I am too tired tonite to dig thru some of today’s data, and see what’s worth noting.
Feel free to add your 2 cents in comments . . .
~~~
After gaining 2.1% yesterday on the government takeover of Fannie Mae and Freddie Mac, the SPX slumped 3.4%, — the biggest drop since February 2007.
The S&P 500 decreased 43.28 points to 1,224.51.
Dow Jones Industrial Average lost 280.01 to 11,230.73.
Nasdaq Composite Index sank 59.95, or 2.6 percent, to 2,209.81.
About 10 stocks dropped for each that rose on the New York Stock Exchange.
The do the exact opposite of Cramer trade seems to continue to pay off big.
The recent increased volatility and worsening economic conditions have market participants very near the breaking point, IMO. If Lehman doesn’t come up with a capital infusion plan that Wall Street likes tomorrow night, then I put the chances of a stock market crash at about 50%.
Double header, anyone? Lehman and WAMU on the same weekend?
I had thought the sucker rally would last at least a couple of days. Looks like the suckers are wising up. Either that or they’re running out of money to ‘invest.’
What he said. But it was pretty obvious (in hindsight) this time around. Vix was too low, and everythings been up on thin volume for too long.
Everything, except the Super-duper (not) dollar has been in an extended bounce until now. Where was it going to bounce to?
So… There may be something to this “deflation” meme after all…
Go figure!
Time for another FED easing!
Japan here we come
This is my best guess of what’s happening:
Fear and more fear.
Margin calls.
Sell your winners first and keep the losers.
SELL
SELL
SELL
And finally sell your losers.
That will be the bottom.
Anyone who has money then will make a fortune.
Fed Calm O Meter
MBI – Done
ABK – Done
Bear Sterns – Done
FNM – Done
FRE – Done
LEH – In Action
WAMU – Pending
C – Pending
USA Inc – Pending
Back to reality:
Energy, financials, technology, materials and retailers — all joined the party!
Small caps, mid-caps and large-caps all had an equal-opportunity day!
Boy! The fall season is knocking the doors hard; and the colors have started changing fast…
Bove predicted tonight Feds will orchestrate a takeover of Lehman (aka bailout) by Wednesday morning. Call me cynical, but Bove has made about 727 predictions the last two months. Methinks prediction number 728 will bear as much fruit.
We need BR on more shows to guide these dunces to the sunlight.
You know what drives me crazy ? It is to think that the White House or some affiliated government agency (like the NY Fed) may be using OUR taxpayer money to try to prop up the market until November. It makes me puke just to think about it ! Crazy world !
Lehman to Announce `Strategic Initiatives’ Tomorrow
Sept. 9 (Bloomberg) — Lehman Brothers Holdings Inc. said it will announce third-quarter results and “key strategic initiatives” tomorrow, a week earlier than planned, after the stock fell a record 45 percent in New York trading today.
Lehman, the fourth-largest U.S. securities firm, said in a statement that it will report the results at 7:30 a.m. in New York. The company said it will host a conference call at 8 a.m. to discuss the firm’s performance, “outlook and strategy.” Lehman previously said it would release the figures on Sept. 18.
…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRrKX7KisYSM&refer=home
I guess they think they have something “good” to say.
Another 300 point reversal tomorrow?
Got whiplash yet?
DUDE…
CRAZIEST ISHT TODAY…SUPER DOWN DAY FOR PRECIOUS METALS STOCKS…
IT’S MURDER ON HUGE VOLUME…
The point of capitulation may be here.
Bail-out hands Pimco $1.7bn payday
http://www.ft.com/cms/s/0/838d3cb4-7e96-11dd-b1af-000077b07658.html
Cost of US loans bail-out emerging
…The price of credit default swaps on five-year US government debt hit a record 18 basis points in early trading, according to CMA Datavision. This means that it costs $18,000 a year to buy insurance on $10m of US government debt.
Tim Backshall, chief strategist at Credit Derivatives Research, said the price implied that the US was more likely to default on its obligations than Japan, Germany, France, Quebec, the Netherlands and several Scandinavian countries. Traders said the CDS market for US debt was illiquid and it was hard to see evidence of increased concern over US creditworthiness in broader market prices.
http://www.ft.com/cms/s/0/e30472a6-7e79-11dd-b1af-000077b07658.html?nclick_check=1
You can’t fix it if it ain’t broke.
By the time the dust settles and the chorus around the world is “help us, please restore to us our fortunes”, then you can be sure there will be a “fix” at hand.
The hook in your mouth are entitlements, savings and value in “investments”.
If you want liberty; true freedom from the “system” that is engulfing every inch of your life, you must be willing to let go of these things.
For the ones that critized my thoughts, wait and see. There are no “prop ups” left for the Fed, or any worth a flip. Hedgies are coming with an all out war with the shorts! If I was a hedge fund, I’d damn sure do it. Everyone is expecting a floor and now everything seems fine. Great profit potential to absolutly crush everyone! Now that assumes that Wall St is a self serving entity that doesn’t care if it crushes the average player. But I’m sure that “assume” will make an ass out of U and me.
As some may know I am highly long QID for many reasons and am on record on 1/2/08 as saying this will be the worst year in S&P history (-43% in 1931 current record). I don’t trade anymore, but am anchored in my position. For those traders out there, I see no reason to be long. Check out this put/call chart. The higher the put/call (see March and July bottoms) the more a rally may be indicated. Not only is a rally not indicated, the put/call is in where I like to call “nowheresville”…nowhere near indicating a rally, more likely indicating a top here.
As a COMPLETE novice who owned his 1st company @ 25, worked in over 3 dozen industries and @ 37 years old was completely clueless as are 99% of Americans; Wow what a nightmare. Sad thing is that they(us) are still asleep. The trimming of American budgets has JUST started.
TDH
It is obvious that Hedge Funds and/or the PPT want to break the back of shorts but it is pure madness to make such a bet ! The fundamentals of the economy are so bad and deteriorating so fast that whomever is on the buy side right now will lose an insane amount of money. It just gives people who have been long a blessed opportunity to get out and shorts to add to their positions !
another interesting point is that today pretty much killed any hope of SWFs injecting more capital in these zombified banks.
the korean people must think their bankers are complete idiots for even entertaining the notion of buying into a company that could have lost them ~40% in a few hours.
i’m not even going to get into FNM & FRE.
i’d be really surprised if any more are stupid enough to get in front of this freight train. the window has been closed.
You know things are bad for the markets when your pile of ultrashort ETF’s is appreciating so rapidly your biggest worry is about the counterparty risk in the ETF’s.
Anyone know of a way to find out who the counterparties are for Proshares ultrashorts?
Re: SWF’s
Marc Faber gave an interesting interview to Bloomberg last week. He pooh-pooh’ed the idea of sovereign wealth funds as the saviors of Wall Street. Said the current account surpluses of the Asians and oil producers are shrinking.
Marc Faber Says Falling Oil `Symptom’ of Economic Slump
The interview is a little awkward because of some delay he had in hearing the questions.
Smells to me like a whole bunch of Hedge funds (or the moral equivalent) boosted their assets by selling unhedged “safe” credit default swaps, got burned, and are in forced-unwind mode. Good thing it was only other people’s money, eh?
As for being short – not so easy going forward. It’s one thing to fight the Fed, but it’s another thing altogether to fight the entire government. If Paulson’s Bazooka doesn’t work, then aside from another round of rate cuts and a shotgun wedding or two, we’re closing in on the point where Bernanke will go for a Roosevelt-style devaluation and hit the printing presses.
Remember in the ’30s they called in all the gold and then swapped it back for dollars worth 40% less than they’d been worth before. The market had a huge up year (in nominal terms) right after that. Now the need to reflate is just as great.
To keep nominal asset prices up in a forced-deleveraging environment, you only have two choices: reduce the number of investment vehicles available for ownership (so that more capital is channeled into the remaining choices), or increase the monetary base which is being leveraged up. My personal preference is for the .gov to finally get around to enforcing the laws, cleaning out all the blatantly fraudulent crap and sending the perps to jail (sans their remaining net worth) until the market returns to its October 2007 highs. Eliminating the fraudulent behavior and taxing the criminals would not only serve justice, it would help channel remaining capital into productive uses and help fund all the bailouts we’ve been forced into…
johnnyvee: “The point of capitulation may be here.”
That was a joke right? You can’t be serious.
Penelope Pitstop,
What a load of gobble gook. I’m sure you thought what you wrote was cute but next time just stick to basic sentence structure. You’re no poet.
Wisdom-seeker:
I think the situation is a bit different than the 30s.
Helicopter Ben may certainly take a ride in his helicopter with bags of $s, but he will soon realize that the FCBs of US Debt are hovering above him with even bigger bags of treasuries. The moment he starts dropping $s is the moment his helicopter crashes due to treasury dumping.
If I am correct, in 30s this couldn’t happen because most of the debt was actually held by US citizens. (I’ll reconfirm this point though.)
Contrary to what many are thinking I see a treasury bubble developing as the Fed scares everyone into bonds (and out of equities – domestic and global) to finance the ever increasing deficit. We could also see rates at 1% by January 2009.
Of course, this will lead to inflation a few months/year down the road leading to a treasury blow-up and that would make the current situation quite pale in comparison.
Just my thoughts.
– Shankar
Hello all,
Just thinking outloud here…..
How about the business cycle? Everyone cites it all the time. Can the business cycle go through a normal bell curve cycle as economic philosophies burn through the resources that power it? Say through X=AMOUNT of years surveyed? I think it might be possible. Also, if the F/F bail out did not happen would the deflation occur in a more rapid fashion? I think deflation/deleveraging will occur in the short term (@ 0mo to 1yr…. not really sure to see how fast the decent could be). However, it might be followed by a massive inflation as the .gov could attempt to correct. I don’t know if I’m right or not (Hopefully the latter.) But, it is on my mind. Comments anyone.
Thanks all,
Economics 101
The 1930s! When you start hearing this sort of panic in the halls you know the buying season will be coming soon for the well positioned.
Goodness me, I was around the USA in the 1970s and it was a lot worse then. Somehow we all survived, even 20% inflation.
Ever since the cold war ended Yanks have become so used to good times 24/7 that they run shrieking at the slighest historically trivial disturbance of whatever. A lot of the Cramer Kids are getting a useful lesson right now. But in 5 years they’ll come out of it much better disciplined investors.
Patience Gobbleknoll, patience. The Cramer Kids have only been sent to their rooms. They haven’t even been spanked, yet.
Until home prices stop declining there’s not much the Fed and US Treasury can do. Paulson thought his Hail Mary would lift the markets. The market stared heading down after 5 minutes on Monday (it did close higher after the bears left the building). I think the market participants are tired of the lying. Once the earnings from the financials start coming in, the S&P will see 1000 as resistance and not support.
wtf, I am sorry you don’t understand. I hope one day you will.
“We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.” – James Paul Warburg, architect of the Federal Reserve Act
http://en.wikipedia.org/wiki/Paul_Warburg
Eco 101: Sorry to provide the bad news, but historical comparisons to 1930s are correct. The last housing led recession was in 1991, and the decline in house prices was about 5%. You have to go back to the 1930s to find declines matching the current 25% (case schiller?). If the declines get to 40% peak to trough (as some predict), we’ll be in uncharted territory. As roubini warns, we haven’t really heard the chorus of the “jingle mail” yet (where keys in envelopes land in the banks post offices), but if he is right, and if as much as 40% of homeowners will have neg equity by the time this is through (possible, given the increasing velocity of home buying from 2003-2007, and prices (way) below 2000 prices), the consequence could make even the 1930s comparison an ill-fit.
Penelope Pitstop: “wtf, I am sorry you don’t understand. I hope one day you will.”
Thanks for the curse. A unabomber fan I presume, or maybe you just finished reading “Into the Wild” for the first time? No thanks, my fondness for starvation, pestilence, and war dissipated shortly after 6th grade history class.
Listen, I’m no fan of rampant consumerism and corporate media, but burying your head in the sand isn’t going to solve global warming.
Eventually imbalances are restored, excesses are rectified, and lessons are learned. Have a little faith in human progress. 2 forward, one back…
CNBC is real comedy in action! http://www.cnbc.com/id/15840232?video=849474171&play=1
The video above is titled,
“LEH Shares Down”
Below that,
Discussing why to buy Lehman now, with Richard Bove, Ladenburg Thalman and CNBC’s Erin Burnett.
Pump, pump, pump with all that hot air CNBC :-)
wtf,
nonsense, much?
please show us where PP was speaking of “Global Warming”/ “”evils” of Technology”..
I’ll second Ms. Pitstop, maybe one you’ll grow enough to reach the Truth. It’s funny that you’re up on the ‘Regression’-part of Natural growth cycles, for, it seems, that’s where you’re stuck.
Past that, the idea of CDS on the USTreas complex always amuse-s/d me. Seriously, who’s the counter-party? Worse, what’s the denomination? a list of “Buyers” of those things would be enlightening.
Now we know why Noah financed the Ark w/ “Junk Bonds”- the first “Yield Trap”
You nailed it Shankar !
Mike in NOLa:
I thought I was the only worry wart! I sold mine for that eaxact reason.
Mike in NOLa @ 11:54:19 PM
“Anyone know of a way to find out who the counterparties are for Proshares ultrashorts?”
I think that these funds use some combination of long puts and short futures. The people on the other side of that trade, of course, have to maintain some margin.
I think that the system will work as long as we don’t get something worse than 10/19/87.
Mike,
that’s the ol’ Pepper. Back to BR’s point: “Know what you own.”
“Sold to You!~” can be sweet music, or a rueful cacophony that shadows your every thought.
Not too long ago we were Free to Choose which, nowadays, not so much.
as an aside, the SEC has the wrong source of funding. Personally, I think it should derive its Revenue from a micro% transaction Tax on every trade. Tamping down the BlackBoxQuant-jocks might be, just, part of the benefit.. if Cary the Computer wants trade stox, he(it) should pay for his lightning-fast reflexes/moodswings..
DL and D.:
Got sidetracked today with the wife’s day off and got nothing done except errands around Houston. Had planned to start buying puts on long etf’s and gradually get rid of the ultrashorts.
I read the fine print at Proshares on SKF and DOG and it says:
“The Funds invest in financial instruments (including
derivatives) that ProShare Advisors believes, in
combination, should have similar daily return
characteristics as the inverse (opposite) of the underlying
index. These instruments include:”
It goes on to list futures, swaps (two party), forward contracts (two party) and what looks like exchange traded options. So the ETF may have exposure to counterparty risk. Their general prospectus says much the same.
Proshares Literature Center
Hoffer,
Regression is Penelope’s original proposal dumb-a$$.
-wtf
You can’t fix it if it ain’t broke.
By the time the dust settles and the chorus around the world is “help us, please restore to us our fortunes”, then you can be sure there will be a “fix” at hand.
The hook in your mouth are entitlements, savings and value in “investments”.
If you want liberty; true freedom from the “system” that is engulfing every inch of your life, you must be willing to let go of these things.
Posted by: Penelope Pitstop | Sep 9, 2008 11:10:24 PM
wtf-
I’ll, just, suppose that you have “Arbeit Macht Frei” tattooed on your chest, and leave it at that. If you can’t recognize the Hegelian Dialectic, try learning more than you’ve been taught..
http://www.calvertonschool.org/Waldspurger/pages/hegelian_dialectic.htm
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Hegelian+Dialectic