Thread: A note of caution for those with deposits in US Banks

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Highly unlikely, more like a total rout of the financials. US futures are trading lower by about 2.5% compared to close on Friday.

What was the fed thinking? 0.25%! WTF?

^Don't know about cheer, but to avoid a 10-20% drop, suspension of trading and a rout of the USD. Wall Street futures are still showing -2.3% on Tokyo, despite their paniced actions..

^ But, Spin, that's a stopgap bennie for JP. The Fed mtg is Tuesday, and it'll likely lower rates to about 2%. Pity the seniors living on savings and investments. I think Binky is hoping he can drown in his hot-tub tonight.

all is well, there is no need panic, everything is fine

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Afraid not jettie. Asian markets all down big time. Dollar at 98 yen, gold up to $1025. Euro markets will follow. No reason to think US market will do anything but go down as well.

Originally Posted by bkkandrew

^Yes, my man at JMP opined that if the deal wasn't done BSC would have gone Chapter 11 and possibly brought down JPM as a result, as they are by far and away their biggest trading partner and have massive exposure.

that shit isn't going to go overnight, Greenspan was sleeping at the wheel when all that subprime shit was happening, I mean he knew what was going on, couldn't they have alerted the government about the sordid details of those mortgage brokers scams ?

Greenspan: 2 bubbles followed by 2 busts, the guy should be shot

Originally Posted by Norton

Originally Posted by Jet Gorgon

A little morning cheer when Wall Street opens tomorrow?

Afraid not jettie. Asian markets all down big time. Dollar at 98 yen, gold up to $1025. Euro markets will follow. No reason to think US market will do anything but go down as well.

It hit 95.76 at one point according to Bloomberg...

Bloomberg.com: Worldwide

Originally Posted by Jet Gorgon

The Fed mtg is Tuesday, and it'll likely lower rates to about 2%

You're right, i just woke up, still sleepy. Its the discount rate they lowered 0.25% and the big cut will probably have to be another emergency move before markets open on Monday morning. Bear Stearns were the victims of a run on Thursday and Friday, investors withdrew 16billion dollars in two days. Both Lehman Bros(tuesdaypm) Morgan Stanley (am wednesday) give q4 reports this week and it could get uglier than it is now.
From Bloomberg.com
"Joseph Lewis, Bear Stearns's second-largest shareholder, has spent more than $1 billion on the firm's stock since September, paying as much as $150 a share. Lewis, a 71-year-old billionaire, wasn't planning to reduce his stake, a person close to him said March 11. He's now entitled to $22 million of JPMorgan shares.

To put into perspective of how cheap Bear has been sold for:
"The price JPMorgan is paying is about one quarter the value of the securities firm's headquarters building in midtown Manhattan. The 1.2 million-square-foot, 45-story structure built in 2001 is worth about $1.2 billion, based on the average $1,000 per- square-foot that comparable office space in the city is currently fetching.

Originally Posted by Jet Gorgon

the Fed trimming 25bp from its interbank rate, also today, a Sunday. A little morning cheer when Wall Street opens tomorrow?

what are you on about?

^ It's a joke -- notice the ? at the end of the sentence, big man? Ray will start flogging his 2-baht necklace soon.
Yep, will be watching market openings. Hopefully C can survive or it's going to get really messy.
You're right Spin, the Fed is helping out the banks first. Nobody wants to lend to anybody right now. And, ya, The Bear buyout price is absolutely ludicrous. JP going for its equity trading or what? Madness.

^Sorry, I missed the ? too...

^ Hard to put the tonal inflection in a written post.

Originally Posted by Jet Gorgon

Hard to put the tonal inflection in a written post.

Missed it too. Thought you were asking a question/opinion?

Anyway, didn't work. Hong Kong down 5%, Nikkei 4%, FTSE just opened 2% down, DAX 3%.

DOW will probably slide 5% at a guess...

Originally Posted by bkkandrew

DOW will probably slide 5% at a guess...

Someone once told me there was big money to be made in falling stock market conditions. Any hints from the experts?

only on a uptick, which means you can't short a stock when it's already sliding,

Originally Posted by Norton

Someone once told me there was big money to be made in falling stock market conditions

No need to short sell. Theres plenty of Etf's that go up when the market goes down. My favourite is SKF from http://proshares
This one gives double inverse of the financial sector, it dipped to $112 the other day but has shot back up and will be trading in the 142-145 range today.

SDS, SH and UDN are also benefiting from the turmoil in the equity and currency markets. while not focused on US markets, FXP is also nice play during this meltdown.

Originally Posted by Jet Gorgon

I like how JP did the deal on a Sunday with the Fed trimming 25bp from its interbank rate, also today, a Sunday. A little morning cheer when Wall Street opens tomorrow?

7:45 EST..DOW futures down 200.

Black Monday ? sure sounds like it

Moneyweek's Analysis of the Riskiest Banks:

As determined by credit default swaps:

Worst CDS Ratings:
1. Kaupthing 833.3
2. Kazkommerts 766.7
3. Glitnir Bank 757.5
4. IKB 612.4
5. Landsbanki 604.6
6. Banca Italease 397.0
7. VTB Bank 332.5
8. Anglo Irish Bank 322.7
9. HBOS 236.7
10. Sberbank 221.3
11. West LB 212.5
12. UBS 209.0
13. Natixis 205.0
14. Bank of Ireland 202.5
15. Allied Irish Banks 195.8
16. Dexia 195.0
17. RBS 191.7

In laymans terms, higher the CDS, the riskier it is to lend money to.

Even more layman:

Gentleman Scamp would be 1000, Dr Naam (on TV) would be 10... (no offence GMS)

UK Banks scramble for BoE funds as crisis worsens

Banks scramble for BoE funds as crisis worsens | Markets | US | Reuters

LONDON (Reuters) - The Bank of England's emergency offer of 5 billion pounds of 3-day loans was nearly five times oversubscribed on Monday as financial institutions scrambled for cash in the face of a global credit crunch.

Aimed at restoring confidence to panicky markets in the wake of the weekend firesale of U.S. investment bank Bear Stearns, the loan offer was only the second such "exceptional" operation since the crisis began last summer.

But investors were scared things would get worse and sold the pound and stocks aggressively. Sterling's trade-weighted index hit its lowest level since March 1997 and the FTSE 100 index of leading shares fell nearly 4 percent.

The BoE said it wanted to bring overnight interest rates down. Banks were so fearful of each others' solvency on Monday they were charging more than 25 basis points above the main central bank lending rate for loans of even just one day.

"Given the money market conditions this morning, the situation is very serious and represents a new and unwanted twist to the credit squeeze," said Philip Shaw, chief economist at Investec. "Five billion pounds represents a substantial sum."

The last time the central bank took such a step was in September just after the run on Northern Rock bank, Britain's fifth-biggest mortgage lender, which was later nationalized.

PANIC EVERYWHERE

The BoE said that like other central banks it was keeping a close eye on developments. On Tuesday, it is offering 10 billion pounds worth of three-month loans in coordinated global action to restore confidence to jittery markets.

Continued...

Ah, I also missed:

UK banks rush to borrow at BoE auction - Telegraph

^ Tks, BA. Heard a bit of that this morning. FTSE firms are nervous.

Originally Posted by Norton

Originally Posted by bkkandrew

DOW will probably slide 5% at a guess...

Someone once told me there was big money to be made in falling stock market conditions. Any hints from the experts?

Not an expert, but this is getting close to the time to buy. Everybody hates financials right now, but keep watching. JPM rose almost 4 bucks today coz it got Bear Sterns' assets (as Spin pointed out, look at its Manhattan real estate) for a song; dunno if the Fed will relieve it of Bear's obligations.
Look for strong fundamentals, good cash flow with minimum debt. I'll go back into the financials soon, coz they are a necessity to any market. Wanna play it safe, utilities and cos with cheap outsourcing. Good divs at the utils, but I reckon they're already discounted into most of the prices. But, it's pick by pick.
Bfly and Ray are probably buying energy stocks now, which are at the top of their 5-yr ranges.
I'm watching C. Dunno about LEH; need more news on the internal biz (heard intl broker mgmt canned biz with LEH and then reversed the order).
Uh ya, you don't short a stock when the prices are already falling.
Lots of choice bottom-picking right now. But caution rules.