A note of caution for those with deposits in US Banks

**raycarey** · 18-03-2008, 09:02 AM

Originally Posted by Jet Gorgon

Not an expert, but this is getting close to the time to buy.

Originally Posted by Jet Gorgon

Lots of choice bottom-picking right now.

considering your track record (what happened to yesterday's "morning cheer"---possibly the most absurd call i've heard or read about financial markets in....well, perhaps ever....the 5th largest bank in the US essentially goes under, the fed lowers the discount rate .25 on a SUNDAY, and you think the market is going to react positively monday morning?), i'll pass on your future investment advice....and i think others would be wise to do the same.

thanks anyway.

btw, the dow and S&P haven't even corrected 20% from their october highs yet.....and does anyone think this is going to be a 'normal' correction? for reference, the S&P got a haircut of approx 40% in 2002. i'm certainly not offering advice to norton as to when to try and time the bottom, but IMO we're nowhere near it yet.

Originally Posted by Jet Gorgon

Bfly and Ray are probably buying energy stocks now

another jet gorgon prediction that has no basis in fact. as MM knows, i've been short equities (mainly the S&P, and some individual sectors) and the dollar for over six months. how about you?

**raycarey** · 18-03-2008, 09:43 AM

back on topic.... herb greenberg had an interesting column on marketwatch yesterday about who really owns those shares if your broker goes belly up.....you or the broker.
you might be surprised.

Herb Greenberg » Blog Archive » How to Keep your Investments Safe

a bit alarmist, but food for thought.

**raycarey** · 18-03-2008, 04:48 PM

seems a significant point to me....maybe that's why you're dodging it.

Originally Posted by raycarey

considering your track record (what happened to yesterday's "morning cheer"---possibly the most absurd call i've heard or read about financial markets in....well, perhaps ever....the 5th largest bank in the US essentially goes under, the fed lowers the discount rate .25 on a SUNDAY, and you think the market is going to react positively monday morning?), i'll pass on your future investment advice....and i think others would be wise to do the same.

well, no point kicking you when you're down. run along li'l jetty.

**Jet Gorgon** · 19-03-2008, 04:21 AM

^as usual, you missed the point and the irony.

**Butterfly** · 19-03-2008, 06:45 AM

Originally Posted by raycarey

you might be surprised.

Herb Greenberg » Blog Archive » How to Keep your Investments Safe

a bit alarmist, but food for thought.

Quite alarmist but all true neverless. Love the comments, all those guys calling their brokers and finding out how much they are exposed.

**raycarey** · 19-03-2008, 10:24 AM

^
it worried me enough that i called mine. and i really didn't get the clear answers i was looking for.

**Spin** · 19-03-2008, 02:11 PM

Originally Posted by Jet Gorgon

Not an expert, but this is getting close to the time to buy.

Got to agree with that, the time to buy is when theres blood on the streets as they say.
My guess is that the feds extension of its loan funds to the investment banks could mean a sustained rally in the financials. I'm staying short though in the short term as i believe yesterdays rally is a spike and Morgan Stanleys results later today could spell business as usual

**Spin** · 19-03-2008, 02:42 PM

Further interesting reading....

Porsche, Sprint Unsettle Banks With Rush for Credit

"Banks had more than $1.4 trillion in untapped loan commitments as of September, the most since data became available in 1989"
"
They have commitments to make loans, which they are being called out on, and their capital is bleeding to death.''

Bloomberg.com: Exclusive

bkkandrew · 19-03-2008, 03:56 PM

^A hitherto unmentioned aspect of the credit crunch. There must be massive legacy loan offers out there orrered in benign conditions chasing returns for the so-called 'Wall of Money' in 05/06. Remember that?

**raycarey** · 19-03-2008, 04:06 PM

Originally Posted by Spin

i believe yesterdays rally is a spike

dead cat bounce if there ever was one.

by no means am i claiming to be an expert or offering advice, but i really don't think we're anywhere near the bottom yet...particuarly in financials. sure there's blood in the streets, but it isn't even up their knees yet.

**Butterfly** · 19-03-2008, 04:09 PM

we will hit bottom when the Dow starts trading at 6,000 not 12,000

NASDAQ has been in the shitter since 2000, so no arguments there, still 50% off from its high in March 2000

S&P 500 needs a small 30% correction,

**raycarey** · 19-03-2008, 04:16 PM

6,000?

jesus.

what kind of time frame are you thinking? years or months?

bkkandrew · 19-03-2008, 04:25 PM

I would concur with 6000. Q3/Q4 2009...?

**raycarey** · 19-03-2008, 05:20 PM

jesus.

so are you all the way short?

**Texpat** · 19-03-2008, 05:39 PM

Originally Posted by Butterfly

we will hit bottom when the Dow starts trading at 6,000.

I'm no expert either, but that sounds to me like wishful thinking. Apart from housing and banking, the sub prime crisis has had negligible impact on much else. The price of oil, however, has had a great impact on everything.

If Dow goes sub 10K it's because of oil, not the sub-prime crisis (which I believe will be sorted within two years.)

I cite Black Friday in '87, the S&L bailout and 9-11 as very quick rebounds from what the Chicken Little's of the day were claiming were absolute worst-case scenarios. American economy has proven to be very resiliant. I see nothing different now than I saw then, with the exception of much greater volumes --totals and losses.

After a few of these disasters, it's not even exciting anymore.

bkkandrew · 19-03-2008, 06:03 PM

HBOS (Halifax / Bank of Scotland) forced to deny liquidity problems (AKA Bear Sterns - should that now be called 'doing a Bear'?). Share price down a futher 11%.

Their shares are now worth just 38% of what they were 6-months ago...

Bloke on BBC TV news this morning advising viewers to 'spread their money around the big banks'...

Also rumour circulating that Bank of England staff have had foreign travel bans over the Easter break enforced, due to expectancy of some crisis or other. Can't think what that would be...

**barbaro** · 19-03-2008, 06:05 PM

^ and ^^ and ^^

Some folks might move into cash (which isn't really that good at the moment), and one can buy at the bottom end. Easier said than than done though, in finding what the low end might be.

But sub-10,000 DJIA and further declines in the S & P 500 Seem very possible.

I do believe, in the RoM: Return of the Mean, over time.

bkkandrew · 19-03-2008, 06:10 PM

Statement released by BoE:

LONDON (Thomson Financial) - The Bank of England said there is no substance to a rumour that Easter leave for MPC members has been cancelled.

‘This rumour is absolute rubbish,’ a spokesman told Thomson Financial News. There were rumours in the market that the MPC was planning to meet over rumoured emergency funding for HBOS (LSE: HBOS.L - news) .

HBOS earlier strongly denied the rumour, saying it is ‘one of the world’s strongest financial institutions, with one of the world’s strongest balance sheets.’

**Butterfly** · 19-03-2008, 06:14 PM

^^ yes, mean reversion is the keyword here

I am not saying Dow at 6,000 will happen, just that it would be a good start

The Dow is a bad index anyhow, full of survivor bias and other technical problems etc...

S&P 500 is better, and the NASDAQ reflect more the reality, so does the RUSSEL

**Panda** · 19-03-2008, 06:26 PM

Short term things have got to bounce back to some extent but probably not to where they were. Tangible goods and services is what the world trades on in reality. The financial markets are just manipulating the value of real goods and services to their own advantage. A lot of big companies making big bucks while the little people go deeper into debt. But in the end the someones got to pay for the spiralling debt, and you guessed it. Its going to be the little people conned into credit cards and loans they cant afford. The big lending institutions have bled the average worker dry until he/she can pay no more and now the US government financially assists not the tax payers, but the big companies like JP Morgan and encourages the little people to borrow more by lowering interest rates.

This endless cycle of increasing debt ain't going to fix anything long term even if it does buy a temporary reprieve. Sort of like offering a new credit card to someone who is already in over their head. Time for an adjustment on the world financial markets to get them back in line with actual production of the true value of goods and services.
This may be a simplistic view, but its a fundamental one that drives world economies in the long run more than manipulation of currency values via debt.

**Spin** · 19-03-2008, 07:09 PM

Originally Posted by Texpat

the sub prime crisis has had negligible impact on much else

Its spreading into the wider economy, as house prices fall further its real impact will become more obvious.

Morgan Stanley results out already,

"March 19 (Bloomberg) -- Morgan Stanley, which reported the first loss in its history three months ago, said earnings fell 42 percent, less than analysts estimated, as investment banking fees dwindled and loan values declined.

First-quarter net income dropped to $1.55 billion, or $1.45 a share, from $2.67 billion, or $2.51, a year earlier, the second-biggest U.S. securities firm said today in a statement. The average estimate for the three-month period ended Feb. 29 was $1.01 a share, according to a Bloomberg survey of 17 analysts."

That news might give the financials momentum to continue yesterdays rally, Morgan Stanley stock is up 6% in early trading.

**Texpat** · 19-03-2008, 07:19 PM

^Spin, you missed the first part of my quote...

Apart from housing and banking, the sub prime crisis has had negligible impact on much else.

MS is one of the world's largest investment banks and global financial services firms...

bkkandrew · 19-03-2008, 07:26 PM

The ftalphaville discussion blog made interesting reading today. Discussion closed but published in full here:

FT Alphaville » Blog Archive » Markets live transcript 19 Mar 2008

**Butterfly** · 19-03-2008, 07:39 PM

to think that the subprime mess will have NO real impact on the economy is a bit naive to say the least,

why do you think we are heading to a recession ? just because God said so ?

The subprime mess is real, and its impact is real, ask the thousands of family who lost their home, the sales agent who lost their business etc... the impact is not negligible

**Spin** · 19-03-2008, 11:36 PM

Originally Posted by Texpat

you missed the first part of my quote...

What about employment, manufacturing and retailing then?

Thornburge Mortgage may be bankrupt early next week, they have margin calls and no money to pay.

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