Market Talk / Oct. 5 - 11

[Mike]

So when, in your opinion, should people on the sidelines move back in?

Sometime next year.

Keep the following in mind:
- the avg length of a bear market is 18 months (2000-2002 bear market lasted a little over 2 years)
- the avg length of a recession is one year - though can be as long as 18 months
- current bear market began just about one year ago
- recession *probably* began in the 3rd quarter of this year.

So with all that in mind, the recession will last 'til sometime between July-December of next year, and the bear market will end a few months before that. Given the fact we have a housing market that has collapsed combined with a nearly frozen credit market, I'll go ahead and say I expect this recession to be deep and lengthy. It probably won't end 'til the end of next year - which means this bear market probably won't end 'til June (if we use the six month outlook of the market where traders anticipate the end of the recession accurately). There's no telling how much more value will be lost in the meantime. We could give back all the gains of the last bull market.

 

[tsptalk]

Anyone remember the Sep 15 comments where we talked about 1000-1005 as the head and shoulers downside target on the S&P? I sure didn't think we would go straight down there, but here we are at 1012. Perhaps we are close to the end?

http://www.tsptalk.com/comments_archive/comments_9_15_08.html

 

[James48843]

Train wreck.

 

[Frixxxx]

Well, here it is....America's new sensation...THE BLAME GAME

http://biz.yahoo.com/ap/081006/meltdown_lehman.html

I can see the interviews now.

Rep. Henry Waxman, D-Calif., : Sir, Did you do anything illegal?

Banker: No

Rep. Henry Waxman, D-Calif., : Sir, did you do anything unethical?

Banker: Can you rephrase the question?

Rep. Henry Waxman, D-Calif., : You know, anything anybody else wouldn't do.

Banker: I was doing what everyone else was doing.

Rep. Henry Waxman, D-Calif., : Don't you find the position of your bank's bottom line a travesty to your investors and customers?

Banker: I don't know what you mean.

Rep. Henry Waxman, D-Calif., : Are you kidding me? People have no money, no house, and no job. Don't you feel responsible?

Banker: I gave them those things. Why shouldn't I get to take them away and get paid big bucks to do it?

Rep. Henry Waxman, D-Calif., : Will you still take your bonus from leaving your position?

Banker: Um ,,, Yep. That $50 mil will keep me outta the gutter until I can find a new job after the recession.

 

[James48843]

VIX now at 57.42 and climbing.

 

[James48843]

VIX topped out at 58.24 today.

Wow.

 

[Silverbird]

[This looks interesting, could someone please translate into non-finance English?]:blink:

Overnight interbank lending rates rise

By Michael Mackenzie in New York
Published: October 6 2008 19:03 | Last updated: October 6 2008 19:03


http://www.ft.com/cms/s/0/065f8bfc-93cc-11dd-9a63-0000779fd18c.html

 

[XL-entLady]

[This looks interesting, could someone please translate into non-finance English?]:blink:

Overnight interbank lending rates rise

By Michael Mackenzie in New York
Published: October 6 2008 19:03 | Last updated: October 6 2008 19:03


http://www.ft.com/cms/s/0/065f8bfc-93cc-11dd-9a63-0000779fd18c.html

I wish I had time to reallly break it down for everyone. Quickly, the TAF or Term Auction Facility is where the Fed auctions money to the banks and it's fully collateralized. The Libor is the rate that banks charge to lend to each other. Because everyone is trying to find short term money to cover year-end needs at a time when credit is tough, the TAF auction could end up having the Fed sell money to banks for 3 month terms at a rate that is above what the banks will lend each other.

Thanks, Silverbird, I hadn't seen this. Maybe more fuel for my wonderings about F Fund. Interesting!!

Lady

 

[James48843]

[This looks interesting, could someone please translate into non-finance English?]:blink:

Overnight interbank lending rates rise

By Michael Mackenzie in New York
Published: October 6 2008 19:03 | Last updated: October 6 2008 19:03


http://www.ft.com/cms/s/0/065f8bfc-93cc-11dd-9a63-0000779fd18c.html

In English:

The FED is going to be a bank- paying interest if you keep your money with the FED.

Previously, banks lent to each other overnight.

Since Banks are weary of loaning any money out, the Fed is offering, for the first time, interest TO banks, if they keep their money on account with the Fed overnight. Thereby allowing the Fed to loan that money out to other banks overnight.

Quite a shell game.

You can't tell who the players are without a program.

 

[James48843]

S&P 500 ends down just 3.5% for the day, after being down over 8% earlier in the day.

Talk about swings.

I need to stop at the store tonight on the way home tonight for something to deal with this headache...

 

[nnuut]

A bottle of Shariz should take care of my headache.

 

[McDuck]

S&P 500 ends down just 3.5% for the day, after being down over 8% earlier in the day.

It will go down another 3% tomorrow.

 

[FUTURESTRADER]

S&P 500 ends down just 3.5% for the day, after being down over 8% earlier in the day.

Talk about swings.

I need to stop at the store tonight on the way home tonight for something to deal with this headache...

got the advil, made a note to put 'tums' in the briefcase also.

 

[Silverbird]

I'm going to get Dramamine. On that note, lots of info in this article.

Former Goldman exec to run financial rescue

Treasury, Fed pledge rapid response, collaboration with other nationsWASHINGTON -
The Treasury Department moved swiftly Monday to implement the financial rescue package, naming a former Goldman Sachs executive to oversee spending the $700 billion earmarked for the plan and pledging to work with other countries to calm global financial markets.

The administration announced it had tapped Neel Kashkari, 35 — an assistant Treasury secretary for international affairs — to head the Treasury's new Office of Financial Stability on an interim basis. http://www.msnbc.msn.com/id/27047568/

 

[Show-me]

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=2008-01-01&id=p33888823587

That's a bottoming tail, now bottom dang it.

 

[DoughBoy]

Please, please, pretty please! Turnaround Tuesday!

 

[coolhand]

Today, Hong Kong’s Ming Pao daily newspaper reported a rumor that the Chinese government is planning to help ease the U.S. financial crisis by buying $200 billion in U.S. Treasury bonds. The report also appeared in several domestic forums. The People’s Bank of China refuted the $200 billion figure, saying only that the bank is committed to stabilizing global financial markets.

This rumor has yet to reach the Western media and there is a good possibility that it appeared only in the Chinese media as a way for the Chinese government to gauge the reaction to such a deal before moving forward with it.

However, the Chinese government does not want to risk raising the ire of the American main street, which would decry such a bailout as a fire sale to the Chinese. Hence, the government denied the rumor before the news spread too far and became unmanageable.

 

[alevin]

it may have been a rumor, but its nice to have some kind of insight into Chigov possible moves other than threatening to turn off our credit tap.

 

[coolhand]

it may have been a rumor, but its nice to have some kind of insight into Chigov possible moves other than threatening to turn off our credit tap.

The source of this is very reliable and well placed. It could happen.

 

[McDuck]

Originally Posted by James48843
S&P 500 ends down just 3.5% for the day, after being down over 8% earlier in the day.

Quote:
It will go down another 3% tomorrow. It will go down another 3% tomorrow.

I was wrong as usual. The S&P500 went down another 5.6% today. Ending at 998 just below the emotional 1000 mark. It hasn't been this low since 2003.

Tomorrow? I think it will go down < 2%.