Black Monday? and will the Fed cut rate on Tuesday?

[350zCommTech]

Thanks to Bear Sterns stupid panic statements and Jim Cramer's idiotic meltdown, the markets got torched as the Yen carry unwound like there was no tomorrow.

Come Sunday night/Monday morning, I expect Asia and europe to be down 2.5-3%. IMO, we might have a "black monday" especially if the YEN continues to rise.

The big question is will Bernake try to rescue the market with a rate cut on Tuesday? IMO, despite Cramers frantic call for the Fed to cut rates(to save his hedge fund buddies?), they will not do it. Doing so will kill the dollar and their credibility. How can they cut when GDP was at 3.4%, jobs at 92K, and headline inflation rising? Remember thier last FOMC statement? They stated that while core inflation was in their accepted range, they were now paying attention to other(headline?) inflation.

If they don't cut and their statement doesn't change much, it will be a big disappointment and the selling continues. Perhaps until we reach February's lows?

If they do cut, obviously the markets will shoot up big immediately, but the dollar will tank and it could cause more unwinding of the Yen carry trades. But the rate cut will be a big relief and I can see the dollar falling against all other currencies except the Yen, allowing the Yen carry trade to resume. Which could keep the rally going for days or weeks.

These are just my opinions and they're probably wrong, so please share your thoughts.

Monday morning is going to be a tough decision day.

 

[nnuut]

Thanks to Bear Sterns stupid panic statements and Jim Cramer's idiotic meltdown, the markets got torched as the Yen carry unwound like there was no tomorrow.

Come Sunday night/Monday morning, I expect Asia and europe to be down 2.5-3%. IMO, we might have a "black monday" especially if the YEN continues to rise.

The big question is will Bernake try to rescue the market with a rate cut on Tuesday? IMO, despite Cramers frantic call for the Fed to cut rates(to save his hedge fund buddies?), they will not do it. Doing so will kill the dollar and their credibility. How can they cut when GDP was at 3.4%, jobs at 92K, and headline inflation rising? Remember thier last FOMC statement? They stated that while core inflation was in their accepted range, they were now paying attention to other(headline?) inflation.

If they don't cut and their statement doesn't change much, it will be a big disappointment and the selling continues. Perhaps until we reach February's lows?

If they do cut, obviously the markets will shoot up big immediately, but the dollar will tank and it could cause more unwinding of the Yen carry trades. But the rate cut will be a big relief and I can see the dollar falling against all other currencies except the Yen, allowing the Yen carry trade to resume. Which could keep the rally going for days or weeks.

These are just my opinions and they're probably wrong, so please share your thoughts.

Monday morning is going to be a tough decision day.

Good Words, I agree. What comes to mind is ROCK AND A HARD PLACE! Need I say more?

 

[Bullitt]

Thanks to Bear Sterns stupid panic statements and Jim Cramer's idiotic meltdown, the markets got torched as the Yen carry unwound like there was no tomorrow.

Great leadership by the CEO of BSC. I couldn't believe it when I heard him say things are worse now than during the tech bubble. Basically this guy's company put the whole entire farm on subprime lending and as a result, have absolutely crushed Bear as a powerhouse firm. Once again we're seeing how much greed is consumed in these hedge funds. This guy can go cry in a corner for all I care, he's a loser. He lost it all and wants everyone else to go down with it.

As for Cramer, I ...... No, I'm not going to go there. Jim's on our side, he knows CNBC is a bunch of cheerleaders.

Well for every winner there's a loser and I read in The Journal that some hedge fund is making a killing shorting these stocks. Apparently, the fund has been doing some heavy shorting the past 2 or 3 years as they saw the bubble grow in the housing sector. Returns were sub par up until the past 3 months where they've made superb returns. Sorry I can't remember the names of the funds.

I'd hate to see that dollar go any lower but unfortunately it's only going to get worse. If the fed cuts next meeting it's going lower. If we stay in Iraq, it's going lower. As Nut said, rock and a hard place.

 

[350zCommTech]

He lost it all and wants everyone else to go down with it.

Possibly, but what if things are really as bad as he said?

If they do cut, obviously the markets will shoot up big immediately, but the dollar will tank and it could cause more unwinding of the Yen carry trades. But the rate cut will be a big relief and I can see the dollar falling against all other currencies except the Yen, allowing the Yen carry trade to resume. Which could keep the rally going for days or weeks.

I should add that they might also leave rates unchanged but their statement could be biased towards a future cut, which would probably have the same effect.

 

[12%ayear]

Looks too easy to say that the markets will tank. The money managers will be buying. They will be placing bets FED acts properly and helps out the economy.

 

[Rustynutt]

What effect will the foot and Mouth outbreak in the UK have on International markets come Monday? Combine that, with the recent flooding, and increased security in the UK, one would think that the current downward trend would continue.

I don't know much about agriculture in stocks, would this new event cause an increase in some markets State side? Seems like a much larger economic tide, if it occurred, than a half of point on interest cuts. So they cut interest, who is going to borrow the money? Hopefully, credit isn’t as easily as obtainable as it has been, I know for sure all the “refinance your home” offers have all but stopped showing up in my mail box. Quick money might go for the lower rate, but increased production and shipping of beef and pork might help out some of the lagging areas in the States.

Just a afternoon thought while taking a break from working on motorcycles

 

[Griffin]

I have now doubt that Monday will be bad overseas but I don't think they will scraping stock brokers off the pavement (actually I've heard they bounce like a dead cat)...I'm more inclined to believe that will be Tuesday and Wednesday.

The reason being, that the 200 dma seems to have a "suspension bridge" effect and I expect the usual pause befroe the Fed to minimize the buying and selling. The more the market pundits try to pump up the "Fed must cut" mantra, the harder it will fall when that doesn't happen. I completely concur with 350z's assessment of the Fed state of mind, but I see only a 1-2% loss on Monday - not enough to categorize it as a "black Monday". Even if the Fed cuts, I dont see anything more then a minor rebound.

I think the dip buyers are out there waiting, but now the pavlovian dinner bell response to every dip is broken. The whip of this market means that they will not come back en masse but trickle back in. I expect a reasonable stable bottom to form before we rebound. I'm almost willing to bet that the entire month of August is a lost cause at this point. I'm searching for a stable entry point.

 

[weatherweenie]

I'm almost willing to bet that the entire month of August is a lost cause at this point. I'm searching for a stable entry point.

For those of us in the markets the question is whether or not to ride it out, or get out?

Anybody, Bueller, Bueller?

 

[Spaf]

The answer is how is you risk v reward?
How long do you have to go before retirement?
If you get out now you will probably be selling low!......Not good! And how are you going to know when to get back in?
If you can hold the market will eventually come back up. When? Only the great Guru knows!
Sell when the market is overbought or stops are broken. Don't let small losses turn into big losses!
We've had almost a 8% decline in [SPX]. That will take almost a 9% gain to reclaim that territory.

For those of us in the markets the question is whether or not to ride it out, or get out?

Anybody, Bueller, Bueller?

 

[Birchtree]

I'm riding my Ducati and throwing spill to the wind. Spent some time today working up my next buy list - there are some excellent prices being offered for the long term perspective. A $16.02 price on the C fund is also golden. Take advantage while the opportunity is available - it will soon enough be back to $18.00. It was the ruin of many a poor boy, the House of the Rising Sun. I'll take a bite on the I fund at $23.00.

 

[weatherweenie]

Where are you when I'm in Vegas?!

Don't let small losses turn into big losses!

That's the thing, I let the losses get away from me, thinking 'it'll come back'

I have a long time, over 10 years, until retirement. So, unless there's something REALLY REALLY bad, I'll just pucker up, and try not to let greed cost me in the future.

 

[tsptalk]

I was watching the Saturday morning Fox market shows and it was a mixed bag. Some said this is a great buying opportunity, others said this is just the start of the correction. We're not the only ones who don't know. Of course half will be right and the half wrong. Kind of like black and red on the roulette wheel.

Place your bets!

 

[Spaf]

chit, I'm retired 50/50 ain't a good bet. I wanna place my widdle marble on the black or red...depending on who's paying.....

 

[pyriel]

It seemed that we are always getting these kind of talk around August timeframe. I don't believe that we will tank and reach the Feb low. There is nothing to indicate that it will happen. Back in Feb, we had been discussing rates, housing bust, and oils... Right now, they are still the same topic that could tank a market but as we can all see, we recovered nicely from that Feb low.
But then again, what do I kow?;-)
P

 

[350zCommTech]

Folks, this is pure speculation on my part but what if Cramer was acting out on behalf of Bear Sterns? I think he mentioned getting calls from people(hedge fund buddies?). I remember seeing him on CNBC a few weeks ago talking about the two B.S. hedge funds. He looked very calm and said it was no big deal.

On Friday, he started off nice and calm and then all of a sudden, WHAM! We got crazy Cramer saying "it's [SIZE=-1]Armageddon."

What I'm trying to get at is that maybe Bear Sterns is really, really, really in some serious trouble? Perhaps bankruptcy kind of trouble? I doubt it. But if this turns out to be the case, we are nowhere near a bottom. Anyway, it was just a thought that came to me. It's pure BS(pun intended).

Wasn't there a bank in Germany that just got bailed out a couple of days ago?
[/SIZE]

 

[350zCommTech]

Back in Feb, we had been discussing rates, housing bust, and oils... Right now, they are still the same topic that could tank a market but as we can all see, we recovered nicely from that Feb low.

Take a look at this chart. I only know a little bit about the ABX indices, but from what I've read, this chart suggest that things are a lot worst than they were back in February.

View attachment 1838

 

[12%ayear]

postive day Monday for USMs

 

[vectorman]

· Three days after a large surprise in the jobs report of 50,000 jobs, up or down, the S&P 500 was higher only 5 out of 18 times. Its average return was minus 0.5%. Markets don’t like surprises because they create uncertainty.
· Ten days after a negative surprise of 50K jobs or more, the S&P was higher 55% of the time. Ten days after a positive surprise of 50K or more, it was lower 58% of the time.
· Ninety days after a large negative surprise, the S&P showed an average return of +5.1%. Ninety days after a large positive surprise, its average return was 1.7%.
· The correlation between surprises in the jobs number and 90-day returns in the S&P 500 has been -.32. This means that the more positive the surprise, the more negative the performance in the S&P and vice-versa. Given the sample size, this is significant.
And, perhaps most important of all…

· If the market did cartwheels for the jobs report and closed higher by 0.5% or more, there was only a 33% chance that is was still higher 30 days later. If it fell out of bed and declined by 0.5% or more, there was a 93% chance of it being higher after 30 days.


http://finance.yahoo.com/q/bc?s=^VIX&t=my&l=on&z=m&q=l&c=

http://www.buythebottom.com/cot_charts/vix_cot_chart.html

 

[FUTURESTRADER]

It seemed that we are always getting these kind of talk around August timeframe. I don't believe that we will tank and reach the Feb low. There is nothing to indicate that it will happen. Back in Feb, we had been discussing rates, housing bust, and oils... Right now, they are still the same topic that could tank a market but as we can all see, we recovered nicely from that Feb low.
But then again, what do I kow?;-)
P

wasn't the big concern in february the shanghai sell-off?

 

[fedgolfer]

my guess is that Fed has to rescue the markets by at least saying a rate cut is in the cards and possibly soon -- best long term scenario. If they actually raise on Tuesday, I think that may pump the markets up in the short term -- but, Bernanke will lose credibility. So, for me, Tuesday is a buy either way. I don't see Ben not reacitng at all. The bear channel down is pretty symetrical and can be traded on technicals alone. hoping for a gap up out of the channel is risky, but i'm confident we may see that on Tuesdsay post-FOMC. We definitely saw capitulation on Friday and hopefully we'll see it on Monday as well.