year bonds, the stress barometer of monetary union.
The spreads reached a post-EMU high of 93 last week. Nobody knows where the snapping point is, but anything above 100 would be viewed as a red alarm. The market took careful note on Friday that Portugal’s biggest banks, Millenium, BPI, and Banco Espirito Santo are preparing to take up the state’s emergency credit guarantees.

Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.
“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.

A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.

The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?

http://www.telegraph.co.uk/finance/...on-the-brink-of-currency-crisis-meltdown.html
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350zCommTech said:
Ok, now I remember why the 21st was in my head, which is next Tuesday.

It's also possible that huge selling that we've withness so far in Oct., was due to forced liquidation in preparation for this payout.

Here's the latest:
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airlift said:
350,

This infprmation is spot on to have significant impact on the markets one way or the other. I do appreciate your posting this article, but please call for others to try to explain if this event will throw the markets in a down spiral (which could be a buying opportunity for those still having an IFT left for the month). Frankly, this eludes me, so I guess it is above my head to understand. At least, the article states that "Those on the wrong side of these Lehman debt contracts - known as credit default swaps (CDS) - must come up with the money by Tuesday, the next D-Day in the ever-fraught calendar of the credit markets. There has been a deafening silence so far."

Questions: Much uncertainty, and thus bad for stock funds? ... or a historic event sparking a surprising rally to the upside? ... ride this out, or go into protection of capital until next month?
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So what ever happened with this? Did the American tax payer have to shell out a bunch of $ because we own AIG now?

On the 21st you guys were talking about 350's new avatar... :nuts: :D
 
KevinD said:
So what ever happened with this? Did the American tax payer have to shell out a bunch of $ because we own AIG now?

On the 21st you guys were talking about 350's new avatar... :nuts: :D
Click to expand...

Well, we certainly did not get a bang but the Dow has been down nearly 900 points since the 20th. Some of it probably happened prior to the 21st. It might actually still be happening as there was news last week that AIG needed more of our tax payer money.:mad:

View attachment 4956

Since trading began this afternoon, the USD/YEN tanked again, down to 91. And the dollar is on the rise again. More of the same basically.
 
Feds to cut 1%?

GLOBAL MARKETS WEEKAHEAD-Fed to cut as markets implode


Sun Oct 26, 2008 11:00am EDT

By Jeremy Gaunt, European Investment Correspondent

LONDON, Oct 26 (Reuters) - The big question facing investors right across the world this week is "How long will this go on?"
The U.S. Federal Reserve is widely expected to cut interest rates sharply, corporate earnings reports will flow in and many investors will be looking to preparations for a global financial summit next month and even the U.S. presidential election.
But the selloff/panic/rout -- call it what you will -- on stock and foreign exchange markets last week and in the months preceding has become so severe that it is almost gaining a life of its own outside of events.

"There's nothing we can do, investors may just have to suffer. Nobody wants to catch a falling knife," Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, said last Friday as his local stock index -- Japan's Nikkei .N225 -- tumbled nearly 10 percent in one day.

The numbers tell a mind-boggling tale.

MSCI's all-country world stock index .MIWD00000PUS hit a five-year low on Friday. In reaching that level it has wiped out in less than a year about 80 percent of the roughly $20 trillion in value gained in the prolonged recovery following the bottom of the internet-stock debacle.

The latest wrinkle, however, is that an emerging market decline is gathering pace. The MSCI emerging market index .MSCIEF lost some 15 percent last week for a month-to-date decline of 39 percent.

At the same time, emerging market sovereign debt 11EMJ was clobbered and various developing economy currencies sank. Hungary was even required to raise interest rates by 3 full percentage points to protect its falling forint currency <EURHUF=> <HUF=>.

It is not at all clear that this week will prove much different.
The abandonment of emerging markets has not been brought on just by lack of confidence in riskier assets as the global recession takes hold. The repatriation of money is also a reflection of hedge funds and others deleveraging -- that is, liquidating their holdings to get back borrowed money.

Such funds are essentially selling into any strength they see, meaning that any attempts at a rally are short-lived. It is also unclear how much needs to be liquidated.

Societe Generale strategist Albert Edwards reckons the deleveraging trend could run at least for the rest of this year and that it will now start adding to a deteriorating picture for emerging markets.
"As reserves fall in EM economies, liquidity is squeezed and they get hurt by this on top of the export slowdown," he said. "(There are) bigger downside surprises to come in EM growth disappointment."

Not that emerging markets are anything like alone. The world's richest economies are where the rot set in and there is little likelihood of immediate improvement there either.

Swiss wealth manager Sarasin, for example, is warning clients to expect U.S. data this week to show falling new home sales and home prices, a gloomy outlook for U.S. production, weaker durable goods and battered consumer confidence [ECI/US] ECONUS.
Into this will step the Federal Reserve with investors expecting a lot from its meeting on Tuesday and Wednesday. Interest rate futures show a majority of market players leaning towards a 100 basis point cut rather than 75 basis points [FEDWATCH].
This would follow an emergency 50 basis point cut earlier this month and leave federal fund rates as low as a wafer-thin 0.5 percent.

Reuters polls also show economists are expecting a half point cut from the Bank of England's next meeting on Nov. 6 [BOE/INT] and at least 25 basis points from the European Central Bank [ECB/INT] by the end of the year.
Normally, such prospects of easier money would lift investor sentiment but the problem for authorities is that very little seems to be working as the worst financial crisis in 80 years morphs into a global recession.

"Markets don't seem to be satisfied with anything at the moment," said Emiel van den Heiligenberg, an asset allocator at Fortis Investments.http://www.reuters.com/article/marketsNews/idINLO16834320081026?rpc=44
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