STOCK MARKET WATCH, Friday August 24

[ozymandius]

Source: DU

Friday August 24, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 517 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2422 DAYS
WHERE'S OSAMA BIN-LADEN? 2134 DAYS
DAYS SINCE ENRON COLLAPSE = 2095
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON August 23, 2007

Dow... 13,235.88 -0.25 (-0.00%)
Nasdaq... 2,541.70 -11.10 (-0.43%)
S&P 500... 1,462.50 -1.57 (-0.11%)
Gold future... 668.40 -0.30 (-0.04%)
30-Year Bond 4.92% -0.03 (-0.63%)
10-Yr Bond... 4.62% -0.00 (-0.04%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [email protected]

For information on protests and other actions Citizens For Legitimate Government

---

more Radical Fringe here


Read more: DU

[ozymandius]

1. Market WrapUp

Hopes for an Easier Fed Policy Boost the Euro and Copper
BY GARY DORSCH

The big risk for the Federal Reserve in lowering the fed funds rate to support the stock market is the probability of another major speculative attack against the US dollar, thereby lifting commodity prices and inflation higher. The last time the Fed began a rate cutting cycle in 2001, the central bank was accompanied by a concerted easing campaign in Australia, Canada, Europe, and Korea, while the Bank of Japan stepped up its monthly purchases of government bonds.

But this time around, the Fed would stand alone in cutting interest rates, and can only hope that foreign central banks won’t go through with their plans to further tighten their monetary policies. The European Central Bank won’t be joining the Fed in lowering interest rates next month, because it’s concerned about the explosive growth of the Euro M3 money supply, which threatens higher inflation. The Euro M3 money supply was expanding at a 10.9% annualized rate in June, it’s fastest in 24-years, and calls for much higher ECB interest rates to restrain its growth.

-chart-

Even after witnessing a 10% correction in the European stock markets, the ECB maintained a hawkish stance, and said its monetary policy was too easy. “Given the favorable development of the Euro zone economy as a whole, monetary policy is still tending towards being expansively orientated after the last interest rate move to 4.00 percent,” the ECB said on August 20th. “The Euro’s higher exchange rate has hardly changed this economic picture up to now,” the Bundesbank added.

-cut-

Right now, European banks are afraid to lend money to each other without knowing how much exposure each one has to toxic sub-prime US mortgage debt. Earlier this month, the Bundesbank was forced to arrange a bailout for Germany’s IKB bank, which owns $24.5 billion of sub-prime US home loans, to prevent the biggest banking crisis in Germany in more than 75-years.

http://www.financialsense.com/Market/wrapup.htm

[ozymandius]

2. Today's Reports

8:30 AM Durable Orders Jul
Briefing Forecast 1.0%
Market Expects 1.0%
Prior 1.4%

10:00 AM New Home Sales Jul
Briefing Forecast 820K
Market Expects 825K
Prior 834K

http://biz.yahoo.com/c/e.html

[UpInArms]

15. YeeHaw! U.S. July durable-goods orders surge 5.9% vs. 1.5% expected

01. U.S. July aircraft orders up 12.6%
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

02. U.S. July motor vehicle orders up 9.8%, 4-year high
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

03. U.S. July durable-goods orders strong across the board
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

04. U.S. July durable-goods shipments up 3.8%, 3-year high
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

05. U.S. July core capital equipment orders up 2.2%
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

06. U.S. July orders ex-transportation up 3.7%, 2-year high
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

07. U.S. July durable-goods orders surge 5.9% vs. 1.5% expected
8:30 AM ET, Aug 24, 2007 - 2 minutes ago

[tom_paine]

17. If only I could have the faith in BushCommie numbers, but I don't

My observation, and Paul Krugman's as well (though he cannot be as blunt as I am about to be), is that the Bushies have so thoroughly altered Amerikan statistical gathering, as well as loaded these departments with Loyal Bushie Comrades, that Bushie Numbers are simply not believable.

Sorry. I know there is no good answer to this problem. I mean, who can get the Free World to release their Real Numbers to us? Do Free Countries even measure stuff like that, and wouldn't it be classified if they did gather it?

So, as if our nation has been taken over by Nazis or Commies, the very real probability, that Bushies lie equally as much as their spiritual antecedents, the Nazis and Commies, must be taken into account.

As bad as it is now, expect it to get worse. As always, evetually Amerika will be exposed before the world as 100% liars (our Bushie govt. at least) as, and yes I have to say it again, the Nazis and Commies before them.

[UpInArms]

19. the devil is in the details

http://www.marketwatch.com/news/story/durable-goods-orders-surge-59-july/story.aspx?guid=%7B4D9A5263%2D5D7F%2D4CA0%2D8C8E%2DF3855E4DD600%7D

excerpt:

Orders for nonaircraft nondefense capital (the "core") goods rose 2.2%, while shipments rose 0.5%. Orders for core capital equipment are down 1.3% year-to-date.

<snip>

Orders for machinery rose 5.5%. Shipments rose 1.7%.

Orders for electrical equipment fell 1.2%. Shipments rose 1.8%.

Orders for fabricated metals rose 1.4%. Shipments rose 2%.

Orders for primary metals rose 7.9%, the most in three years. Shipments rose 1.5%.

Orders for defense capital goods increased 36%. Shipments rose 9.1%.

...more at link...

[wordpix]

26. "Orders for defense capital goods increased 36%." There's the reason for overall good numbers right

there

[Ghost Dog]

35. "Surge" in "durable" military procurement. Hmm.

Details of this (non-black budget) military spending available anywhere?

[UpInArms]

46. Bolton: I 'Absolutely' Hope The U.S. Will Attack Iran In The Next 'Six Months'

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2963569&mesg_id=2963569

:shrug:

[54anickel]

81. Paul Craig Roberts has been saying something appears to be in the works for a while now.

MSM tends to paint him as some sort of way-out wacky nutjob, but some of what he says makes some sense.....

http://rawstory.com/news/2007/Oldline_Republican_warns_somethings_in_works_0719.html

snip>

Roberts said that because of Bush's unpopularity, the Republicans face a total wipeout in 2008, and this may be why "the Democrats have not brought a halt to Bush's follies or the war, because they expect his unpopular policies to provide them with a landslide victory in next year's election."

However, Roberts emphasized, "the problem with this reasoning is that it assumes that Cheney and Rove and the Republicans are ignorant of these facts, or it assumes that they are content for the Republican Party to be destroyed after Bush has his fling." Roberts believes instead that Cheney and Rove intend to use a renewal of the War on Terror to rally the American people around the Republican Party. "Something's in the works," he said, adding that the Executive Orders need to create a police state are already in place.

"The administration figures themselves and prominent Republican propagandists ... are preparing us for another 9/11 event or series of events," Roberts continued. "Chertoff has predicted them. ... The National Intelligence Estimate is saying that al Qaeda has regrouped. ... You have to count on the fact that if al Qaeda's not going to do it, it's going to be orchestrated. ... The Republicans are praying for another 9/11."

Hartmann asked what we as the people can do if impeachment isn't about to happen. "If enough people were suspicious and alert, it would be harder for the administration to get away with it," Roberts replied. However, he added, "I don't think these wake-up calls are likely to be effective," pointing out the dominance of the mainstream media.

"Americans think their danger is terrorists," said Roberts. "They don't understand the terrorists cannot take away habeas corpus, the Bill of Rights, the Constitution. ... The terrorists are not anything like the threat that we face to the Bill of Rights and the Constitution from our own government in the name of fighting terrorism. Americans just aren't able to perceive that."

more...

[Ghost Dog]

105. Ms. Clinton on this subject:

http://www.nypost.com/seven/08242007/news/nationalnews/hill__terror_would_be_gop_boos.htm (Sorry about source)

August 24, 2007 -- WASHINGTON - Sen. Hillary Rodham Clinton yesterday raised the prospect of a terror attack before next year's election, warning that it could boost the GOP's efforts to hold on to the White House.

Discussing the possibility of a new nightmare assault while campaigning in New Hampshire, Clinton also insisted she is the Democratic candidate best equipped to deal with it.

"It's a horrible prospect to ask yourself, 'What if? What if?' But if certain things happen between now and the election, particularly with respect to terrorism, that will automatically give the Republicans an advantage again, no matter how badly they have mishandled it, no matter how much more dangerous they have made the world," Clinton told supporters in Concord.

"So I think I'm the best of the Democrats to deal with that," she added.

/..

[54anickel]

122. Sheesh GD. That just seems so wrong on so many levels. I don't know where to begin. n/t

[Demeter]

34. Do You Think the Next Democrat In White House Will Give True Numbers?

Or will the tendency to pretty them up continue?

[ozymandius]

40. I expect a redux of what Clinton did when he took office.

He saw widespread misrepresentation of numbers. Cooked books out the wazoo. Greenscam warned Clinton that if he publicly announced what crimes had been committed then the markets would nosedive 1929 style.

Another Democratic president will be faced with the same dilemma. But when I think about it - I wonder if the next president will feel the urge to put GWB in shackles the same way Clinton wanted with GHWB. It might not avert financial disaster if the truth be told. But it would make for pretty tee-vee pictures.

[Demeter]

49. Well, Why Is Clinton Hanging Around Poppy NOW?

It's not like he could inflict anything worse than W on us.

I was thinking that the way to mitigate the inflationary effects of flooding the globe with liquidity would be to suck it back into the Treasury with a substantial tax increase on the people who accumulate that liquidity.

Any thoughts on that?

[ozymandius]

52. two things

(1) That would be called 'taxing the rich'. The richest among us have been the beneficiaries of the Bush tax cuts. At the same time - they have benefited without paying for the system that grants tax leniency. I'm for it.

(2) Those who have accumulated so much liquid capital have access to off-shore havens. Since the Fed no longer reports the M3 (aggregate) money supply - the gauge for measuring offshore dollars in circulation is broken. It's not impossible to figure out. Just darned difficult.

[ozymandius]

55. and another thought

(getting tired of hitting the 'edit' button)

So much capital is in overseas banks. That's a fly in the taxation ointment. The government cannot tax it if it cannot find it.

[Demeter]

56. AThanks for the answers

That was very informative!

[Tandalayo_Scheisskopf]

66. The way I see it...

That's the reason we have SPECOPS and Marines. Send them down to The Caymans and have them find out who and how much is squirreled away down there.

That's a far better use of them. After all, economic security is important.

[ozymandius]

67. That's the American Way.

Where the dollar goes - the flag goes. And the troops follow the flag.

[UpInArms]

42. it depends - if they are a part of the DLC, I doubt it -

Clinton chose not to expose the fraud when he went in -

http://www.greatchange.org/ov-martin,case_for_sedition.html

After Bush got out of office, it was important that the economy be re-liquefied as quickly as possible, regardless of the inflationary impact. You can always control the inflationary impact later on by raising the interest rates.

Clinton had a good idea of the problems that the Bush Administration had created. Congressman Bill Alexander, who knew Clinton personally for years and used to have lunch with him, used to tell me (this is when they were trying to work out a deal for me) that Clinton was absolutely appalled and even frightened about the enormity of the situation. At the lunch that Bill Alexander had with him at the White House, Clinton looked at him and said, "Bill, I hope you have enough to pay for that lunch. The United States government doesn't have any money left."

When he got there, he realized there was nothing left. He said we are probably 14 or 15 trillion dollars in debt and we're continuing to bleed. Three days after taking office, he begins to discover the real story. And he was frankly scared out of his wits.

Can you imagine coming into the Oval Office and finding out that there are no capital reserves left, the nation is $14 trillion in debt, all of the capital marketplaces are shaky as hell, and the nation is bleeding red ink at the rate of one billion dollars a day, as the Bush Administration publicly admitted?

Clinton then found out that the actual red ink was about twice that amount (about $2 billion a day) and that there was an accumulated $14 trillion in debt - with the rest of the world still in recession.

and just think - it is now much much much worse :(

[tom_paine]

58. I want to say "no", but two things preclude me from doing so

(that doesn't mean it will be as bad as Bushies...but will they still be partially unreflective of reality? Probably.)

1) The damage the Bushies did was far from a "one-shot deal" because with a ruthless disregard only someone dedicated to tearing down a system and rebuilding it anew can do, the Bushies have systemically altered everything, not just statistics (but I will stay focused on that one aspect of dozens) to the level where I wonder just how much effort will be required to untangle their nazi-like Web of Lies.

For one example: Such things as the effort underway to reclassify positions, in which Loyal Bushes were inseretd as appointments, as suddenly Civil Service jobs, thus freezing the Loyal Bushies appointed now with massive civil service protections, and can't be unappointed when if a Democrat is allowed to ascend the Imperial Throne.

This is but one of many methods by which Bushevik Power will extend perhaps as long as the American Empire is around and semi-recognizable, be it 50, 100 or even 200 years more. The Democratic Leadership simply cannot keep up with all of it, even though they are relegating to investigating and exposing, rather than substantial action.

2) If indeed, the lack of a spine on the part of the Democratic Party as a whole is indicative of something much more deeper and troubling than being afraid of what Bill-o and the rest of the Mighty Wurlitzer will trumpet, then even IF a Democrat is allowed to sit on the throne, Loyal Bushie Powers, ensconced at all the now-unreversible-Bushified Executive Agencies, will sit silent like a threat. A Democrat therefore would fear getting JFK/RFK/MLK/Wellstoned or perhaps just Dacshle/Leahy/Brokawed to make the substantive changes required for anything approaching honest numbers.

Suddenly, the Democratic Imperial Throne-Holder will remember and know what was true when they were a Senator or whatever is just as true now:

Royal Bushies can order Loyal Bushies to kill you, as they likely did Carnahan, Wellstone, Tillman, and only God knows how many others, or send you anthrax, and the "real killers" will NEVER be found.

Why? Becuase the people that gave the killers their orders are also giving the orders to those honest people who might actually be trying to look for the perps.

Thus the Antrhax Assain walks free, as does Bin Laden, most likely.

Oh, and there is a third reason now that I am thinking of it:

3) Considering these numbers have all been corrupted for one purpose, to shield anyone from knowing the true state of the economy, particularly as it relates to labor and the life of the filthy little nobodies (that's us), will the Democratic Emperor have the moral courage to take such a step by revealing the true numbers and how bad things really are for the bottom 50% and to a lesser degree, the bottom 80%?

Again, I would like to say with firm certainty, "Of course they would, even though they would be providing their enemies with ammunition, it is more important to know the truth."

But with the tiniest, fewest of exceptions I ever imagined possible, I have seen no behavior, and I mean NONE, like that from Democratic Leadership which would lead me to believe that any Democrat the Bushies allow to sit on THEIR thrown would behave in a morall courageous fahsion where the Constituion is at stake.

[ozymandius]

25. This truly is the realization of Soviet-style dogma.

How could these numbers bear any merit when the Philly Fed registered at zero last week?

[Hugin]

27. The auto numbers jumped out at me...

Haven't I been reading how auto sales have slowed considerably and consumers are reluctant
due to the housing slump and mortgage uncertainty?

Isn't that what I've heard?

Who am I to believe... These numbers or my lying ears? :shrug:

[UpInArms]

32. "Twenty-two straight months of negative growth in automobile sales"

Published - August, 24, 2007

http://www.pensacolanewsjournal.com/apps/pbcs.dll/article?AID=/20070824/BUSINESSJOURNAL/708240301/1003

Twenty-two straight months of negative growth in automobile sales has local car dealers scrambling to survive a market slump increasingly weighed down by a depressed housing market.

"It's a tough market," said Allen Turner, owner of Allen Turner Hyundai in Pensacola. "We're just trying to work harder and smarter than ever before."

Turner said his employees are weathering the downturn by "staying focused, watching our expenses and just staying on the ball. I don't see a lot of changes in the market over the next several months."

The car sales nosedive began about a year after Hurricane Ivan swept through Pensacola in September 2004.

The Category 3 storm damaged or destroyed thousands of cars and trucks, creating a sudden and abnormal surge in demand.

...more...

[Ghost Dog]

41. Must be gearing up for a surge in exports of

American vehicles to the rest of the world.

Ha Ha. :sarcasm:

[54anickel]

78. Doesn't everybody still want a shiny new Cadillac or Lincoln?...n/t

[Roland99]

65. How much of that 5.9% was attributable to the aircraft orders?

Not that often that a bunch of aircraft are bought and that's quite a narrow industry to be hardly reflective of the economy as a whole.

But, then again, there I go trying to inject some reason and critical thinking....

[UpInArms]

43. YeeHaw Again! U.S. July new-home sales rise 2.8% to 870,000 annualized

01. U.S. new-home inventories fall 4 months in a row
10:00 AM ET, Aug 24, 2007 - 1 minute ago

02. U.S. June new-home sales revised up to 846,000 vs. 834,000
10:00 AM ET, Aug 24, 2007 - 1 minute ago

03. U.S. July new-home median price up 0.6% vs. July 2006
10:00 AM ET, Aug 24, 2007 - 1 minute ago

04. U.S. July new-home inventories 7.5-month supply vs. 7.7
10:00 AM ET, Aug 24, 2007 - 1 minute ago

05. U.S. July new-home sales better than 820,000 expected
10:00 AM ET, Aug 24, 2007 - 1 minute ago

06. U.S. July new-home sales rise 2.8% to 870,000 annualized
10:00 AM ET, Aug 24, 2007 - 1 minute ago

[ozymandius]

47. Cardboard boxes reclassified as "dwellings".

A surge in durable goods orders = a surge in durable goods packaging materials. Voila! Instant housing sales!

[UpInArms]

53. More homeowners say house value declines: survey

kinda shoots a hole in that

03. U.S. July new-home median price up 0.6% vs. July 2006
10:00 AM ET, Aug 24, 2007 - 1 minute ago

hmmmm.... wonder how that lie works?

http://www.reuters.com/article/bondsNews/idUSN2432654220070824

NEW YORK (Reuters) - Homeowners across America were more likely to report declines in their home values than at any time since 1992, according to the The Reuters/University of Michigan Surveys of Consumers for August released on Friday.

Nearly one-in-four consumers in the August survey reported that the value of their home had declined during the past year, said Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers in a statement.

Some 18 percent of respondents expected their home's value to decline in the year ahead, Curtin said. Owners who suffered the biggest declines in the past year expect even steeper price drops during the year ahead.

The slump in home prices was deeper among homeowners living in the West and Northeast, with the sharpest declines experienced and expected by owners of more expensive homes, Curtin said.

The data indicated housing wealth will provide less support for consumer spending as tighter lending standards and higher borrowing costs curtail cash-out refinancing during the year ahead. Though the survey indicates a significant slowdown in consumer spending, it will stop short of a recessionary downturn, Curtin said.

...more...

[fedsron2us]

85. And will probably be quietly revised down at a later date

http://calculatedrisk.blogspot.com/2007/08/new-home-sales-revisions.html

[UpInArms]

74. Gauge of U.S. economy falls last week - ECRI

http://www.reuters.com/article/bondsNews/idUSNAT00309820070824

NEW YORK, Aug 24 (Reuters) - A gauge of future U.S. economic growth fell last week, weighed by higher interest rates and falling equities prices, and its annualized growth rate slowed to a 37-week low, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index (WLI) slipped to 139.8 in the week ended Aug. 17 from 141.7, downwardly revised from an earlier-reported 141.8.

The annualized weekly growth rate in the index slowed to 2.6 percent from 4.1 percent in the prior week, revised from 4.2 percent.

"This week's sharp drop in WLI growth indicates a dimmer economic growth outlook, but not a recessionary tailspin," said Lakshman Achuthan, managing director of ECRI.

...more...

it goes on to say that this report was mitigated by the "low jobless rate" - whoopsie!

[ozymandius]

3. Oil prices steady in Asian trading

SINGAPORE - Oil prices were steady Friday following an overnight rebound as a more stable stock market alleviated traders' worries about an economic slump dampening demand.

Light, sweet crude for October delivery dropped 2 cents to $69.81 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract rose 57 cents to settle at $69.83 a barrel Thursday.

The energy markets have fallen recently despite the threat of hurricanes, with many investors betting that credit might be tightening so much as to stifle growth. Traders worry a slowdown in the U.S. economy will likely hurt energy demand.

-cut-

But supplies of crude oil and gasoline are much tighter, and gasoline demand, despite all of the market's jitters about the consumer, was at an all-time high last week, according to U.S. Energy Department data. So if another Atlantic hurricane does veer toward the U.S. oil facilities scattered along the Gulf Coast, investors who took their money out of the energy markets to make up for losses elsewhere might feel inclined to put it back in — which could eventually mean higher gasoline prices for consumers.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. Shaken by product safety woes, China declares "war"

BEIJING (Reuters) - China has launched a four-month "war" on tainted food, drugs and exports, state media reported on Friday, as beleaguered officials embraced time-tested campaign tactics to clean up the country's battered image.

Chinese Vice Premier Wu Yi told officials that the campaign, to run to the end of the year, would focus on problem products that have corroded domestic and foreign consumers' confidence in the "made in China" label.

-cut-

The world's largest toymaker, Mattel, recalled more than 18 million Chinese-made toys in mid-August because of hazards from small magnets that can cause injury if swallowed, just two weeks after it recalled 1.5 million toys due to fears over lead paint.

Wal-Mart said it was asking suppliers to resubmit testing documentation for the toys it sells after Mattel's move.

Other Chinese export scares have hit toothpaste, animal food ingredients, tires, eels and seafood, and deadly chemicals that found their way into cough medicine, killing patients in Panama.

http://news.yahoo.com/s/nm/20070824/bs_nm/china_safety_dc

[Demeter]

39. If the Olympics Were Held In China, Would Anybody Go?

They must be producing a lot of bricks over there.....

[Gregorian]

62. Only with gas masks. Even their air is poisoned.

Like LA when I was a baby. The smog would be so bad you couldn't see the offramp signs.

[ozymandius]

5. Court clears way for Whole Foods merger

WASHINGTON - A federal appeals court on Thursday cleared the way for Whole Foods Market Inc. to buy rival organic grocer Wild Oats Markets Inc.

The three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit denied a request by the Federal Trade Commission to delay the $565 million sale pending the outcome of an appeal. Whole Foods lawyers argued that such a ruling would have killed the deal.

U.S. District Judge Paul L. Friedman refused to step in last week and block the transaction, a decision that federal regulators quickly appealed. They claimed that if the two companies combine, it would mean less competition and higher prices for premium and organic food.

http://news.yahoo.com/s/ap/20070824/ap_on_bi_ge/whole_foods_merger

[ozymandius]

6. Asian subprime fears grow, Europe calmer

LONDON/SINGAPORE (Reuters) - Three Asian banks' heavy exposure to the limping U.S. home loan sector reinforced global credit jitters on Friday but Germany and Italy saw no signs of new problems.

Shares in Singapore's DBS Group Holdings, state-controlled Bank of China and its Hong Kong subsidiary, BOC Hong Kong, all skidded on Friday after they revealed a combined exposure to the U.S. subprime mortgage market of almost $13 billion.

The news raised fears that Asian banks, generally risk averse following the Asian financial crisis 10 years ago, were more vulnerable to the crisis as investors had thought.

Stock markets tumbled from Sydney to Seoul in response, putting Asia on track for its first losing session since a major fall last Friday.

European stocks followed suit -- the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,504.38 points as improving confidence was also stopped in its tracks by Countrywide Financial chief Angelo Mozilo's assessment that the U.S. economy could be dragged into recession.

http://news.yahoo.com/s/nm/20070824/bs_nm/economy_credit_dc

[ozymandius]

7. BOC shares decline after U.S. subprime revelation

HONG KONG (MarketWatch) -- Hong Kong-listed shares of Bank of China Ltd. shed more than 5% Friday after officials disclosed the bank had almost $10 billion of exposure to securities backed by U.S. subprime mortgages.

The amount was higher than many analysts were expecting, and likely places the BOC (HK:3988: news, chart, profile) , one of the mainland's four biggest lenders, among the largest holders of subprime-backed assets held by Chinese banks.

BOC shares in Hong Kong declined 5.4% to HK$3.87 ($0.50), though investors in Shanghai shrugged off the revelations, bidding the bank's shares up 1% to 6.16 yuan ($0.81).

Dominic Chan, an analyst who covers the bank for CLSA in Hong Kong, said most analysts had assumed subprime exposure amounting to about 1% of BOC's total U.S. dollar-denominated investments.

The figures disclosed by the bank after the close of trading Thursday revealed subprime exposure closer to 10% of U.S. dollar investments, Chan said.

http://www.marketwatch.com/news/story/boc-shares-plunge-after-us/story.aspx?guid=%7B5D189314%2DD4AC%2D4B72%2DBA56%2DB07075DCD6F2%7D&dist=SecMostRead

[UpInArms]

13. BNP Paribas says 'too early' to estimate subprime impact

http://news.yahoo.com/s/afp/20070824/bs_afp/marketsfinancefrancebankingcompanybnp

PARIS (AFP) - The chief executive of French bank BNP Paribas said Friday that it was "too early" to estimate the impact of US subprime home loans on the bank's results.

The group added to international financial market turmoil on August 7 when it suspended three investment funds exposed to subprime home loans, which are mortgages granted to high-risk borrowers.

In an interview with France's Les Echos newspaper, chief executive Baudouin Prot explained the decision to freeze the funds was a response to "the total and sudden illiquidity of the subprime market."

He stressed however that BNP Paribas had "very limited" exposure to the sector.

The French bank said on Thursday that it would reopen the three frozen funds on August 28 and 30.

...more...

[UpInArms]

18. Indian outsourcers start to feel subprime fallout

http://www.reuters.com/article/bondsNews/idUSBOM11358320070824

By Sumeet Chatterjee BANGALORE, Aug 24 (Reuters) - Ripples from the U.S. subprime mortgage crisis have reached India's back-office outsourcing sector, where mostly smaller firms are feeling the pinch as U.S. companies cut back or stop some spending on services.

Already struggling with a stronger rupee and rising wages, the fear for outsourcers is that the subprime woes will spread, although larger players such as Infosys Technologies (INFY.BO: Quote, Profile, Research) (INFY.O: Quote, Profile, Research) say this could open up new opportunities.

"The key issue here is the number of challenges being faced at the same time," said Atul Vashistha, chief executive of U.S.-based outsourcing consultancy firm neoIT.

"The question is how do they handle the exposure to a slowdown in the financial sector as the subprime woes spread to their other financial businesses." Bangalore-based iGate Global Solutions Ltd (IGAT.BO: Quote, Profile, Research), a mid-sized outsourcer, has seen its income from U.S mortgage companies drop to 7 percent of its revenue in the June quarter from more than 10 percent in the December quarter.

"This has come like a second wave. It started in February-March and after that it kind of died down. Now it has picked up, which is of course a little concerning," iGate chief Phaneesh Murthy told Reuters.

iGate's clients include GreenPoint Mortgage Inc, a unit of Capital One Financial Corp (COF.N: Quote, Profile, Research) which said on Monday it would shut the wholesale mortgage unit due to the downturn.

...more...

[Ghost Dog]

21. Asian Stocks Snap Four-Day Advance; Bank of China, BHP Decline

http://www.bloomberg.com/apps/news?pid=20601080&sid=ajlNVTpR4W1E&refer=asia

Aug. 24 (Bloomberg) -- Asian stocks fell for the first time in five days after Bank of China Ltd. said it had almost $9.7 billion invested in U.S. subprime loans.

China's second-biggest bank posted its biggest drop since going public last year. BHP Billiton Ltd. and Posco led raw- materials producers lower after the No. 1 mortgage provider in the U.S. forecast a recession in the world's largest economy. The declines cap the best week for regional shares in five years.

``Bank of China was a negative surprise,'' said Thue Isen, who manages about $1 billion at Bankinvest Group in Singapore. ``If you talk about recession or a slowdown in the U.S., I would put a big question mark on earnings estimates for Asia and the market would have to adjust to that.''

Insurance Australia Group Ltd., the nation's largest auto and home insurer, fell after earnings declined. Yorozu Corp., which supplies parts to Isuzu Motors Ltd. and Toyota Motor Corp., surged after raising its net-income forecast.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.3 percent to 148.18 as of 7:12 p.m. in Tokyo. The decline trims this week's gain to 8.1 percent, which is the best performance since March 2002 and follows a four-week, 15 percent slump. A measure of financial companies was the biggest drag among the benchmark's 10 industry groups today.

Japan's Nikkei 225 Stock Average slid 0.4 percent to 16,248.97, while Hong Kong's Hang Seng Index fell 0.2 percent from a three-week high. Benchmarks slid in other markets, except for India, Jakarta, Sri Lanka and China, where the CSI 300 Index completed its best week since it was introduced in April 2005.

/...

[Ghost Dog]

22. European bourses weaken in choppy trade

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Ba496ac82%2D4ee0%2D4052%2D83b3%2D95aaf592ef02%7D

European shares snapped a five-day winning streak on Friday, easing into negative territory amid fears problems in the subprime market and the ongoing credit squeeze could hamper global growth. The FTSE Eurofirst 300 index slipped 0.5 per cent to 1,502.3. Germany’s Xetra Dax fell 0.6 per cent to 7,470, while in Paris the CAC 40 shed 0.3 per cent to 5,506.6. Market sentiment was hurt by downbeat comment from the chief executive of Countrywide, the ailing US mortgage lender. Angelo Mozilo warned the downturn in the US housing market could tip the nation’s economy into a recession. Weakness in heavilly-weighted financial names dragged the indices lower. BNP Paribas fell 1.2 per cent to €77.5, Société Générale slipped 1.2 per cent to €118.2 and Germany’s Allianz edged 1.2 per cent lower to €157.3. But shares of Germany’s Nordex rose as much as 10.6 per cent to €33.3 after a newspaper reported the wind turbine maker’s two main shareholders, Goldman Sachs and CMP Capital Management Partners, who are considering selling their holdings, have received at least three attractive offers.

[Ghost Dog]

75. Strong US data send European bourses higher

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Baac1c73e%2D3024%2D4d41%2Da2cc%2Dcb4aa3cc9465%7D

European bourses ended the week in positive territory as stronger-than-expected durable goods and housing data out calmed fears of a possible recession in the US. The FTSE Eurofirst 300 rose 0.3 per cent to 1,514.4. The CAC 40 gained 0.8 per cent to 5,569.4 in Paris, but the Xetra Dax lost 0.1 per cent to 7,507.3 in Frankfurt. Lafarge and Royal Philips Electronics, both companies with earnings sensitive to shifts in US economic growth, rose 1.4 per cent to €155.1 and 1.1 per cent to €28.7, respectively. A crude oil rally in New York sent France’s Total 1.4 per cent higher to €54.1. Saipem jumped 4.5 per cent to €26.5.

:+

[UpInArms]

73. Stricken German bank set for fast sale: sources

http://www.reuters.com/article/bondsNews/idUSL2473955020070824?sp=true

FRANKFURT (Reuters) - The owners of stricken state lender SachsenLB aim to sell the German bank quickly after its near collapse under heavy losses from U.S. subprime mortgages and other risky debt, sources familiar with the matter said.

Last week a group of state banks said they would rescue SachsenLB, the second German casualty after the subprime mortgage crisis led to difficulties in world credit markets.

In return for a 17 billion euro ($23.1 billion) credit line to keep SachsenLB afloat, its owners -- the eastern state of Saxony and local community savings banks -- were forced into agreeing to its sale.

At least four regional state lenders, or Landesbanks, are interested -- WestLB, LBBW, NordLB and BayernLB, one source familiar with the matter said on Friday.

<snip>

The sale is a milestone in Germany, where few state-owned banks are ever put up for auction.

It also is an indication that the subprime mortgage crisis may ultimately loosen the German government's dominance of the country's banking industry.

...more...

[Buttercup McToots]

8. Anyone know what this means? Ozy?

Can someone explain this to me?


http://finance.yahoo.com/q/op?s=SPY

[UpInArms]

16. that appears to the keno department at the casino

http://www.sectorspdr.com/forums/

[Buttercup McToots]

20. Weird Activity..

http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669

The option MMs are obligated to take them up.

If they don't "stick" then it was a mistake and someone ate a few million on that error.

If they stick then someone just unloaded nearly $2 billion worth of SPYs at today's price, and whoever did it is VERY SURE that the market is going in the shitter.

I'm looking at the numbers right now and there is 10K of volume on ITM call strikes from 60 to 95 for September 2007...
GOOD LORD!!!

Someone very big is betting on a gigantic stock market crash for September!!


Stockmonger, I'm with you on that scenario and that is probably what happened with the $1.7B play.

Of course, this doesn't explain at all the 61,000 calls written on the 700 SPX. These are so far out of the money that I can only envision a major meltdown play involving nukes, or Dkane's theory of an Asian MBS/Treasury dump, etc.

Please can someone clarify for my foggy brain-

how much exactly was put up to loose and how much is to gain (if the S&P -30%)

THX


2007-08-24 00:22:51
Capeman
Posts: 67
Incept: 2007-07-12
San Diego

It was a nearly 900k bet at 700 on the SPX.X. That's a very expensive lottery ticket that will pay out gazillions if there were a 30% drop. Yes gazillions...

I'm one up on you guys on this one (lol naw doubt it). I was thinking about it last night. Who would be totally screwed if the S&P 500 dropped by that much? The buyers of those sales, that's who. What if the whole 2 billion that was lent yesterday was mean to force the Market Makers to keep the Spyders up through September? Another direct intervention by the fed to avoid a crash and give the illusion that our markets are fine. If they are able to keep the market stable, they get all that money, if they fuck up a crash costs them bazillions of dollars.

Neener neener...really though, just postulation but it may make sense...???

[jdog]

77. See my post #76 please.

Does any of this make sense to you ButtercupMcT?

[ozymandius]

9. No other banks go to discount window, Fed says

WASHINGTON (MarketWatch) -- Few U.S. banks have taken advantage of the Federal Reserve's offer last Friday to lend them unlimited amounts of money at 5.75%, Fed data released Thursday show.

As of Wednesday, outstanding loans from the Federal Reserve's discount window totaled $2 billion, exactly the amount four major banks said Wednesday that they had borrowed to show solidarity with the Fed's attempt to ease the crunch on short-term credit.

For the week, borrowing averaged $1.2 billion per day. Loans from the discount window are traditionally overnight loans, but the Fed extended the term to a maximum of 30 days.

Borrowing from the discount window has been rare except during extraordinary times. Such loans from the Fed typically carry a stigma because market participants assume that only a desperate situation would compel a bank to use the lender of last resort.

Last week, however, the Fed lowered the discount-rate penalty and encouraged banks to borrow as needed to help flood the system with short-term cash.

Because the Fed redeemed $5 billion in Treasurys earlier in the week in anticipation of higher borrowing, the Fed actually added no new net money to the system this week.

The Fed is probably disappointed, economists said.

http://www.marketwatch.com/news/story/no-further-bank-borrowing-discount/story.aspx?guid=%7B5F923BA3%2D9023%2D4EF1%2DBAB4%2DF424AA00B457%7D

[UpInArms]

10. dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 80.868 Change -0.244 (-0.30%)

US Dollar: Outlook is Grim but a Recovery Could be Swift

http://www.dailyfx.com/story/bio1/US_Dollar__Outlook_is_Grim_1187905085897.html

The news that Bank of America will be plowing $2 billion into Countrywide Financial Corp was supposed to be very bullish for the financial markets, but the move in the Dow today was far from impressive. Carry trades and high yielding currencies are only higher because of gains in the Asian and early European trading sessions. The Nikkei closed up 400 points after the Bank of Japan left interest rates unchanged. Credit and housing concerns continue to grapple the market as traders and investors alike question whether the worst is truly behind us. Although everyone may be breathing a little easier with no new blowups announced, the drop in bond yields suggest that many buyers still prefer to park their money in Treasuries or cash. Jobless claims were slightly higher than expected last week, but not as bad as they could be given the recent layoff reports. According to the Wall Street Journal, in the past 10 days alone, mortgage companies have shed 13k jobs. In all likelihood, many of those people have yet to file for unemployment benefits. Non-farm payrolls for the next few months should be particularly horrid. Meanwhile, new home sales and durable goods for the month of July are due for release tomorrow. Home sales are expected to drop for the third straight month. The market is only looking for a modest 1.7 percent drop, but sales could easily be a lot worse. If they are not, that would only mean that the August and September numbers would bear the brunt of weak demand. Last month, home builder confidence dropped to a 16 year low while housing starts dropped to a 10 year low. Builders and home owners are both feeling the crunch. RealtyTrac announced earlier this week that foreclosures in the January-July 2007 period jumped 60 percent compared to last year. Senate Banking Committee Chairman Christopher Dodd also added that the rate of foreclosures is at a 37 year high. The outlook for the US economy is grim, but the eventual recovery could come quickly. The strong demand for Treasuries indicates that companies and global investors are still awash with cash. They only want to hoard that cash for the time being until the storm passes and once it does, buyers may come back in force.

...more...

Quiet Before The Storm? Euro Slightly Higher in Overnight Trade

http://www.dailyfx.com/story/bio2/Quiet_Before_The_Storm_Euro_1187954280370.html

The announcement that Bank of China carried nearly 10 Billion dollars of exposure to asset-backed bonds on its books had little impact on trade, partly because the Chinese bank is well capitalized and partly because the marked is becoming somewhat inured to stories of MBS risk. Traders attention is now shifting to handicapping what effect the past two weeks of volatility in capital markets may produce on the real economy.

So far economic activity in Europe and UK remains buoyant. Overnight EZ Advance PMI Services and Manufacturing data printed essentially in line with expectations. Although both indices slipped slightly from their readings the month prior they remained well above the 50 boom/bust levels and the composite PMI actually beat expectations. Clearly, the higher euro and the decline in US consumer demand is having some negative impact on EZ growth but overall the economic performance in the 13 member region continues to follow an expansionary path which should maintain a hawkish bias in ECB monetary policy for the time being.

In UK the GDP numbers also met forecasts with growth coming in at an impressive 3.0% annual rate. Private consumption was bit higher than the consensus call printing at 0.8% vs. 0.7%. The pound firmed in the aftermath of the news but its is unclear if tonight’s data was strong enough to justify a policy change from the BoE. It was however, certainly constructive for the pound as it showed that at a least presently UK economy continues to grow at a healthy pace leaving open the possibility of a bump to 6% rates by year’s end.

The most important event risk of the day is likely to come from the US calendar as New Home Sales data and Durable goods are both due at the start of the US session. While the expectations for New Home sales are understandably low given the persistent problems in the housing sector, the Durable goods ex- transports report may prove to be the more interesting piece of data. The market is looking for a rebound after last month surprising decline. However, if the Durable Goods number misses to the downside once again, printing a negative reading for the third consecutive month, fears of a US economic slowdown may start to weigh on the greenback as we close out the week.

...more...

[Ghost Dog]

23. Yen rallies as risk aversion returns

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B7e49391a%2Ddcdc%2D40ea%2Dab91%2D7ecdc03fc79c%7D

The yen rallied on Friday as risk aversion returned to global markets following several sessions of relative calm. An overnight drop in US equity markets was followed by falls in Asian stocks. But trade was light with few investors wishing to take fresh positions in the face of uncertainty about the timing of the next rate move from the US Federal Reserve. ”This could end up being little more than a guessing game for at least the next couple of weeks as it seems unlikely that the Fed will give much away in advance of any such move,” said David Jones at CMC Markets. During most of the week, currency speculators had begun to re-enter carry trade plays, a risky strategy of trading interest rate differentials, where gains can easily be wiped out by sudden, volatile moves in prices. Signs on Friday that volatility was returning prompted the unwinding of some of these positions, which benefitted the yen, which is usually sold off to fund carry trades. The yen rallied 0.4 per cent against the dollar to Y115.91, and fell 0.2 per cent to Y157.54 against euro.

[ozymandius]

33. Gold gains as dollar weakens

NEW YORK (MarketWatch) -- Gold futures made gains Friday, boosted by a decline in the dollar against other major currencies.

Gold for December delivery rose $2.90 to stand at $671.30 an ounce on the New York Mercantile Exchange.

"Buoyed by a decline in the U.S. dollar and by light pre-seasonal physical offtake from India, gold tried once more for the plus column early this morning," said Jon Nadler, analyst at Kitco Bullion Dealers, in a note.

The Dollar Index, which tracks the greenback against a basket of the world's major currencies, declined 0.4% at 80.790.

-cut-

Potentially a catalyst for metals, traders are awaiting data on U.S. sales of new homes for July. Sales are expected to drop about 2% from June to what would be a seven-year low of 820,000 units, according to economists polled by MarketWatch.

http://www.marketwatch.com/news/story/gold-gains-04-dollar-falls/story.aspx?guid=%7BB15DCED4%2D5429%2D4771%2D8D3D%2D8FBFD97453A5%7D

[mojavekid]

59. Daily Pfennig 8/24/07: The Negative Sentiment Returns...

http://www.kitcocasey.com/displayArticle.php?id=1555

The end of a week where we saw things begin to get back to normal, that is, with the currencies... The return of the negative bias and sentiment for the dollar was the theme of the week, and as we head into the weekend, it probably won't get a breather, as the latest New Housing report is due to print later this morning.

The negative sentiment toward the dollar is really gearing up again... Goldman Sachs issued a new forecast for the currencies, and here you can really see the negative sentiment coming through... Here's a snippet from the report...

"Markets have been extremely volatile in recent weeks and we have been reluctant to make forecast changes for that reason. But we now think that key aspects of the Dollar outlook are sufficiently clear for us to implement a forecast change. We are incorporating significant Dollar weakness on a 3-6 month horizon versus the Euro and the Yen, reflecting three key forces. First, we expect continued decoupling between activity in the US and the rest of the world, and this trend will continue to drive rate differentials lower from a Dollar perspective. Second, we think weakening credit markets in the US will be an important Dollar negative from a flow perspective. Third, we think market-to-market losses on mortgage instruments are a bigger problem in the US than elsewhere at the macro level. For these reasons, we now forecast EUR/$ at 1.43 on a 3-6 month horizon, compared with 1.35 previously. For $/JPY we expect a move to 110 on a 3-6 month horizon, compared with 118 previously."

You may ask yourself why this is happening again so quickly after the consolidation last week... Well... There are a few things that I think are pushing the envelope for a weaker dollar... And of course, I'm going to tell you what I think they are!

1. Housing... Subprime... Losses... Layoffs... And an overall uneasiness with the markets right now.

2. The rumors of a Fed rate cut (Fed Funds rate) this fall... (of course, if you were in attendance at the last speech I gave in Panama before going on leave, you would have heard me say then that I believed the Fed would cut rates before winter)

3. A return of the ECB rate HIKE talk...

more....

[UpInArms]

11. Foreign funds concern US

Foreign funds concern US

http://www.turkishdailynews.com.tr/article.php?enewsid=81477

(thank KoKo01 for this one :)

The financial instability that spread throughout the globe during the last few weeks has conjured a disturbing question for the United States: Will the trillions of dollars that the U.S. owes to China, Japan and oil-producing countries give political leverage to foreign governments?

According to The New York Times, the Bush administration has started to worry that amidst global financial instability, foreign governments are “increasingly converting their dollar holdings into investment funds to acquire companies, real estate, banks and other assets in the United States and elsewhere.”

“The fear is that these so-called sovereign wealth funds could destabilize markets or provoke a political backlash,” wrote The Times yesterday.

The concerns are so concrete that Washington is pressing the International Monetary Fund and the World Bank to “examine the behavior of these funds, which control up to $2.5 trillion in investments, and develop possible codes of conduct for them,” wrote the paper. Among the proposed rules would be an obligation to disclose investment methods and to avoid interfering in a host country's politics.

According to the story, sovereign wealth funds owned by countries such as Russia and China brings up the question whether cross-border investment is “evolving into cross-border nationalization, raising the prospect of government interference in free markets.”

Rapid growth: Another concern is the size and potential growth of these funds, said The Times. Their estimated $2.5 trillion in assets exceeds the sum invested by the world's hedge funds. Moreover, according to a Morgan Stanley research, these investment funds could grow to a staggering $17.5 trillion in just 10 years. Experts say that with such a growth, these funds could play some kind of role in future crises, by “selling assets abruptly and precipitating a crisis, or by bailing out funds or companies that are in trouble.”

...more...

[KoKo]

57. awww...Thank YOU, UIA's, for digging this out...

;-) What a deal with the Devil this could be if these SWF's could be spun as a "savior" to our failing system. An alternative that the American people will have shoved down our throat because it's the consequence of what the Bushies have caused by raping our economy and plunging us into enormous debt in the name of a fake endless war for freedom and democracy.

My worst nightmare is seeing Talking Heads on CNBC and folks like Steve Forbes and Kudlow preaching about how this is "Globilization and it's Good for Us to have "SWF's" own America." Learn to love it because the alternative is homeless Americans roaming the streets looking for food scraps.

Apologize for the melodrama, but my worst nightmares with this Crime Family have tended to come true.
:-( Maybe Lou Dobbs will pick up on this.... HA!

[UpInArms]

68. SEC examining sovereign wealth funds, Cox says

(here are the rest of those stories, KoKo :) - just so they are all out for everyone to see)

http://www.marketwatch.com/news/story/sec-examining-sovereign-wealth-funds/story.aspx?guid=%7B39A528F7-D902-45AF-AD1A-C343646EB15D%7D

Last Update: 9:35 AM ET Jul 31, 2007

WASHINGTON (MarketWatch) -- Securities regulators are "grappling" with the rising prominence of sovereign wealth funds in global capital markets, Securities and Exchange Commission Chairman Christopher Cox told Congress Tuesday. In testimony prepared for a Senate Banking Committee hearing, Cox said the funds' growing influence over capital market flows and their lack of transparency presents "challenges to a regulatory system premised on free markets" and the free flow of information. The funds are government investment vehicles funded by foreign exchange assets. Cox said they are larger than all hedge funds and much less transparent.

[UpInArms]

70. China moves from hunter to gatherer

http://waluty.onet.pl/14,1432331,,3255,ft.html

The head of China’s new sovereign investment fund, Lou Jiwei, has a gentle rejoinder for the foreigners flooding his office with potential deals after his fund’s surprise purchase of a stake in Blackstone, the US private equity group.

With the Blackstone purchase, a $3bn (€2.2bn, L1.5bn) pre-listing deal cut in June when the fledgling company did not even have an office, Mr Lou likened himself to a hunter with an opportunist eye for the quick kill.

But in future, according to foreign dealmakers, Mr Lou says he will see himself managing the fund more like a farmer, tilling the soil for sustainable, steady returns. The soothing rural metaphor conjures up the kind of non-threatening image the fund, charged with investing a portion of China’s $1,330bn in foreign exchange reserves, wants to cultivate among foreigners and locals alike.

The fund has been deluged with ideas in China of how to use the money, with top government leaders suggesting it be spent on raw materials, such as oil, and also beset by criticism over the Blackstone deal.

The fall in the Blackstone share price since its initial public offering provoked a torrent of vitriol on the internet from Chinese who said the fund had lost money earned through the “sweat and toil” of ordinary people.

More ominously, senior leaders have privately expressed anxiety about Blackstone’s share price, even though with a four-year lock-up period any losses are only on paper at this stage.

...more...

[UpInArms]

71. US foreign debt and investments may affect markets, create chaos

http://www.livemint.com/2007/08/22004112/US-foreign-debt-and-investment.html

US foreign debt and investments may affect markets, create chaos
Foreign funds could push up bonds, stocks and property prices, and inappropriately control politics or private space
Steven R. Weisman / NYT

Washington: For years, the Bush administration has shrugged off concerns about the trillions of dollars that the US owes to China, Japan and oil-producing countries in West Asia, arguing that these debts give no undue leverage to foreign governments.

But at a time of global financial instability, the administration has started to worry that foreign governments are increasingly converting their dollar holdings into investment funds to acquire companies, real estate, banks and other assets in the US and elsewhere. The fear is that these so-called sovereign wealth funds could destabilize markets or provoke a political backlash.

In response, the Bush administration is pressing the International Monetary Fund (IMF) and the World Bank to examine the behaviour of these funds, which control up to $2.5 trillion (Rs103 trillion) in investments, and develop possible codes of conduct for them. Among the proposed rules would be an obligation to disclose investment methods and avoid interfering in a host country’s politics.

Officially, the US welcomes all investments, except those that could compromise national security. “Money is naturally going to gravitate toward dollar-based assets because of the strength of our economy,” said treasury secretary Henry M. Paulson Jr. “I’d like nothing more than to get more of that money. But I understand that there’s a natural fear that they’re going to buy up America.” Still, a note of caution can be heard. One of the American concerns is philosophical. The US has for years preached the gospel of privatization, calling on other countries to sell their government-owned industries.

Now, with sovereign wealth funds, many experts are asking whether cross-border investment is evolving into cross-border nationalization, raising the prospect of government interference in free markets, only this time, in markets of other countries.

Another concern is the sheer size and potential growth of these funds—an estimated $2.5 trillion in assets that exceeds the sum invested by the world’s hedge funds. Global financial services firm Morgan Stanley, in a widely cited study, projects these investment funds to grow to a staggering $17.5 trillion in 10 years.

...more...

[Ghost Dog]

96. World economy confronted by liquidity paradox

http://www.ft.com/cms/s/0/1c481a66-51a5-11dc-8779-0000779fd2ac.html
Published: August 23 2007 19:39 | Last updated: August 23 2007 19:39

There is a paradox of liquidity in the world economy today.

In large parts of the financial system market liquidity is in scarce supply. The supply of credit is tightening and the price of risk is going up. But at the macroeconomic level, liquidity remains abundant.

The world is still awash with savings as it has been for several years. One striking example of this: the giant current account surpluses of the oil exporters, China and other emerging markets, which represent surplus national savings.

In the short term this structural “global savings glut” is no guarantee against further market turmoil.

But at some point it is likely to act as a moderating force, containing the ultimate extent of the increase in the price of risk reflected, for instance, in credit spreads, and helping to restore market liquidity.

To some extent the liquidity paradox is an illusion, deriving from the fact that we use the word liquidity to describe several distinct ideas.

As investors have discovered in recent days, macro liquidity (plenty of savings) does not guarantee cheap and available credit, or micro liquidity (ease of buying and selling in markets).

Kevin Warsh, a Federal Reserve governor, argued in a speech in March that micro liquidity was largely a product of confidence – a commodity that is in short supply now.

But Ken Rogoff, a professor at Harvard and former chief economist of the International Monetary Fund, says: “There is clearly a link between macro liquidity and micro liquidity.”

Before the latest crisis broke, analysts often talked about how a wave of global liquidity was driving down the price of risk and making it easy to buy and sell in the markets. This story sometimes came in over-simplified form. But it has economic logic behind it.

...

“Global liquidity is strong,” says Raghu Rajan, a professor at Chicago and, a former chief economist of the IMF. “There is still in some sense an excess of desired saving over investment.”

He says the problem is not supply of savings, but the fact that market dysfunction is making it hard to reallocate these savings.

“This certainly is one of the differences from 1998” – when there appeared to be a global shortage of savings – says Mr Rajan.

Some sketch out a scenario in which the sovereign wealth funds that invest some of the world’s excess savings could ride to the rescue of troubled markets. This is unlikely, as these funds are risk-averse.

The IMF says co-ordinated intervention of this kind is not under discussion. Still, the savings have not gone away, and once markets stabilise this should help to moderate any long-term increase in the price of risk and decline in market liquidity. Throw in a strong global economy and cash-rich corporate balance sheets as well, says Mr Rogoff, and it is “an extremely soft cushion on which to land”.

/...

[54anickel]

72. Phfft! "raising the prospect of government interference in free markets.”

Raisng the Prospect?!?!? Oh Puh-leeeeez! WTF do they think has been going on? Hello?!?!?!? Remember that little Working Group Raygun put together?
Oh, I get it, it's not government interference when we're doing it. :eyes: :puke:

[Ghost Dog]

94. Morgan Stanley: Sovereign Pension Funds

http://www.morganstanley.com/views/gef/index.html

SWFs will be one of the most important structural factors for the financial markets in the coming years. However, in this note, we propose that a closely related ‘cousin’ to the SWFs — sovereign pension funds (SPFs) — also has great potential to be an important force augmenting the impact of the SWFs. We believe that the SPFs in many countries will become much more outward-oriented than before, just like the SWFs, i.e., the ‘home bias’ is likely to decline sharply for many of these massive funds, with important implications for the international capital markets. We urge investors to pay attention to this category of funds.

The idea we have in mind …

We have written on the subject of SWFs, and urged investors to pay more attention to what we believe will be one of the key themes in the coming years. (See Sovereign Wealth Funds and Official FX Reserves, September 14, 2006, Tracking the Tectonic Shift in Foreign Reserves and SWFs, March 15, 2007, Russia: The Newest Member of the SWF Club, April 26, 2007, How Big Could Sovereign Wealth Funds Be by 2015? May 3, 2007, Sovereign Wealth Funds and Bond and Equity Prices, May 31, 2007, Why Japan Should Have Its Own Sovereign Wealth Fund, July 5, 2007, Excess Official Reserves, July 12, 2007.) However, we don’t believe that the story ends there. Increasingly, SPFs, most of which are denominated in local currency terms and have been invested primarily in local currency assets, are being invested more aggressively, with higher equity and foreign content in the portfolios. In fact, many of these funds could eventually be managed by the SWF of the country in question, and could be deployed to purchase real investments overseas, i.e., FDI. Here are some examples of the SPFs we have in mind:

/snip...

Why we believe that the SPFs are important

We put together a list of the SPFs for the G10 economies. (We will try to put together a more comprehensive list that also includes the major emerging countries’ SPFs.) We make the following observations.

Observation 1. These funds are big. The funds under management in the G10 economies in our sample total US$4.4 trillion, and US$2.5 trillion excluding the US. This is massive, relative to the US$1.7 trillion in funds managed by hedge funds and US$2.6 trillion managed by SWFs(even netting out the double counting as some funds are both SWFs and SPFs). Once we have a more comprehensive list of these SPFs, the overall value of their assets will be even more impressive.

Observation 2. These funds have a very low exposure to foreign assets. The sample’s average exposure to foreign assets is only about 19%, compared to 100% exposure of SWFs. This is the defining difference between SPFs and SWFs. 30% foreign exposure would not be unreasonable for a large country, and this figure should be even higher for smaller countries.

Observation 3. This will change, however. We believe that we will witness a general rise in these funds’ exposure to both foreign assets and equities. In a way, the same demographic pressures impinging on central banks to separate out their official foreign reserve holdings into a liquidity tranche and an investment tranche also apply to the SPFs. With declining fertility and mortality rates, all of the G10 countries and much of the emerging world will experience immense budgetary burdens arising from the ageing process. Far from turning more risk-averse (i.e., buying more bonds than equities, extending duration exposure and minimising currency risks), as predicted by most academic studies, we believe that most pension funds in the world, including especially sovereign funds, will actually move out on the risk-return curve.

In addition to having a greater risk-taking appetite, I believe that globalisation will lead to a greater willingness on the part of these SPFs to hold foreign assets. Improved information flows on foreign markets, fewer capital controls and a genuine need to diversify assets away from the local markets will all contribute to a general decline in the ‘home bias’ of these funds, in my view. This is a structural trend, quite independent from my previous point about rising risk-taking appetite.

Bottom line

The emergence of SWFs is one of the key trends for the financial markets in the coming years. Investors should also pay attention to some prospective changes in the way some of the SPFs may be invested. Specifically, we believe we will witness a general rise in SPFs’ exposure to foreign assets and riskier assets (i.e., equities), with logical implications for the global financial markets.

/...

[texpatriot2004]

12. K & R nm

[UpInArms]

14. Pressure growing to ease subprime crisis

http://news.yahoo.com/s/ft/20070824/bs_ft/fto082320072253280323

The growing political importance of the subprime mortgage crisis was underscored on Thursday when Chris Dodd, Senate banking committee chairman, called on the Bush administration to speed up efforts that could allow the Federal Housing Administration to help.

The FHA is a 1930s-era agency that is the largest mortgage insurer in the world. The Treasury is already working with the Department of Housing and Urban Development (HUD) on measures that could allow the FHA to help more subprime borrowers with refinancings.

This would help the many borrowers who are in the autumn facing a switch in their payments at low introductory, or "teaser", rates to more expensive rates.

Mr Dodd has for weeks been urging the administration - without success - to ease problems in the mortgage market by agreeing to lift caps on the mortgage portfolios of Fannie Mae (NYSE:FNM) and Freddie Mac, the two big "government-sponsored" lenders, which buy mortgages and package them into securities.

By now urging faster action on FHA reform - an issue that has the administration's support - Mr Dodd has highlighted how some Democrats appear to be taking as much political advantage of the issue as they can.

Bill Gross, a prominent US fund manager, has also attracted attention by calling on the Bush administration to do more to help struggling borrowers.

...more...

[wordpix]

61. from another thread: Home sales rise, factory orders up

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2965266

http://news.yahoo.com/s/ap/20070824/ap_on_bi_go_ec_fi/economy

By JEANNINE AVERSA, AP Economics Writer 9 minutes ago

WASHINGTON - Sales of new homes perked up, while factory orders took off in July, raising hopes that the economy can safely weather financial turmoil that has shaken Wall Street.

The Commerce Department reported Friday that new-home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

Both reports were better than analysts had expected. They were forecasting home sales to fall and were calling for a much smaller, 1 percent gain in factory orders.

snip:

By region of the country, the improvement in sales in July reflected gains in the West and the South, where sales went up by 22.4 percent and 0.6 percent respectively. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

[UpInArms]

24. Hedge-fund redemption shock

Investors looking to cash out this fall may be met with an unpleasant surprise.

http://money.cnn.com/2007/08/23/markets/hedge_fund_redemptions/index.htm

LONDON (CNNMoney.com) -- Investors are expected to hit hedge funds with a flood of redemption requests this fall, but those who try to withdraw their money may be in for an unpleasant surprise.

Most hedge funds have "lock-ups," a minimum period of time during which investors agree to tie up their money and not make any withdrawals.

Once that period ends, investors generally can redeem their stakes as long as they give advance notice, usually 45 to 90 days before the quarter end. Although that cut-off has passed for many funds for the current quarter, investors can still put in requests to get their money out by year-end.

But hedge funds also can slow withdrawals, or suspend them altogether. While they're usually loath to do this, since it can signal that a fund is on the verge of collapse, current conditions may result in more funds not letting investors take their money out - at least not immediately.

...more...

[ozymandius]

28. Markets opening with a pffft.

9:36
Dow 13,224.50 Down 11.38 (0.09%)
Nasdaq 2,537.97 Down 3.73 (0.15%)
S&P 500 1,462.92 Up 0.42 (0.03%)
10-Yr Bond 4.633% Up 0.015
NYSE Volume 72,351,000
Nasdaq Volume 52,902,000

09:15 am : S&P futures vs fair value: -0.2. Nasdaq futures vs fair value: -5.0.

08:59 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -4.0. The strong durables orders data for July has helped diminish some of the earlier selling interest in the futures market. Nevertheless, the cash market is still expected to start the day on a somehwat lackluster note.

08:38 am : S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: -1.2. The futures market has gotten a boost from the July Durables Orders data, which were much stronger than expected with orders up 5.9% (consensus +1.4%) and orders, ex-transportation, up 3.7% (consensus +0.6%). Non-defense capital goods shipments, excluding aircraft, which is a proxy for busines investment, jumped 0.5%. The Durables Orders report is known to be volatile, but the July data fly in the face of concerns about a credit crunch derailing the economy. The market, though, isn't likely to be convinced of the July strength until it can see some confirmation in the August report.

[UpInArms]

29. Florida mortgage broker faces involuntary Ch. 11

http://www.reuters.com/article/bondsNews/idUSWEN068020070824

NEW YORK, Aug 24 (Reuters) - TransLand Financial Services Inc., a Florida mortgage brokerage, is the subject of an involuntary Chapter 11 bankruptcy petition filed by three banking companies, in which it was accused of failing to remit at least $22.9 million of loan payoffs and other payments.

The petition was filed Thursday with the U.S. District Court for the Middle District of Florida by TierOne Corp (TONE.O: Quote, Profile, Research), Federal Trust Bank and MidCountry Bank, court records show. TierOne said it is owed at least $12.9 million, MidCountry at least $7.6 million, and Federal Trust at least $2.4 million.

In a U.S. Securities and Exchange Commission filing, Lincoln, Nebraska-based TierOne said it replaced TransLand as the servicer of some residential construction loans, and in effecting the transfer, it "uncovered evidence of the alleged fraud."

TierOne said it is insured up to $7.5 million against fraudulent losses by loan servicers, and that its insurance carrier has been notified of a potential claim. The company said it does not expect the matter to materially affect results.

...more...

[wordpix]

37. now the insurance cos. will be hit for the mortgage cos' "fraudulent losses"

[ozymandius]

45. These allegations will be circulating through the courts for many,

many years. For lending companies to ignore the Truth in Lending Act is an act of financial suicide. Since these mortgages are supposed to be insured then the insurance companies will take a hit. But then is the insurance policy null-and-void if the lender did not follow the most basic among lending rules?

Bear in mind that insurance companies are among the biggest real estate players. When times are good these companies buy lots of property as hedge against tough times. Maximum exposure anyone?

[UpInArms]

48. I think the insurance companies will have to prove "criminal intent"

because of the "errors and omissions" part of the policies.

[ozymandius]

50. good point

That is the crux of any legal proceeding: intent. Then there is circumstance. I wonder how hard it would be either to prove or merely produce the appearance of "theft by deception"?

[UpInArms]

51. well the banks and the insurance companies have been swapping spit for a while

http://www.msnbc.msn.com/id/20246355/

Goldman Sachs fund gets $3 billion bailout
Investor group comes to the rescue amid credit crisis

Updated: 11:48 a.m. CT Aug 13, 2007

NEW YORK - Goldman Sachs Group on Monday said a group of investors that includes Eli Broad and Hank Greenberg will sink $3 billion into one of its biggest hedge funds that has seen its value plunge amid market volatility.

The investment bank said its Global Equity Opportunities fund "suffered significantly" as global markets sold off on worries about debt and credit. The fund lost as much as 14 percent of its value during the past 12 months, according to media reports, and is currently worth about $3.6 billion.

Goldman Sachs Group Inc. will lead the group of investors to help bail out the hedge fund, which relies on computer-driven trading strategies. Other investors include Broad, Greenberg's C.V. Starr & Co., and Perry Capital LLC.

...more...

[UpInArms]

30. US junk bond funds report $379.7 mln net outflow

http://www.reuters.com/article/bondsNews/idUSN2432827520070824

NEW YORK, Aug 24 (Reuters) - U.S. junk bond mutual funds reported a $379.7 million net outflow in the week ended Wednesday, following a $274.5 million net outflow the prior week, AMG Data reported late on Thursday.

Junk bonds are rated below investment grade and carry high yields to compensate for their risks. Junk bond funds have reported net outflows for 11 straight weeks as a global credit squeeze turned investors sour on risky assets.

[ozymandius]

31. Home Depot may accept $1.2 bln less for unit: report

NEW YORK (Reuters) - Home Depot (NYSE:HD - News) is close to accepting about $1.2 billion less for the sale of its wholesale distribution business to three private equity firms, The Wall Street Journal reported on Thursday.

But the deal may not close before a Thursday deadline, with the three major financiers -- JP Morgan Chase & Co (NYSE:JPM - News) Lehman Brothers Holdings Inc (NYSE:LEH - News) and Merrill Lynch & Co Inc (NYSE:MER - News) -- balking over the financing, the Journal reported on its Web site, citing people familiar with the matter.

The banks were preparing for the possibility of lawsuits, the Journal reported, without saying whom they would sue.

The Journal said some of the most senior figures on Wall Street were trying to manage their exposure to a deal beset by crises in the housing and credit markets, the Journal reported.

http://biz.yahoo.com/rb/070824/homedepot_banks.html?.v=3

[ozymandius]

36. Countrywide borrowers feel the pain (loan restructuring)

WASHINGTON (MarketWatch) -- A national homeownership advocacy group on Thursday asked the Office of Thrift Supervision to force Countrywide Financial Corp. to restructure loans for borrowers who are in trouble.

Bruce Marks, chief executive of nonprofit Neighborhood Assistance Corp. of America, said Countrywide should be required to restructure loans, such as "strangulation" adjustable rate mortgages, to create payments that are affordable over the long term.

The advocacy group brought a panel of borrowers to a press event here in an effort to pressure regulators to take action as the woes in the subprime lending arena continue to mount.

Cynthia Bryant, one of the panelists, said Countrywide refused to accept a late payment last year. The 42-year-old single mother of four, with a home in Pomona, Calif., has filed for bankruptcy to stop the rate from climbing on her interest-only loan.

http://www.marketwatch.com/news/story/strained-homeowners-ask-countrywide-redo/story.aspx?guid=%7B88F9E363%2D27B4%2D4033%2DA247%2D91E848EE464F%7D

[UpInArms]

38. "There is about $300 trillion worth of derivatives traded around the planet"

http://www.marketwatch.com/news/story/time-shine-light-corporate-accounting/story.aspx?guid=%7BE12FC5C8%2D2AB4%2D4DF5%2D9CC4%2DEC1C6DF95F22%7D

SANTA MONICA, Calif. (MarketWatch) -- If you thought the ways in which corporations reported to shareholders before now was murky, just wait.

"I'm in the business, it's what I do every day, and I have no idea how to trace back one of my trades or figure out how you would assess risk," one veteran derivative trader told me.

Traders who deal in exotic financial instruments admit they don't understand what's going on. Financial institutions conduct triage in an environment that they don't understand. And the Federal Reserve Board is standing by, scratching its head. Think any of this is going to be clearly stated to investors in next quarter's corporate reports? Think again.

Shareholders reports aren't universally standardized, which is another problem in and of itself. When a mortgage in Sacramento is bundled up with a tranche of other mortgages in New York and then packaged as securities that may be sold in London where some rocket scientist creates a derivative instrument based on their performance and then sells those derivatives in Geneva where a Chinese government-backed corporation houses capital and with that, in turn, buys U.S. Treasury bonds, there is a mind-boggling series of financial connections around the globe.

There is about $300 trillion worth of derivatives traded around the planet and hardly anyone can tell you what the value is based on. (Figure this: Those tried and true and safe?! money market funds, even, have $11 billion invested in subprime debt, according to trade reports.)

...more...

[UpInArms]

44. 10:04 EST Ponies for Everybody!

Dow 13,263.44 27.56 (0.21%)
Nasdaq 2,543.98 2.28 (0.09%)
S&P 500 1,466.50 4.00 (0.27%)
10-Yr Bond 4.614% 0.004

NYSE Volume 228,801,000
Nasdaq Volume 204,344,000

09:40 am : The opening activity held true to the indication provided by the futures market, which is to say it was mixed and relatively flat.

With this in mind, it should be little surprise to hear that there isn't any strong leadership at the moment. The energy sector (+0.5%), however, has gotten off to a decent start with oil prices jumping back above $70 per barrel (+$0.39 at $70.22).

The New Home Sales report for July is due at the top of the hour. The market is expecting a drop in sales to an annualized rate of 825K, which would be a 7-year low, versus the prior month of 834K. DJ30 -7.56 NASDAQ -4.74 SP500 -0.32

09:15 am : S&P futures vs fair value: -0.2. Nasdaq futures vs fair value: -5.0.

08:59 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -4.0. The strong durables orders data for July has helped diminish some of the earlier selling interest in the futures market. Nevertheless, the cash market is still expected to start the day on a somehwat lackluster note.

[ozymandius]

54. They must be happy about living in the new cardboard tee-pees.

10:33
Dow 13,268.48 Up 32.60 (0.25%)
Nasdaq 2,544.22 Up 2.52 (0.10%)
S&P 500 1,465.74 Up 3.24 (0.22%)
10-Yr Bond 4.647% Up 0.029
NYSE Volume 387,054,000
Nasdaq Volume 322,099,000

10:05 am : There wasn't a lot of conviction in the early-going, but mercifully, there wasn't a lot of volatility either

Separately, it was just reported that July New Home Sales actually rose 2.8% to an annualized rate of 870K (consensus 825K). The early response has been favorable as this was indeed a positive surprise.

Combined with the durables data earlier, the market has gotten an encouraging dose of economic news today. What it does with that remains to be seen - given that the figures are just a load of crap. It is bullish in its own right, but the notion that it might prevent the Fed from cutting rates could serve as a roadblock to a rally effort.DJ30 +35.77 NASDAQ +6.12 SP500 +5.86 NASDAQ Dec/Adv/Vol 1270/1089/112 mln NYSE Dec/Adv/Vol 1143/1217/42 mln

[ozymandius]

60. 11:35

Dow 13,253.36 Up 17.48 (0.13%)
Nasdaq 2,545.31 Up 3.61 (0.14%)
S&P 500 1,464.12 Up 1.62 (0.11%)
10-Yr Bond 4.631% Up 0.013
NYSE Volume 693,379,000
Nasdaq Volume 520,029,000

[mojavekid]

63. MW: That was then, this is now for gold

http://www.marketwatch.com/news/story/then-now-gold/story.aspx?guid=%7BED1FFDCE%2D31CB%2D4A8F%2DB37B%2DA45623F09DBE%7D

As frustrating and unpredictable as gold has been in the past few years, it parallels history at times -- and sometimes it's anyone's guess. Analysts blame that on the metal's changing market.
"The entrée of large institutional players have most definitely altered the gold landscape to the point where it is no longer the same old game," said Jon Nadler, a senior analyst at Kitco Bullion Dealers.

snip...

Categorizing recession
Take some of the market crashes of the past for example.
"There are certainly some parallels that can be drawn with 1987, 1929 and the 1970s," said Mark O'Byrne, director of GoldandSilverInvestments.com.
He stressed the word "parallels" and insisted that no one can actually "compare any one previous market crisis or crash as they are all so different."
And as investors "tread through the ongoing credit crisis," gold will likely act very differently than it has during past stock market corrections or crashes, said David Beahm, vice president of marketing and economic research at Blanchard.

It's difficult to know how this crisis will evolve; there are so many variables, said O'Byrne. And how the U.S. government and the Federal Reserve responds to the situation will largely "dictate whether a coming recession is deflationary, hyperinflationary or a virulent strain of stagflation."
"Gold would perform differently in each type of recession," O'Byrne explained. Gold would be the "asset class to own in a hyperinflationary or severe stagflationary scenario as it was in the brutal hyperinflation in Germany in the 1920s and in the stagflationary U.S. in the 1970s," he said.
In a deflationary scenario, gold prices might fall along with stocks and property, but fall by "far less" than other asset classes, he said.
In that scenario, a "combination of gold, but also cash, treasuries and conservative, fiscally prudent government bonds would be where investors should protect their wealth," he said.

more...

[mojavekid]

64. Prudent Squirrel: WILL CREDIT CRISIS CALM DOWN BEFORE THE REAL STOCK CRASH?

http://www.financialsense.com/fsu/editorials/laird/2007/0823.html

snip...

As happened in the February 27 crashes, the US markets were the ones that more or less held ground- So far. As that seemed to continue to be the case, again, the Asian markets seemed to calm, and also the European markets. Now, I would also suggest that the US ‘Working Group on Markets’ and the BOJ market management teams both put serious floors under equities. Many times in the past two weeks we would see the Dow headed for a really bad day, but all of a sudden a serious reversal. I particularly remember that day when the Dow was rapidly down 150 points, but made most of that up in the last hour and ended down something like a few points. You are not going to tell me that the traders really did that one. A floor was put in.

snip...

Crisis has spread everywhere

Now, we get into the issue that the credit crisis spread to other areas and hammered confidence. The Fed used the discount rate to encourage lenders to loosen up. They lowered the rate .5% to 5.75, and allowed 30 days, instead of overnight – plus the option to roll forward as needed. That should have helped the situation. However, not too many took the Fed up on the deal, so we had an orchestrated campaign, where Citi, Morgan, Wachovia and another borrowed $500 million apiece Wednesday from the Fed under those terms.

Then, this is supposed to encourage others to take advantage of the discount rate. The trouble is, banks and institutions are not. Why is that? Because they don’t want to lend the credit to others in trouble, and then assume the risk. So, it does little good to lower the rate, and even have campaigns to take advantage of it, if lenders have lost confidence in the liquidity of the system, and that is a real problem.

So, unless central banks are willing to just underwrite the entire credit system, and cover all impending mortgage losses, (buyers of everything as last resort, like MBS – Fed) we will likely not see any confidence return to credit markets. This is the thing the ECB has been quite afraid of. So has the Fed. The trouble is, if the CBs do underwrite all the losses (monetize them) then the only healthy market left, sovereign debt like US treasuries, will collapse too. Then we are in total disaster, as the USD might just let go finally…and we now go to a combination of a liquidity crisis followed by a collapsing USD – that is if the Fed wanted to monetize all these trillions of losses. So that can’t happen. People who think central banks will totally cover all these trillions of losses and hold up equity markets overestimate their power and willingness to do that.

more...sorry if this is a dupe from another day...!

[Roland99]

69. 12:42pm - Friday Free-(ponies)-for-all!! WHEEE!!! Happy Hour!!

Dow 13,309.45 +73.57
Nasdaq 2,556.33 +14.63
S&P 500 1,470.57 +8.07
10 YR 4.64% +0.02
Oil $70.55 $0.72
Gold $677.00 $8.60

[jdog]

76. help! I'm trying to make sense

out of the trade that is the subject of this thread. (I went there due to a post earlier up in this thread.) I feel quite dense and would love it if anyone feels like helping me to understand it. Don't expect any help from me though as this is way over my head.

http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=11

[specimenfred1984]

79. "Spyders" link

http://www.streetauthority.com/cmnts/sp/2004/04-19-spy.asp

[jdog]

80. Thanks Fred.

That helps me understand what SPY is. Very interesting.

still a bit confused by the transaction itself though.

[Buttercup McToots]

84. This needs to be analyzed but those who know the market...

It was a nearly 900k bet at 700 on the SPX.X. That's a very expensive lottery ticket that will pay out gazillions if there were a 30% drop. Yes gazillions...


snip
know this thread has gone on too long - but no one has posted this so ...

I feel like an idiot BTW - I didn't really understand the math on this trade until today and I should know better.

If we assume that this is a spread trade as Infospace has clearly verified, and we also assume that the call options volume that exploded the other day represented the two legs of the trade, then what we are looking at is an ITM bear call spread. Forgetting about the transaction costs and the slippage and time premium it looks like this :

--------------------------------------

Let's say the SPY's start at 150, and the guy sells a 60 call (which he sells for 90) and buys a 90 call (which he buys for 60). So he originally 'pockets' the 30 point difference.


Examples :

1) SPY's go up to 170

60 call = 110
90 call = 80
------------
difference = +30

Result : no profit (30 - 30)


2) SPY's go down to 100

60 call = 40
90 call = 10
------------
difference = +30

Result : no profit (30 - 30)


3) SPY's go down to 75

60 call = 15
90 call = 0
------------
difference = +15

Result : profit (30 - 15)


4) SPY's go down to 60 (or below)

60 call = 0
90 call = 0
------------
difference = 0

Result : profit (30 - 0)




So, the end result is not only is this guy betting on a crash below 900 before Sept 21, but he gets his biggest profit if it goes below 600.

That is one nasty bet.

P.S. If my math STILL sucks, please someone correct me.



Last modified: 2007-08-24 12:22:02

[DemReadingDU]

88. quite interesting

I finally determined that your posting was originally created by Kochevnik in the tickerforum that you linked to.

It is a heck of a bet! Wonder what they think might happen to cause the markets to drop so precipitously in September? Another attack in the U.S.? Maybe war with Iran? Maybe the financial markets to implode?

[Demeter]

112. How About Citicorp and BoA Going Under?

There's a posting about Feds bending the rules for them both today....

[UpInArms]

117. Fed bends rules to help two big banks

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2965854&mesg_id=2965854

This is extremely serious - and it appears that it is sanctioned by the Fed - which is insane

all I can say is: I am appalled and there is no turning back.

:scared:

[Buttercup McToots]

86. JD

They are speculating that what happened last night with the options on SP
is similar to what happened in the market right b/4 9-11.
See below:
Insider Trading
Pre-9/11 Put Options on Companies Hurt by Attack Indicates Foreknowledge
Financial transactions in the days before the attack suggest that certain individuals used foreknowledge of the attack to reap huge profits. 1 The evidence of insider trading includes:

Huge surges in purchases of put options on stocks of the two airlines used in the attack -- United Airlines and American Airlines
Surges in purchases of put options on stocks of reinsurance companies expected to pay out billions to cover losses from the attack -- Munich Re and the AXA Group
Surges in purchases of put options on stocks of financial services companies hurt by the attack -- Merrill Lynch & Co., and Morgan Stanley and Bank of America
Huge surge in purchases of call options of stock of a weapons manufacturer expected to gain from the attack -- Raytheon
Huge surges in purchases of 5-Year US Treasury Notes


In each case, the anomalous purchases translated into large profits as soon as the stock market opened a week after the attack: put options were used on stocks that would be hurt by the attack, and call options were used on stocks that would benefit.

Put and call options are contracts that allow their holders to sell and buy assets, respectively, at specified prices by a certain date. Put options allow their holders to profit from declines in stock values because they allow stocks to be bought at market price and sold for the higher option price. The ratio of the volume of put option contracts to call option contracts is called the put/call ratio. The ratio is usually less than one, with a value of around 0.8 considered normal. 2

Losers
American Airlines and United Airlines, and several insurance companies and banks posted huge loses in stock values when the markets opened on September 17. Put options -- financial instruments which allow investors to profit from the decline in value of stocks -- were purchased on the stocks of these companies in great volume in the week before the attack.

United Airlines and American Airlines
Two of the corporations most damaged by the attack were American Airlines (AMR), the operator of Flight 11 and Flight 77, and United Airlines (UAL), the operator of Flight 175 and Flight 93. According to CBS News, in the week before the attack, the put/call ratio for American Airlines was four. 3 The put/call ratio for United Airlines was 25 times above normal on September 6. 4


This graph shows a dramatic spike in pre-attack purchases of put options on the airlines used in the attack. (source: www.optionsclearing.com)

The spikes in put options occurred on days that were uneventful for the airlines and their stock prices.

On Sept. 6-7, when there was no significant news or stock price movement involving United, the Chicago exchange handled 4,744 put options for UAL stock, compared with just 396 call options -- essentially bets that the price will rise. On Sept. 10, an uneventful day for American, the volume was 748 calls and 4,516 puts, based on a check of option trading records. 5

The Bloomberg News reported that put options on the airlines surged to the phenomenal high of 285 times their average.

Over three days before terrorists flattened the World Trade Center and damaged the Pentagon, there was more than 25 times the previous daily average trading in a Morgan Stanley "put" option that makes money when shares fall below $45. Trading in similar AMR and UAL put options, which make money when their stocks fall below $30 apiece, surged to as much as 285 times the average trading up to that time. 6

When the market reopened after the attack, United Airlines stock fell 42 percent from $30.82 to $17.50 per share, and American Airlines stock fell 39 percent, from $29.70 to $18.00 per share. 7

The activity last night bets on something going down in 3 weeks...
I'll look for more info...

[jdog]

87. THANK YOU for your explanation.

I was afraid of that. Some of those 9/11 futures trades were never collected on, right?

Wow. This is...well I don't know what to say.

[Buttercup McToots]

89. Another thread...

http://www.godlikeproductions.com/bbs/message.php?messageid=428771&mpage=1&showdate=8/24/07&forum=1

BREAKING-ANOTHER HUGE SALE OF OPTION CONTRACTS ON $4.5 BILLION WORTH OF STOCKS BETTING THE MARKET WILL LOSE 30%-50%
Quote



THEY DID IT AGAIN. . . . ANOTHER HUGE SALE OF OPTION CONTRACTS ON $4.5 BILLION WORTH OF STOCKS BETTING THE MARKET WILL LOSE 30%-50% OF ITS VALUE IN FOUR WEEKS!
THIS SALE ON THE SPY.X AND THE ONE FROM YESTERDAY ON THE SPY.Y (MENTIONED TWO STORIES BELOW) ARE BEING REFERRED-TO BY FOLKS IN THE MARKET AS "BIN LADEN TRADES" BECAUSE ONLY AN ACT OF TERRORISM AKIN TO 9-11 (WITHIN THE NEXT FOUR WEEKS) COULD MAKE THESE OPTIONS VALUABLE.
There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep "in the money" calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.

The entity or individual offering these sales can only make money if the market drops 30%-50% within the next four weeks. If the market does not drop, the entity or invidual involved stands to lose over $1 billion just for engaging in these contracts! Clearly, someone knows something big is going to happen BEFORE the options expire on Sept. 21.

THEORIES:
The following theories are being discussed widely within the stock and options markets today regarding the enormous and very unusual activity reported above and two stories below. Those theories are:
1) A massive terrorist attack is going to take place before Sept. 21 to tank the markets, OR;
2) China, reeling over losing $10 Billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump US currency and tank all of Capitalism with a Communist fianncial revolution.

Either scenario is bad and the clock is ticking. The drop-dead date of these contracts is September 21. Whatever is going to happen MUST take place between now and then or the folks involved in these contracts will lose over $1 billion for having engaged in this activity.

Re: BREAKING-ANOTHER HUGE SALE OF OPTION CONTRACTS ON $4.5 BILLION WORTH OF STOCKS BETTING THE MARKET WILL LOSE 30%-50% Quote


"$1.78 Billion Bet that Stock Markets will crash by third week in September
Anonymous Stock Trader Sells 10K Contracts on EVERY S&P/Y "Strike"
Shorts Stocks "in the money" effectively selling all his SPY holdings for cash up front without pressuring the market downward
This is an enormous and dangerous stock option activity. If it goes right, the guy makes about $2 Billion. If he's wrong, his out of pocket costs for buying these options will exceed $700 Million!!!

The entity who sold these contracts can only make money if the stock market totally crashes by the third week in September.

Bear in mind that the last time anyone conducted such large and unusual stock option trades (like this one) was in the weeks before the attacks of September 11.

Back then, they bought huge numbers of PUTS on airline stocks in the same airlines whose planes were involved in the September 11 attacks. Despite knowing who made these trades, the Securities and Exchange Commission NEVER revealed who made the unusual trades and no one was ever publicly identified as being responsible for the trades which made upwards of $50 million when the attacks happened.

The fact that this latest activity by a single entity gambles on a complete collapse of the entire market by the third week in September, seems to indicate someone knows something really huge is in the works and they intend to profit almost $2 Billion within the next four weeks from whatever happens! This is really worrisome."

[jdog]

90. ok, this is getting scary.

Should this be its own thread? If you think so, can you start one (I don't know how).

[DemReadingDU]

93. we need someone with a highly visible userID

I could create a new post, but it would sink like a rock. I don't post much either.

[DemReadingDU]

95. maybe this is a hoax?

[Buttercup McToots]

97. Could be so...

http://finance.yahoo.com/q/op?s=SPY

Lets see if I can do this...

Options Get Options for:




View By Expiration: Sep 07 | Oct 07 | Nov 07 | Dec 07 | Mar 08 | Jun 08 | Dec 08 | Dec 09
CALL OPTIONS Expire at close Fri, Sep 21, 2007

Strike Symbol Last Chg Bid Ask Vol Open Int
60.00 SWVIH.X 86.50 0.00 88.20 88.50 10,000 12,308
65.00 SWVIM.X 81.50 0.00 83.20 83.60 10,000 12,219
70.00 SZCIR.X 76.50 0.00 78.20 78.60 10,000 12,573
75.00 SZCIW.X 71.50 0.00 73.20 73.60 10,000 10,889
80.00 SZCIB.X 66.50 0.00 68.20 68.60 10,000 10,785
85.00 SZCIG.X 61.50 0.00 63.30 63.70 10,000 10,848
88.00 SZCIJ.X 54.70 0.00 60.30 60.70 50 470
89.00 SZCIK.X 53.70 0.00 59.30 59.70 48 239
90.00 SWGIL.X 56.50 0.00 58.30 58.70 10,000 10,651
91.00 SWGIM.X 55.50 0.00 57.20 57.70 10,000 10,362
92.00 SWGIN.X 54.50 0.00 56.30 56.70 10,000 10,390
93.00 SWGIO.X 53.50 0.00 55.20 55.70 10,000 10,377
94.00 SWGIP.X 52.50 0.00 54.20 54.70 10,000 10,532
95.00 SWGIQ.X 51.50 0.00 53.30 53.70 10,000 10,474
96.00 SWGIR.X 52.00 0.00 52.30 52.70 0 249
97.00 SWGIS.X 51.00 0.00 51.30 51.70 0 332
98.00 SWGIT.X 47.80 0.00 50.30 50.70 67 718
99.00 SWGIU.X 46.20 0.00 49.30 49.70 0 420
100.00 SWGIV.X 42.80 0.00 48.30 48.70 24 308
101.00 SWGIW.X 41.80 0.00 47.30 47.70 25 509
102.00 SWGIX.X 40.80 0.00 46.30 46.70 25 770
103.00 SWGIY.X 47.50 0.00 45.30 45.70 0 155
104.00 SWGIZ.X 42.80 0.00 44.30 44.70 3 145
105.00 SWGIA.X 33.25 0.00 43.30 43.70 5 1,293
106.00 SWGIB.X 39.30 0.00 42.30 42.70 10 645
107.00 SWGIC.X 37.10 0.00 41.40 41.70 51 488
108.00 SWGID.X 36.40 0.00 40.40 40.80 201 371
109.00 SWGIE.X 33.90 0.00 39.40 39.80 25 113
110.00 SPYIF.X 35.55 0.00 38.40 38.80 110 739
111.00 SPYIG.X 32.50 0.00 37.40 37.80 22 786
112.00 SPYIH.X 33.80 0.00 36.40 36.80 935 1,463
113.00 SPYII.X 32.80 0.00 35.40 35.80 804 1,232
114.00 SPYIJ.X 34.40 4.70 34.40 34.80 1 247
115.00 SPYIK.X 30.90 0.00 33.40 33.80 1,056 1,412
116.00 SPYIL.X 29.90 0.00 32.40 32.80 400 790
117.00 SPYIM.X 28.30 0.00 31.50 31.80 100 1,822
118.00 SPYIN.X 26.70 0.00 30.50 30.80 151 1,635
119.00 SPYIO.X 26.50 0.00 29.60 29.80 380 1,851
120.00 SPYIP.X 27.93 0.93 28.60 28.80 81 2,585
121.00 SPYIQ.X 24.60 0.00 27.60 27.80 532 3,880
122.00 SPYIR.X 23.50 0.00 26.60 26.90 150 2,883
123.00 SPYIS.X 22.20 0.00 25.60 25.90 459 1,374
124.00 SPYIT.X 23.10 0.00 24.60 24.90 50 950
125.00 SPYIU.X 22.18 0.00 23.70 23.90 5 3,177
126.00 SPYIV.X 20.60 0.00 22.60 22.90 51 1,735
127.00 SPYIW.X 18.00 0.00 21.60 22.00 4 1,841
128.00 SPYIX.X 17.48 0.00 20.60 21.00 5 1,300
128.00 RQQIX.X 17.63 0.00 20.70 21.00 5 735
129.00 SPYIY.X 16.90 0.00 19.70 20.00 1 3,376
129.00 RQQIY.X 12.10 0.00 19.80 20.10 17 2,320
130.00 SFBIZ.X 18.21 0.91 18.70 19.00 8 3,095
130.00 RQQIZ.X 18.40 0.90 18.80 19.10 5 383
131.00 SFBIA.X 15.80 0.00 17.70 18.10 10 2,076
131.00 RQQIA.X 14.20 0.00 17.90 18.20 19 652
132.00 SFBIB.X 15.30 0.00 16.70 17.10 1 3,817
132.00 RQQIB.X 9.80 0.00 16.80 17.20 34 1,241
133.00 SFBIC.X 15.40 0.00 15.80 16.20 2 2,377
133.00 RQQIC.X 12.50 0.00 15.90

[jdog]

99. China?

Interesting comment by Dkane at that initial thread:

"My guess boys & girls is the Chinese Goverment/Bank of China is hedging the $10B in shit they are holding in subprime MBS. They got their hedge in place and next they start dumping their US $$$$ to make the point of who's your daddy now!"

http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=9

[Buttercup McToots]

102. *

if anything can go wrong, it might be a chinese dumping US treasuries, or one Big US bank going under.

[DemReadingDU]

91. I remember some discussion about those put options in 2001

Somebody must have insider knowledge again that something to occur soon.

This is scary.

[Buttercup McToots]

92. On the thread

some were getting scared and thought that HS should be alerted...

But I don't think everyone is sure what is going on yet...
From what I can tell...They thought it was just an error at first
but now...well, I don't know...
Just thought we should have a heads up...

[Buttercup McToots]

103. Large option activity can signal an unusual event

Finally, in the curiously interesting category there was really large option activity in the SPY, S&P500 etf, yesterday. Large option activity can signal an unusual event. 10,000 calls at almost every of the strikes, starting at $95 and going down to $60 or 120,000 deep in the money Sept. calls were sold. That's the equivalent to 12,000,000 shares of the SPY. Several ways to look at this, two potential ways, #1) an investment firm was looking to move $1.7 billion worth of stock without causing a big ripple...may have been BAC raising the funds to do the CFC deal, OR #2) someone with very deep pockets is expecting the markets to rollover bigtime, possibly 35%+, by the third friday in Sept. What's spooky about #2 is that the current chart of the DOW mirrors the pattern of the DOW in 1987 heading into Sept. Spooky coincidence or is it drop the hammer on the markets next week?

[UpInArms]

82. Merrill could face big subprime write down - lost $111 million through the first half of 2007

http://www.reuters.com/article/bondsNews/idUSN2432127020070824?sp=true

NEW YORK (Reuters) - Profit at Merrill Lynch & Co. Inc. (MER.N: Quote, Profile, Research) could take a big hit if the U.S. brokerage heavyweight cuts the value on nearly $1 billion in subprime lender assets it bought just eight months ago.

Analysts said they would expect Merrill Lynch to write down at least some of the goodwill-related assets from its $1.3 billion purchase of First Franklin Financial Corp, the No. 5 U.S. subprime originator in the first quarter, according to Inside Mortgage Finance.

The possibility of write-downs related to ill-timed acquisitions of mortgage lenders shows that the Wall Street fallout from the subprime mortgage meltdown, which caused two Bear Stearns & Co (BSC.N: Quote, Profile, Research) hedge funds to collapse and Lehman Brothers to shutter a unit, is far from over.

<snip>

But recently filed reports with U.S. banking regulators show that Merrill Lynch Bank & Trust Co., where much of the First Franklin franchise is housed, lost $111 million through the first half of 2007. In the fourth quarter, before First Franklin's impact was felt, the unit made money, records show.

U.S. accounting rules require companies to evaluate goodwill for impairment at least once a year. If the goodwill is impaired, its carrying value on the balance sheet is cut and companies record a loss, reflected on income statements. One effect of the rules is that they provide investors with insight into management's success on past acquisitions.

...more...

[UpInArms]

83. Fitch downgrades Countrywide Home Loans' servicer ratings

http://www.reuters.com/article/bondsNews/idUSWNA073120070824

NEW YORK, Aug 24 (Reuters) - Fitch Ratings cut its servicer ratings for Countrywide Home Loans Inc on Friday citing troubles in the residential mortgage market.

Among Fitch's ratings cuts, Countrywide Home Loans' servicer ratings for Alt-A and subprime products were cut to "RPS1-" from "RPS1," Fitch said. Fitch last week cut parent Countrywide Financial Corp's (CFC.N: Quote, Profile, Research) rating to "BBB-plus," or three levels above junk, from "A," five levels above.

[Odin2005]

98. The markets seem to be in full sucker rally mode.

[calteacherguy]

115. LOL. I bought last week...

And I'm no sucker. :-)

It's a Bull market, should reach 1600s in S&P by early next year.

[Buttercup McToots]

100. From Yahoo

this is from a blog on those options... lots of chatter right now about this trade

As a registered Commodity Trading Advisor I have never seen a situation in the options market like I do today,

Go to Bigcharts and look at the options chain for SPY, the S&P 500 spider.

There is an unusual amount of open interest and volume in the strikes between 60-90 September calls. These are deep in-the-money.

This means that someone is doing some big time hedging or creating a synthetic short position, which bypasses many pension and mutual fund regulations against short selling.

There is little activity between 90-135 strikes and then it pickes up to the normal amount as it gets close to the current index price of 147.

The FED governors are also meeting at Jackson Hole, Wyoming. This is very unusual as well because it is the site of the R2 COG (continuity of government) site. It is essentially an underground base with high security and low visibility.

The VP has been spending most of his time there since 9/11.

Just fill in the blanks folks.

[Buttercup McToots]

101. Print

Here is the print here:

(Actually, its about 61K contracts at 700 deep in the money)

Somebody is actually betting almost 5 billion dollars that the market is going down 30% by Sept 21.

Wow...
http://finance.yahoo.com/q/op?s=%5EGSPC&m=2007-09

[DemReadingDU]

104. Oh my

maybe there is something going on

:wow:

[Buttercup McToots]

106. An idea of what's going on...

The SPY transaction was sufficiently odd and sufficiently large to suggest that more than simple profit motivation was involved. If a hedge fund was really desperate to raise cash and wanted to keep it secret, this would be one way to do it. If the fund were related to Goldman, there would be double motivation for secrecy. There is also the possibility that this was, or related to earlier transactions, initiated on behalf of the Plunge Protection Team. Some posters have suggested that the net result was a stabilization and advance of the S&P 500. This may well have been the objective.
The borrowing of 500MM each by the 4 biggest banks from the Fed's discount window was also clearly a head game intended to demonstrate that the big guys were not shy about using a facility that heretofore was used only by the deadbeats.



snip:
I have a tip on who it was, but I'm not going to distribute the rumor as I can't verify it.

Let me just say this - they're big in the options market.

Guess we will see...

:crazy:

[Buttercup McToots]

107. An opinion of today's SPY activity

I checked with a friend who is familar with this and this is what he said...
And I thank him for taking the time to research and explain...

I called our Options department in ****** and asked about
the volume and the activity on this particular ETF. The
analyst was not impressed with the volume in light of recent
volatility in the overall market. He told me that if we had
seen this sort of activity say 6 weeks ago, it might have
meant something more nefarious but the fact is, SPY is an
extremely liquid, broadly based fund and it is therefore very
attractive to large institutional investors. The large blocks
of 10,000 call contracts you cited are
almost certainly simply covered call writing, reflecting the
large purchases of similar blocks yesterday afternoon. If you
add the strikes and the large contract prices, you end up with
roughly the cost of the security as it is trading, ie 146.00

Yesterday, for instance, there were transactions (I can not
tell if they were buys or sells) on SPY all day long, as one
might expect but the time frame between 11:07 AM and 12:05 is
interesting when cross referenced against a Thompson chart
tracking share price in 5 minute intervals. It went like
this;
11:07 - 100,000 Shares @ 146.57
11:11 - 76,100 @146.39
11:13 - 136,000 @ 146.48
11:15 - 260,000 @ 146.60
then no large blocks until 11:39 - 24 minutes
11:39 - 100,000 @146.26
then nothing for another 16 minutes
11:55 - 1,000,000 @ 146.02 - Yes, one million shares
11:56 - 1,500,000 @ 145.82
11:59 - 150,000 @ 146.00
12:01 - 975,200 @ 145.93
12:05 - 1,000,000 @ 146.07
Then no large blocks until 1:19 PM, a full hour and 14 minutes
later.

My real-time charting tool has as an option the overlay of
"Bollinger Bands"
http://www.investopedia.com/terms/b/bollingerbands.asp
and the price of SPY passed the bottom, indicating a buying
opportunity at exactly 11:10 AM and moved away at exactly
12:00. The next time it passed below again was 12:50 PM.
This pattern repeats itself every time there were large block
transactions.

It would seem that the activity in SPY can be attributed to
technical trading activity on the part of institutional
investors coupled with tactical options writing. While the
possibility of some other purpose can not, of course be ruled
out, it is more than likely simply one or perhaps dozens of
large funds, Insurance companies or other investors using
extraordinary market volatility to their advantage.

There ye have it...friends...
Sure made for an interesting day, yes?
Love Buttercup

[UpInArms]

109. that was a very nice follow-up and follow-through

thank you!

[jdog]

110. wow. stressful. Thanks. n/t

[DemReadingDU]

111. Thank you for the explanation

Have a nice weekend!

:)

[UpInArms]

108. Fed accepting asset-backed paper as collateral

http://www.reuters.com/article/bondsNews/idUSN2435933120070824

WASHINGTON, Aug 24 (Reuters) - The Federal Reserve system has clarified that it will consider accepting investment grade asset-backed commercial paper as collateral at its discount window, officials confirmed on Friday.

"Reserve banks accept investment-quality commercial paper. Asset-backed commercial paper is viewed as a particular type of commercial paper and thus is eligible for consideration," the Fed said in a posting to the discount window's Web page: www.frbdiscountwindow.org/cfaq.cfm?hdrID=21&dtlID=?hdrID=21.

The Fed system posted the information overnight in response to queries about what sort of collateral would be acceptable at the discount window, a New York Fed official said.

The discount window has been thrust into the spotlight as the U.S. central bank reaches for measures to restore order and lending flows to markets spooked by delinquencies in subprime mortgage markets.

The Fed on Friday lowered the discount rate by a half-percentage point to 5.75 percent in hopes of loosening tight credit conditions.

The market for U.S. commercial paper -- an assortment of short-term corporate IOUs that provide companies with cash to fund their daily operations -- has shrunk by more than 8 percent in the past two weeks, as investors have shied away from risk. The asset-backed segment of that market that includes debt backed by home loans, including subprime mortgages and car loans, has been particularly hard hit.

...more...

I'll gladly pay you for a hamburger today sometime in my next reincarnation of another being. :eyes:

[UpInArms]

113. shop closing time

Dow 13,378.87 142.99 (1.08%)
Nasdaq 2,576.69 34.99 (1.38%)
S&P 500 1,479.37 16.87 (1.15%)
10-Yr Bond 4.633% 0.015

NYSE Volume 2,541,400,000
Nasdaq Volume 1,670,948,000


4:20 pm : It's a stretch to say things were back to normal this week, but there was no denying that the market tone was much improved.

Negative headlines on the subprime exposure - and there were plenty of them - came and went without unraveling the market. Meanwhile, T-bill rates pushed higher again, providing a tacit signal that fears about a liquidity crisis have eased in the wake of the Fed cuttting its discount rate and its accommodative repurchase agreements.

Friday's action ended the week on a high note as the market rallied in a broad-based manner, aided by better than expected economic data, better than expected earnings results from several retailers, and speculation that a buyout deal might be in the offing within the battered investment banking group.

If there was one shortcoming to Friday's rally, it was that it occurred on light volume. NYSE volume was just below 1.2 billion shares (it often does 1.0 bln by noon on heavy days). Today's total suggests there wasn't a lot of conviction behind the buying efforts. Nonetheless, investors who are long the market will take higher stock prices any way they can get them.

On Friday they got them on the back of leadership from the energy (+2.20%), materials (+1.80%), technology (+1.50%), industrials (+1.30%) and consumer discretionary (+1.30%) sectors.

The positive bias took root in the early-going as participants responded favorably to stronger than expected durable orders and new home sales data for July. Specifically, durable orders jumped 5.9% (consensus +1.4%) while new home sales increased 2.8% to an annualized rate of 870K (consensus 825K).

Although there were some initial misgivings that the data might prevent the Fed from cutting the fed funds rate, those misgivings were set aside and the good economic news was isolated today as just that - good economic news. Still, the market was careful not to put too much weight on today's reports knowing that they covered a period that didn't really encompass the recent credit market turmoil.

It would be remiss not to add, though, that some of today's strongest areas were economically-sensitive areas.

On a related note, the consumer discretionary sector caught a bid after companies like Gap (GPS 18.51, +1.11) and Ann Taylor (ANN 32.43, +2.79) both reported better than expected earnings results and provided reassuring earnings guidance.

All sectors took a backseat to energy, which jumped in conjuntion with oil prices that pushed back above $71 per barrel (+1.26 to $71.09).

The financial sector (+0.54%) trailed the broader market, but it picked up steam late in the session on speculation that heavy call buying in Lehman Bros. (LEH 60.37, +2.19) suggests a deal of some sort may be in the works. That may ultimately prove to be untrue, but on a light volume day, it carried some weight with buyers.

With the late bid in financials, the major indices managed to close at their best levels of the day. For the week, the Dow, Nasdaq and S&P rose 2.3%, 2.9% and 2.3%, respectively.DJ30 +142.99 NASDAQ +34.99 SP500 +16.87 NASDAQ Dec/Adv/Vol 930/2079/1.64 bln NYSE Dec/Adv/Vol 806/2499/1.18 bln

3:30 pm : Heading into the home stretch and the indices are holding on to the bulk of today's gains.

Next week isn't too heavy with scheduled events, but there will be some attention-grabbing items. In particular, the FOMC Minutes get released on Tuesday and the Personal Income & Spending report, which contains the Fed's favorite inflation indicator (core-PCE), hits the wires Friday morning.

Separately, Fed Chairman Bernanke on Friday will also be giving what will undoubtedly be some closely-watched, and over-analyzed, opening remarks at the Fed Symposium in Jackson Hole.DJ30 +100.31 NASDAQ +26.41 SP500 +11.80 NASDAQ Dec/Adv/Vol 1097/1891/1.31 bln NYSE Dec/Adv/Vol 908/2365/850 mln

3:00 pm : The indices haven't succumbed to selling interest today; in fact, they just hit new session highs in the past half hour.

Reports of heavy call buying in Lehman Bros. (LEH 60.09, +1.91) and the supposition that it means a deal might be in the works has been a factor behind the latest uptick, which has seen the financial sector (+0.1%) push back into positive territory for the day.

Volume continues to be on the light side, but that's not much of an issue for investors that are long the market.DJ30 +112.10 NASDAQ +28.55 SP500 +13.43 NASDAQ Dec/Adv/Vol 1124/1833/1.20 bln NYSE Dec/Adv/Vol 977/2278/774 mln



edited for the dratted html

[Buttercup McToots]

114. Good Nicht!

:beer:

[calteacherguy]

116. I hope everyone took advantage of the gift horse buying opportunity last week.

If not, it's still not a bad time to get back into the market right now for anyone going long for at least six months.

[wakemeupwhenitsover]

118. Of course, I hope you're right & it's a bull market, but

I'm wondering where you got your crystal ball from? And of course it begs the question: if your crystal ball is so accurate then why are you still teaching? Shouldn't you just play the market?

edited because I wrote bear instead of bull. :sheesh:

[54anickel]

119. I was thinking the gift horse could be either way....

Last week was a great blue light special or the little "recoveries" are an opportunity to bail and "get while the gettin's good". :shrug:
Either way.....

[wakemeupwhenitsover]

120. I edited. I can't believe that I typed bear instead of bull.

I think that calteacherguy is predicting a bull market which is why he bought last week when stocks were down. His crystal ball says that stocks were undervalued & we're now entering a bull market. & he thinks it will last 6 months.

I agree. It can be a crap shoot. And I suck at craps. Poker's my game.

:hi:

[54anickel]

121. I sort of figured you weren't really hoping for a bear. That crystal ball sounds like

it's been calibrated to the (flawed) Fed Model touched on in a Hussman piece earlier this week.
My crystal ball has long been on the fritz - no reliable repair shops left anymore.
:hi: