Global Correction

[sonicdragon]

the Feds are going to cut rates again. the stuff they said about not cutting rates again was like when your mom threatened to leave you in the hotel room alone while the rest of the family went to Disney World if you didn't stop misbehaving.

Yep, agreed, and that's a nice way of putting it

[TonyLeung]

how will the US credit crunch effect the Thai Real Estate market? Does anyone have any clue? It doesn't seem to have had any effect thus far.

[bingobongo]

this sounds eerily familiar....strap in folks

China - China - Shanghai Municipality: Shanghai Office of Chinese Central Bank Reports Continuing Flow of Savings to Stock, Property Markets

The Shanghai office of the People's Bank of China (PBoC) has reported that during the month of October the overall level of deposits in Shanghai's financial institutions declined by 96.4 billion yuan (US$13 billion)—a record monthly decline— as depositors continue to divert larger amounts of their holdings towards stock market and property investments. Large increases in deposits with financial services firms and brokerages were also reported. The report also cites an increase to down-payment requirements for purchases of property and new restrictions on mortgage lending as other factors behind the drain of deposits from the city's commercial banks. Bank monitors in Shanghai have also noted that the issuance of new "consumption loans", commonly used to purchase automobiles, housing and other big-ticket items, slowed significantly during October, down to 5.46 billion yuan from 72 billion yuan a month earlier. This slowdown appears to be limited to domestic banks in Shanghai, with foreign banks reporting lending levels of growth in lending at the end of October up by 9.5 percentage points compared with the previous month, and up by 87.3% y/y during the first 10 months of the year.

Significance: The PBoC noted that commercial banks in Shanghai do not face any capital constraints at the present time, though efforts to drain liquidity from the banking sector are having a noticeable impact on deposit levels, creating the possibility that any kind of event in the future could make it harder for banks to fund their assets with a heretofore unending supply of cheap consumer deposits. Bank regulators have singled out the rapid growth in lending by foreign banks, and although they account for a small proportion of total credit issuance in Shanghai, regulators are still looking at the discrepancy between their lending behaviour and the policy priorities.

Edited November 9, 2007 by bingobongo

[lannarebirth]

]Got some kind of confluence popping up in Nov 6-9 range, maybe nasty.

[]

Extended into Nov 13-15 range.

Edited November 9, 2007 by lannarebirth

[bingobongo]

well, the AAA tranche continues disintegrating as are the AA and A (which is swirling the bowl) and the DOW loses another 200 points today Nov 9, and we are just warming up..........

enjoy........you get the picture, same goes for AA and A

[lannarebirth]

Cycles:

It's like deja vu all over again:

Decennial_7th_year.bmp

Maybe this time it wil be different?

[bingobongo]

Credit markets lead folks, equity markets follow.

and the credit markets are in bad shape........if the Asian markets take a dive on monday in response to the AAA, AA, and A credit tranche plunges, then US markets will keep falling until DOW 12,500 before any significant bounce, and the Thai SET will take it on the chin as well

strap in, as it is going to be very nasty ride

[Naam]

Credit markets lead folks, equity markets follow.

and the credit markets are in bad shape........if the Asian markets take a dive on monday in response to the AAA, AA, and A credit tranche plunges, then US markets will keep falling until DOW 12,500 before any significant bounce, and the Thai SET will take it on the chin as well

strap in, as it is going to be very nasty ride

where did i hear that before?

[LaoPo]

this sounds eerily familiar....strap in folks

China - China - Shanghai Municipality: Shanghai Office of Chinese Central Bank Reports Continuing Flow of Savings to Stock, Property Markets

The Shanghai office of the People's Bank of China (PBoC) has reported that during the month of October the overall level of deposits in Shanghai's financial institutions declined by 96.4 billion yuan (US$13 billion)—a record monthly decline— as depositors continue to divert larger amounts of their holdings towards stock market and property investments. Large increases in deposits with financial services firms and brokerages were also reported. The report also cites an increase to down-payment requirements for purchases of property and new restrictions on mortgage lending as other factors behind the drain of deposits from the city's commercial banks. Bank monitors in Shanghai have also noted that the issuance of new "consumption loans", commonly used to purchase automobiles, housing and other big-ticket items, slowed significantly during October, down to 5.46 billion yuan from 72 billion yuan a month earlier. This slowdown appears to be limited to domestic banks in Shanghai, with foreign banks reporting lending levels of growth in lending at the end of October up by 9.5 percentage points compared with the previous month, and up by 87.3% y/y during the first 10 months of the year.

Significance: The PBoC noted that commercial banks in Shanghai do not face any capital constraints at the present time, though efforts to drain liquidity from the banking sector are having a noticeable impact on deposit levels, creating the possibility that any kind of event in the future could make it harder for banks to fund their assets with a heretofore unending supply of cheap consumer deposits. Bank regulators have singled out the rapid growth in lending by foreign banks, and although they account for a small proportion of total credit issuance in Shanghai, regulators are still looking at the discrepancy between their lending behaviour and the policy priorities.

That's why:

China Orders Banks to Raise Reserves to Cool Economy

From 13 to 13.5%

Nov. 10 (Bloomberg) -- China ordered banks to put aside more reserves for the ninth time this year to cool an economy that expanded 11.5 percent in the third quarter and to damp speculation in stocks and real estate.

``To strengthen liquidity management in the banking system and curb excessive loan growth,'' lenders must set aside 13.5 percent of deposits from Nov. 26, the People's Bank of China said today on its Web site. The ratio, up from 13 percent, is the highest since at least 1987, according to Bloomberg data.

http://www.bloomberg.com/apps/news?pid=206...&refer=asia

LaoPo

[bingobongo]

hello naam,

thought i would give you an update since my last post:

yen up - check (hence my yen for yen)

Yen Rises to 1 1/2-Year High Against Dollar on Risk Reduction

http://www.bloomberg.com/apps/news?pid=206...&refer=home

credit markets sezing up - check

Asian Stocks Slide on New Subprime Losses, Strengthening Yen

http://www.bloomberg.com/apps/news?pid=206...id=aPlWg6iq2ABg

and viola, as i suggested on friday, asian markets are headed down (as will the SET)....global correction is just beginning (but there will be dead cat bounces along the way)

http://finance.yahoo.com/intlindices?e=asia

it is going to get much much worse.......strap in boys and girls........ have your tray tables in the upright and locked position and assume the crash landing position

Edited November 12, 2007 by bingobongo

[Naam]

hello naam,

thought i would give you an update since my last post:

thanks Bongo! without your updates i'd be completely lost

[Naam]

hello naam,

thought i would give you an update since my last post:

yawn... what's new Bongo? will the sky fall this week or next week?

[up-country_sinclair]

it is going to get much much worse

you've made it clear that this is your position...and i'm somewhat inclined to agree.

but i'd like to know how far you think markets will fall..dow, s&p, ftse, set, etc...

[LaoPo]

it is going to get much much worse

you've made it clear that this is your position...and i'm somewhat inclined to agree.

but i'd like to know how far you think markets will fall..dow, s&p, ftse, set, etc...

It wouldn't surprise me if some markets drop by 30-40% from their present levels.

LaoPo

[tingtong]

as far as it isn't the $ to thai baht that falls another 30-40%, i dont mind too much.

[lannarebirth]

it is going to get much much worse

you've made it clear that this is your position...and i'm somewhat inclined to agree.

but i'd like to know how far you think markets will fall..dow, s&p, ftse, set, etc...

It wouldn't surprise me if some markets drop by 30-40% from their present levels.

LaoPo

That wouldn't surprise me either. It also wouldn't surprise me if markets bottom on Wednesday.

[LaoPo]

it is going to get much much worse

you've made it clear that this is your position...and i'm somewhat inclined to agree.

but i'd like to know how far you think markets will fall..dow, s&p, ftse, set, etc...

It wouldn't surprise me if some markets drop by 30-40% from their present levels.

LaoPo

That wouldn't surprise me either. It also wouldn't surprise me if markets bottom on Wednesday.

What's up on Wednesday ?

edit:

But, whatever is on Wednesday I don't think the markets will bottom....not yet by far.

LaoPo

Edited November 12, 2007 by LaoPo

[lannarebirth]

it is going to get much much worse

you've made it clear that this is your position...and i'm somewhat inclined to agree.

but i'd like to know how far you think markets will fall..dow, s&p, ftse, set, etc...

It wouldn't surprise me if some markets drop by 30-40% from their present levels.

LaoPo

That wouldn't surprise me either. It also wouldn't surprise me if markets bottom on Wednesday.

What's up on Wednesday ?

edit:

But, whatever is on Wednesday I don't think the markets will bottom....not yet by far.

LaoPo

Nothing's up exactly. It's just during option expirations weeks I switch to "thinking like a criminal" mode. There's a whole lot of OTM strikes that were written which are now ITM. Wall Street just hates paying out on options. Someday this week I expect they'll run it. the earlier the better from their perspective.

[TonyLeung]

i see how the emerging markets going down to august levels.

[bingobongo]

my dear Naam, it is time for another lesson so pay attention, but this is in reference to your yen carry trade confusion.......

The yen is threatening to break higher in a continuation pattern, which would signal global players are de-leveraging via a reversal in the Yen Carry Trade. This would mean they see worsening prospects for growth on a global scale, which would undoubtedly play havoc with all equity groups, not the least of which would include emerging markets and commodities. So if the yen breaks out (per the $), signalling liquidity problems, then global equities can be expected to come under more pressure.

have you been paying attention to the Asian markets? oil? gold? the recession is coming

Edited November 12, 2007 by bingobongo

[stevenjm]

hey, its great to see people are finally starting to agree correction is coming very soon. I have not broached this subject for about 2 months due to Dr Naams sarcasm and thoughts on the economy

Interest rates have hit 6.75 percent in Australia, which amognst the more intelligent economists's in australia, is generally the point to get ready to run. Anybody trying to weather the stock exchange in Australia beyond the 7 percent figure has my best wishes of luck.

Time for any Aussie investors to start considering some heavy profit taking in order to weather the storm ahead. I stand to be corrected however I think the only correction will be to the stock market itself. Also start asking yourself what your stocks are really worth and not what price the madness of the current market has them at.

My humble opinion only.

[david96]

I predict a recession in Australia in 2008 caused by consumer debt in housing and credit cards and borrowing on the paper equity in their homes to buy investment properties for tax minimisation and capital gains.Too much money borrowed thanks to morgage brokers and financial advisers.

Interest rates to rise and unemployment up to 8% plus

If you live within your means and have minimal debt you should be OK. But you should have some cash reserves to fall back on.

[stevenjm]

Yeh, I also agree with your, the whole economy in australia is headed for deep shit theory. And know doubt if howard gets back in it will be something that had to happen due to global economy trends, however if rudd gets in it will all be his fault. I can't believe that people fell for his keep interest rates low promise at the last elections - he must be the only prime minister in australian history who thinks he can control the global economy.

[TonyLeung]

before i was certain interest rates were coming, now not so sure. it might not be enough and the FED might let the markets play out which is recession time. nobody knows how bad this is going to get for the banks or the economy.

i wonder what kind of debt's the Thais are holding? If only they'd tell us?

[Naam]

The yen is threatening to break higher in a continuation pattern, which would signal global players are de-leveraging via a reversal in the Yen Carry Trade.

and you think i need your explanation for that Bongo? anybody who follows the markets knew that this development was in the offing. you keep on telling seasoned investors "two plus two equals four". it's ridiculous but... you make me smile.

[disgruntled]

Things look mostly dreary from what I am reading here.

[fletchsmile]

Things look mostly dreary from what I am reading here.

Some people enjoy looking for doom and gloom. This thread has been going for 3 months, and some of the posters have been saying longer than that. Bit like people telling you you're going to die one day . After that people will forecast it will go up. Haven't seen a single poster who has accurately timed this global crisis.

Personally I'm doing better now financially than when this thread started .

Yes a few things look highly valued, and there are a few risks, but that's life. When all's said and done, I believe I'll be up at the year end compared to the start of the year. i.e put in a little context.

Have been a few healthy small corrections downards in the last few days, which gives comfort.

[LaoPo]

Things look mostly dreary fr

[LaoPo]

......

Something went wrong with the connection...and I forgot what to post... but I suppose it will not influence the Global Correction...

LaoPo

[fletchsmile]

......

Something went wrong with the connection...and I forgot what to post... but I suppose it will not influence the Global Correction...

LaoPo

Not so sure. Chaos theory: Butterflies causing hurricanes across the other side of the world and all that. I wonder if this small glitch will precipitate the global correction, or has it prevented it.