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The top of this cycle for ASX200, cash is king ?


kahuna1

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In reply to: moses on Thursday 07/08/08 01:39pm

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The problem with losing the local banks for day to day dealings and having to deal with the mega banks will become a fact of everyday life when you try to get a loan and have to explain everything to ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“EmmaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ in Mumbai at extension 2197.

 

 

Thanks Moses http://www.sharescene.com/html/emoticons/lmaosmiley.gif

 

cheers

aus

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Moses

 

 

great summary of the usual economic stuff he didn't touch on some of the very bad things and changes needed as time goes on Re medicaid debt and Soc Sec and the unfunded govt employee's super fund and health funds.

 

Amazing stuff .....

 

I do love the words its over or the market has capitulated.

 

Yep and I am wearing drag right now !!

 

For me the doosey is the sales of homes chart he had and this bit ...

 

QUOTE
The harsh reality is that the next shoe is dropping now, as I warned about and predicted well over a year plus ago. The commercial real estate failures always follow residential ones and since we are only halfway through the housing crisis, just wait and see how severe the commercial real estate crash is about to become.

 

I do wonder when there has been pretty much zero declared this side how bad in reality it is going to get.

 

From the other charts on activity when employment falls and profits fall commercial real estate aside from it being kept at fictious levels the revals .... the tennacy rates fall sharply and the whole ball of wax unwinds.

 

For me i suspect as time goes on its the favored next saga in writedowns ...

 

Glad the guy covered the Merrills things ... there are currently so many lawsuits against investment banks in the US its clogging up the courts for the next few years. One nameless one had an analyst sending out recommendations to buy into one marekt for shonky paper their sales force selling like mad as well and in the meantime they were going to withdraw completley from the marekt in question and not make a price so the investor reading thier recommendation within 7 days was married to some paper no one would ever make a price to exit from.

 

All quite amazing ... I also loved the amount of US notes in circulation its up 220 billion or 36% in 8 years ....

 

Our marekt the usual today ... they did take notice for a while of the US side and the AIG chairs comments after the NY close and him actually saying he thinks the US housing side has a bit more to go .... but our employment numbers put paid to any selloff and the usual guff from the smartarses on the ASX with a lot of stocks ... no news but outside ther radar jammed up 5% and more on the day. GPT WOR and so on.

 

Next week we shall see how they like the CPI and PPI not that it makes any difference I suppose to US fed policy. CPI is 5% ... fed funds is 2% ... maybe they try and save up some of the seasonal adjustments they rorted earlier in the year for next month since oil has in fact come back at US$117- to where they bedgrugingly let it go for the PPI .... only sub US$110 for the CPI mind you ....

 

Oil according to the US CPI never ever went to US$125- or even above US$120- ... funny i thought it was up near US$148- at one stage ...

 

Take care

 

 

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No worries barnymauler ... bit early for a drink today.

 

Well .... its over ... well at least for some. Like the US statisticians who removed any and all spikes from oil so according to them for the CPI oil has never risen above US$110- and for the PPI where it harder to hide the US$118- level .... it seems the correction for now on oil is over.

 

Always when something has been to a level it makes it 20 times easier to get back there again but in this case oil having been once not so long ago at US$25- a barrel its just not going to happen. Buyers coming out of the woodwork last night and the hedge funds which slavishly follow the direction were the only sellers and thank god they were there and have been there of late like the savants they are to keep things in line on the topside. Amazing not so long ago we were all crying about petrol breaking AUD$1- per litre and now we are thankful its just a mere $1.50 and not the $1.70 it was not so long ago. Oh how times change.

 

On the markets .... usual guff. They tried to buy ... they really did mum !!! But AIG results coupled with the CEO's fireside chat where he caught on fire didn't sit well and no bloody wonder with shockers like that reported. It is however amazing to see the markets without fail in the US try and gleam a gem out of the rubble and focus solely on that and use it as an excuse for a rally. Must run down to the local sewerage plant and see if I can pick up any specials from what people flush down the drain. It is very much like this when you pick bottoms or try and pick bottoms in a bear market all you end up with is smelly hands very much like my proposed fossicking trip..

 

Metals and other resources also staged somewhat of a bounce of recent lows and the comments by a nickel boy in Russia he is thinking of cutting production due to low prices sent the nickel price off recent lows. It was the star on the manipulation tables not so long ago as two investment banks and there hedge funds colluded and made the metal look as scarce as hell and doubled the price because they took the metal they were long out of supply and made it look as though the stockpile was dwindling. Of course eventually it was revealed and the hapless London metal exchange was forced to change its trading rules as a result ... but the outcome was ... lots of fried critters in Nickel. It raises a few questions for me in light of other things going on ... since I believe both investment houses were recommending a strong buy for Nickel when they were perpetrating this fraud .... I do wonder what happens if clients actually wake up to the fact they were being sent things saying it goes to the moon and in reality they were running a scam. Anyhow same sort of scam run on the very thinly traded Uranium market where hedge funds only had to buy tiny amounts to corner the market and make it APPEAR as though uranium would run out .... for both .... the scam eventually revealed and the metals halved or worse in the case of Nickel.

 

Markets do what markets do and its hard enuf to trade without being held to ransom. I was aware of the nature of the Uranium market scam fairly early ... nickel as soon as I saw the LME change its rules ... I knew it was the same rort but different market. Its not nice when your broker sends you a note to buy this or that strongly and in fact he is selling or holding a massive long that he intends to dump into your frenzied buying.

 

Just raising this because I mentioned lawsuits and the securities firms selling things that they had no intention of continuing supporting in the future and Citi yesterday settled the case against them and agreed to buy back a whole swag of securities and its just the start of a long line of banks who are going to be forced to do the same. Numbers not clear other than Citi handed a massive US$100- million fine and possibly being forced to buy back as much as US$20- billion of securities it sold to those whom were unaware and take the hit as a result. that it appears they sold them to charities ... paper that was illiquid and in some cases worth as little as 22 cent sin the dollar but sold for face value is astounding. just lovely people there ones. It appears with Merrill's and BA and every other security seller under the same blowtorch that enuf is enuf.

 

This whilst not the size of the sub prime thing the initial cost to Citi just for the stage one settlement is going to be steep ... the fine was bad but buying at least $5- billion if not closer to US$20- billion in securities will make things interesting.

 

Merrill's tried to sweep this under the carpet and come clean but it was a joke and this first in a very long line of similar suits will again bring massive pressure on the already beleaguered banks and financial sector in the USA. when they behave badly they behave very badly. For me I dislike the investment bank types in the extreme and the ability to sell a security without regard to its real underlying value and sell it to a bloody charity let alone the public says a lot about how the world in 2008 operates. they deserve what they are about to receive and Citi was just number one .... its investment bank arm was naughty next is the usual suspects. What the fools dont know is that settling opens a can of worms and sets a precedent for all the other rubbish they sold. Investment banks jobs or one of them is to buy paper and then get sweet smelling but cheap perfume and sprinkle it on the paper either by analysts writing it up as fantastic or getting it credit rated or whatever and then on-sell it for a large profit. Nothing wrong with that unless your buying pond scum and you know it and then selling it as prime waterfront real estate.

 

Anyhow ... this is the backdrop for the next few months I suppose and will impact AGAIN us financials bottom lines as they write this stuff down yet again ... reach settlements with clients and govt for selling pond scum. I say send the lot of them to jail and then whisper to the fellow inmates that they are racist since 70% of the population of 3 million inmates is ethnic in the USA take your choice. Sorry but this is a pet peeve what appears to have gone on here. Trading in itself is a very noble occupation .... picking the direction and being correct more than you are incorrect and making a living this way. Rigging the playing field and taking advantage of the poor bloody retail customer and calling that a trading profit when you rip someone off who in reality should be playing is no such thing. Sure a profit is a profit but the financial side like the credit crisis crossed a line in the sand some time ago on this score and in the case of the US credit crisis and collapse it seems not only were the investment bank types prepared to dump worthless paper onto funds controlled by their own staff and basically lob the losses onto investors in funds ... they did the usual and dumped them onto everyone else. This time the passing of the buck selling a security worth 22 cents in the dollar to the hapless public is about to come back and bite them.

 

About bloody time.

 

What they did wrong with this ..... several things ... they wrote glowing reports on the markets and paper in question when in fact they knew very well it was trash ... the rest selling to a charity ... my my my ... but selling the same to a govt agency ... what were they thinking since govts actually change the laws and were they hoping they didn't notice selling stuff ? Ahh found the results Citi has to buy back 7 billion of the paper. Do suspect there is more to come just from Citi ... a lot of not so happy holders of paper out there. First mistake of course was getting caught :}

 

QUOTE
Mr Cuomo last week publicly notified Citi of his intention to file charges over the sale of the troubled securities. In a letter to Citi's general counsel, Mr Cuomo, the state of New York's highest ranking legal official, alleged that the bank "has repeatedly and persistently committed fraud by material mis-representations and omissions" in the underwriting, distribution and sale of auction rate securities, touting them as safe, cash-equivalent investments.

He also claimed that Citi "destroyed recordings of telephone conversations" related to the marketing and sale of auction-rate securities.

 

http://www.telegraph.co.uk/money/main.jhtm...7/cnciti107.xml

 

Do so love these happy stories ....... this settlement and trying to stop the govts case before it gets any steam I suspect is besides the point as Citi has more than just this dead body in the closet. Next one to fold and settle is Merrills or so it seems followed by BA which just had its records seized then UBS and Morgan Stanley just did it as well.

 

What I think beyond the obvious is not so clear .... is what does this do to the ongoing business of these securtiy firms. The losses as yet to be seen from this next in the series of debacles is not even reflected on the bottom line of most of the US financials and compared to writedowns to date they are not going to be massive just another very poor third quarter result for most of them.

 

If a bank/investment bank actually has to tell the truth and be very careful about the swill it sells its clients .... the model ... the profit model and assumptions that investment banks profits will revert back to previous years sorts of profits is just wrong. If you cannot buy some paper then get a ratings agency to put cheap smelling but very strong perfume on the paper to get the pond scum smell out of it and then sell the paper for a massive profit to hapless investors and bond funds ... a large part of the ongoing business of these firms is GONE or greatly diminished and its about time they cleaned up their act mind you. It does however put even more into question the forward looking profit outlooks from analysts which have these companies fates suddenly reverting back to 2006 profit later this year. just is not going to happen. Selling of new debt and trading of these securities in some cases represents well over 50% of the firms profits and if its curtailed or they cant make the super profits by tarting up junk this means large changes to the forward looking profits for these firms and assumptions that it reverts back to 2006 numbers when it was the wild west I think are stupid. But heck what do I know ?

 

On our market the things going on in the USA not much interest other than there market as time goes on its your choice as to what is going to pop out from under the carpet. I favor the commercial real estate market as the prime suspect next 6 months and hoping someone actually looks at the govts accounts there is not going to happen not with Bush on the way out the door and candidates fighting it out in coming months. Full calender Olympics , then US presidential fight and not much room for anything else. Doubt thats the case since the latest twist has some ways to go. ASX 200 3.5-4% above that line in the sand of 4,750 for now but down off the highs seen on the super-ball bounce that always ... always was going to fail at some stage. Mind you AIG the worlds largest insurer stopped it dead in its tracks. Europe kept things on hold overnight and I suppose that they didn't raise which was more a chance than them lowering is a blessing. Next week a BIG numbers week with Euro zone GDP ... US trade numbers which despite oil rising never rose an inch I await to see these ones ... US retail sales ... and my old fav US CPI followed by PPI the following week.

 

Must stop looking at CPI and PPI since the US has clearly signaled its intention ... it doesn't care and it will bugger the numbers to remove any spikes no matter how harsh they are as they did with oil. they actually got it right nearly since oil eventually did collapse 25% from its peak. Its the long term pressures which interest me more with these things and USA and what it does as the super power in economic terms it used to be slowly rides off into the sunset just like the UK was 100 years ago and by the middle of the century it was sadly after two massive wars and loosing all its colonies not what it used to be.

 

Hmmm ... every day if they can its the same sort of pattern .... open sell down ... hit a brick wall and spend the rest of the day going up. Sure markets go up but they seem to spend even in these bear markets more time rising than falling. Down the elevator shaft and up the escalator ..... something quite different this time around and this bear market are these killer bear market rallies .... why one would be rushing out to have their eyebrows shaved off is beyond me. At some stage after 20 or so times even the stupid Pavlovian dogs they are will wake up and actually let things go further before they rush in and buy some stock they thing has bottomed.

 

have a nice weekend .... do something BAD ... I will be :}

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In reply to: kahuna1 on Friday 08/08/08 10:23am

K1,

 

wrong thread - friday humour

 

"...why one would be rushing out to have their eyebrows shaved off is beyond me. "

 

have a good weekend

 

Regards

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In reply to: kahuna1 on Friday 08/08/08 11:23am

QUOTE
as much as US$20- billion of securities it sold to those whom were unaware and take the hit as a result. that it appears they sold them to charities ... paper that was illiquid and in some cases worth as little as 22 cent sin the dollar but sold for face value is astounding. just lovely people there ones.

kings and dukes allnem!

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Strange thing that the dirties are now exposed and made to pay up. seems a good sign.

what do you reckon would happen if the pressure (like with citi) was put on the US to not extract the operation enduring freedom costsplus out of iraqs future oil monies? Might just prick the bubble?

 

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