Financial Crisis

[flying]

http://www.youtube.com/watch?v=6ypDL-eO-do

US Cash and Bonds are HIGH RISK - Massive Inflation Coming

Martin Hennecke

You can bet they wont invite him back to CNBC :D

Edited May 5, 2009 by flying

[churchill]

Green Shoots ?????

Market sentiment: Faber et al take on ‘green shoot ennui’

After end-of-the-world swine flu hysteria momentarily transfixed investors, sentiment appears to be shifting. The pundits are back out in droves - many predicting a robust comeback for stocks or, at the very least, peddling the “green shoots” botanical analogy that we’re already heartily sick of.

Even Marc “Dr Doom” Faber, in his latest monthly newsletter to clients, concedes that perhaps, just perhaps, the S&P500 has bottomed out and things may improve from here. Not only that — after boosting gold consistently for months, he warns that precious metal prices may correct further on the downside in coming months.

One can never expect Faber to be totally optimistic (it would ruin his reputation), so he tempers this benign view with the soothing remark: “Rest assured dear readers: economic, financial, pandemic, and increasingly social and geopolitical problems are plentiful and won’t disappear anytime soon”:

If the swine flu becomes a serious problem (as I believe it will), then obviously it will be another nail in the coffin of the global economy. I hate to think about what will happen when the Swine flu reaches Africa and countries like India and China where intensive animal husbandry methods place swine and poultry close to humans and where sanitary conditions, poverty and a poor health infrastructure will be an extremely fertile ground for the swine flu virus (also further mutations).

Just to throw in another out-of-field problem for investor sentiment, Faber adds that another key problem could emerge from Afghanistan, and neighbouring Pakistan - which, he reminds us, possesses nuclear weapons. But, as he notes from the recent string of bleak US data, the stock market “will usually respond with an upturn long before the ‘news’ turns positive”:

I suppose the key for a low is that the news becomes less bad than was expected, which was the case in the US since March 6, 2009 when the S&P 500 bottomed out at 666…

Why this might be an important low in Faber’s view is that the “market’s advance has been broadening and that more and more groups such as airlines, homebuilders and cyclicals like Dow Chemical, International Paper and Alcoa are showing signs of having bottomed out”.

For this and other reasons, however, Faber advises investors to “avoid Treasury bonds and short them on any rebound”.

Pestilence and nuclear Armageddon aside, market watchers overall appear to be moving out of their bear phase. As SmartMoney notes:

After a week dominated by swine flu fears, corporate earnings, Chrysler’s bankruptcy and debate about the government stress tests’ likely effects on wobbly banks, our pundits’ views on recovery were no firmer, but neither were they weaker.

So-called green shoots — lower jobless claims, increased consumer confidence, a lower-than-expected drop in first-quarter corporate profits and the 9.4% April rise of the S&P 500 index (its best showing since March 2000) — are starting to add up. However, a debate still rages on about whether those are genuine positive market signals or blips that will give way to more bad news next week.

Traders’ Narrative, however, warns in an earlier post on market sentiment:

You know the old Wall St. adage, “Sell in May and go away”. Well, here we are. We have now officially entered the time period which has historically been most difficult for the stock market.

So far we’ve had a tremendous rally off the March lows: the S&P 500 index gained 28.4% and for the two months of March and April, it has risen 25% with most of it coming from March. April’s gain was 8.2%

Looking at market cycles, this is rare. To see such a similar strong performance for the months of March and April we would have to go back to the 1930’s where intense bear market rallies were the norm. In those times, it wasn’t a good time to put fresh money to work (hence the label of bear market rallies and the annual cyclical nature of returns).

SmartMoney’s “naysayers” include Morgan Keegan economist Donald Ratajczak, who warned on April 27 that the emergence of a few green blades of grass only means “the lawn is dying at a slower rate”, notes SmartMoney, adding: “And then there are the market watchers who are just sick of all the prognostications — and the metaphors that come with them”.

ISI Group founder Ed Hyman sums it up with his line in an April 27 report: “This is getting old and tedious”. Unfortunately for Hyman - and for us - the clichés probably won’t end any time soon - not least because whether you believe in swine flu or not, global hype over the outbreak has probably temporarily derailed a recovery.

What’s remarkable, as SmartMoney notes, is how the Dow shook off last week’s bad news to heard for its sixth out of seven positive weeks. But according to Ed Yardeni, founder of Yardeni Research, and Thomas Lee, US strategist at JPMorgan, a bull market isn’t in the offing - yet.

In the absence of a fresh catastrophe, markets will remain range-bound, according to Yardeni, whose top forecast has the S&P hitting 1000. Lee, in a Wednesday note on the business cycle, cautioned that smart investors should use history as a guide and predicted that the next few weeks could shed light on how and when recovery arrives.

As we’ve seen in nearly every recession’s bottoming process, we could be headed for a “W” shaped recovery that includes another market tumble, he warns:

“In other words, the current rally still falls within what would be regarded as the initial move prior to a retest,” he says. “A rally past the first week of May would force us to reconsider this view, as it would suggest a ‘V’ bottom is more likely.”

In its latest post, however, Traders’ Narrative points to a supposed “tsunami of cash just waiting to be invested”. Just don’t get too excited:

A build up of cash is normal in a bear market but before we can transition to a bull market it needs to be put to work. As people become convinced that the worst is behind us, they start to take more risk and begin to put their cash into the market. So unfortunately, just noticing a massive pile of cash doesn’t really help us unless we can somehow pinpoint when and with what intensity this billowing mass of liquidity will start to be invested in the stock market.

But to give you an idea of the sheer monstrosity of the potential tsunami of cash, consider this: it currently represents 50% of S&P 500 total capitalization. Needless to say, that is jaw dropping. As it is put to work, even in a trickle, it will put an impregnable floor on almost all equity indices and then drive prices higher. When that may be, can not be determined by this metric itself but by other technical, monetary and sentiment measures.

As for recent US stock rallies: here’s a word from Merrill’s chief economist David Rosenberg (no link), courtesy of Option Armageddon:

You know it’s a low quality rally when the top 50 most heavily shorted stocks are the ones that outperform the most — up 28% in April, an 1,860 basis point spread over the broad equity market.

We reckon, though, that the last word on “green shoot ennui” should go to NihonCassandra, in her latest post on Financial Gitmo:

So hearing Mobius, Cohen, and other pundits speak of bull-markets and greenshoots is predictable. But I reckon that Mssrs Schilling,and Roubini, will in time - once again - more likely be correct insofar as I believe continued recession and mild deflation will predominate longer than optimists (and inflationists)- and in particularly longs, can bear once the shorts have sufficiently covered and the intermediate term optimism rolls over with the continued bleak news flow. Then, the trend-followers will mechanically bail, and reverse positions, prescient programmes and specs, too, will re-establish their shorts, until finally the squeezed-in will, once again get squeezed-out, and those amongst us with weak constitutions will be forced to hide the pills and sharp objects to avoid …. tragedy.

http://ftalphaville.ft.com/blog/2009/05/05...nui/?source=rss

[Merangue]

Pound Trades Near Four-Month High Against Dollar as FTSE Gains

By Lukanyo Mnyanda

May 5 (Bloomberg) -- The pound rose to the strongest in almost four months against the dollar as reports showed the decline in the nation’s commercial property and construction markets is easing and the benchmark stock index advanced.

The U.K. currency also climbed to the highest level since April 22 versus the euro as the Royal Institution of Chartered Surveyors said the rate of decline in demand for U.K. office and retail space eased in the first quarter, adding to optimism the recession may be waning. The FTSE 100 Index rose for a third time in four days. Gilts declined as a separate report showed U.K. construction shrank at a slower pace in April.

“I’m reasonably confident we’ve passed the low point and that’s underpinning the resilience in sterling,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International. “Clearly stocks have had a good run and the risk story is on.”

The pound gained as much as 0.6 percent to $1.5111, the strongest level since Jan. 12, and was at $1.5103 as of 10:15 a.m. in London. It rose 0.8 percent to 88.60 pence per euro.

Investors should “be wary of chasing it too far” and gains by the pound may stall at 88 pence to the euro, according to Stretch.

The net balances for enquiries, demand and confidence in office and retail space were the least negative in a year, the Coventry, England-based RICS said today. That indicated “some hope that the aggressive cuts in monetary policy have provided some limited support for the commercial markets,” RICS said.

Construction Boost

An index based on a survey of purchasing managers at building companies was at 38.1, the highest level since September, the London-based Chartered Institute of Purchasing and Supply and Markit said today. A reading below 50 indicates contraction.

Bank of England next meet May 7 amid evidence the cut in the benchmark interest rate to a record low of 0.5 percent is beginning to work. The central bank also started buying assets with newly created money to stimulate the economy.

An industry report showed last week that manufacturing contracted at the slowest pace in eight months in April while the Bank of England said mortgage approvals rose in March to the highest in 10 months.

The FTSE 100 Index jumped 2.9 percent, pushing the benchmark’s rebound since reaching its low this year on March 3 to 24 percent.

Gilts fell, pushing the two-year gilt yield three basis points higher to 1.08 percent. The 4.25 percent security due March 2011 fell 0.06, or 60 pence per 1,000 pound-face amount, to 105.74. The 10-year yield rose two basis points to 3.56 percent. Bond yields move inversely to prices.

[12DrinkMore]

Yeah, so a report full of

"the rate of decline in demand for U.K. office and retail space eased in the first quarter"

"the least negative in a year"

"some hope that the aggressive cuts in monetary policy have provided some limited support for the commercial markets"

"An index based on a survey of purchasing managers at building companies was at 38.1, the highest level since September... A reading below 50 indicates contraction."

"contracted at the slowest pace"

What are these guys trying to tell us? Basically "it is getting worse but not at the rate it was".

Well, WONDERFUL, I am so relieved. Why don't you all just pi55 off and go away until there is REALLY something POSITIVE to report.\

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

Over the next few months, you are going to hear a whole series of increasingly ridiculous and bogus signals of recovery trumpeted as if they heralded the end of the recession. All will be meaningless.

Here’s a fool’s guide to four types of “green shoots,” all of which can be ignored by anyone trying to work out where the economy is going.

I suppose we fall into two camps

1. Believers of the "signs of recovery" prepared to start spending and investing because you are confident the Leaders have correctly analysed the problem and applied the correct solution, are not acting out of self interest, and will lead you into a prosperous new future.

or

2. Cynical bastards who do not believe the mouthwash we are being given and have no confidence that the current Leaders have any other interest other than their own. That there are no signs of a recovery and that a reduction in the rate of decline is by no means a recovery.

So,

members of camp 1 please rush out and ask for more credit to buy that dream house, new car and borrow more to furnish the house. Rest assured the Leaders are doing their best to keep your house price increasing. It will be worth 20% more in two years. YEAH!

members of camp 2 don't play the suicidal game, hunker down, pay off debt and await real signs of recovery, such as unemployment decreasing, interest rates moving up, and independent reports stating this. By then there will surely be reasonable and sustainable house prices.

Are you in camp 1 or camp 2?

[Chaimai]

CAMP ONE

Someone has got to keep the country/world moving and work the way out of this mess.

Option B is to stare up your own rectum looking for more gremlins.

[flying]

CAMP ONE

Someone has got to keep the country/world moving and work the way out of this mess.

Option B is to stare up your own rectum looking for more gremlins.

If only the world was so black & white though......

In everything there are two sides.

Stock investors have longs & shorts..Would you say the shorts do not help to keep it moving?

Casino's have right way & wrong way betters

Just because some bet with the casino instead of against them does not mean they are static.

[ronz28]

Bank destroys 16 new homes in California....more elsewhere

http://online.wsj.com/article/SB124148169574985359.html

Can't sell em for a good price.....wreck em. Taxpayer will pay.

[lannarebirth]

"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

http://www.salon.com/opinion/greenwald/2009/04/30/ownership/

We'll see who owns what as we approach the 34 week ema this week.

[flying]

SEC Hearings today.... Seems they are pounding the shorts.

Hearing testimony for & against

Will be interesting to see what comes of it.

[flying]

Are you in camp 1 or camp 2?

Here you go...........Both camps talk.

http://www.youtube.com/watch?v=ZG037wKPyJw...re=channel_page

http://www.youtube.com/watch?v=Ej_QHQmuq5U

Of course you know Schiff will be camp 2 but I have to admit the intro by Kudlow is hyper cheerleading at its finest! Everyone get on board !!! I dont buy it for a minute

Edited May 5, 2009 by flying

[AlexLah]

But get ready for a bit of bad weather first.....

5-8/94

[Naam]

CAMP ONE Someone has got to keep the country/world moving and work the way out of this mess.

Option B is to stare up your own rectum looking for more gremlins.

an interesting exercise

[Naam]

here's the formula which contains the solution to the global financial crisis. doom&gloomers take a look!

[Naam]

and here's a suggestion to divert one's mind away from the global financial crisis:

[Naam]

7-19™/5689 ¬ ¢²µ≡☻

[BEENTHEREDONETHAT]

and here's a suggestion to divert one's mind away from the global financial crisis:

What crisis

[Naam]

and here's a suggestion to divert one's mind away from the global financial crisis:

What crisis

the "AlexLah/Midas/Churchill-Bingobongo et al" crisis

[flying]

and here's a suggestion to divert one's mind away from the global financial crisis:

Hey is that the pool I saw in the picture of your house? Carry On then

[midas]

and here's a suggestion to divert one's mind away from the global financial crisis:

What crisis

the "AlexLah/Midas/Churchill-Bingobongo et al" crisis

We already know from your earlier postings there is no

crisis whatsoever unless it directly affects NAAM'S WORLD

[midas]

People who believe that a soaring Dow Jones index means that the Financial Crisis

must be over are watching too much CNBC because they are forgetting one vital

ingredient for a properly functioning business world ..............................

A Trust Crisis

" Sapienza and Zingales point out a substantial decrease in trust toward banks, from

34 percent in Dec. 2008 versus 29 percent in March 2009, and in large

corporations, from 12 percent to 10 percent over the same time period."

http://www.financialtrustindex.org/

[flying]

Here is something that will shake a few more of any confidence.....

http://online.wsj.com/article/SB124148012581385199.html

Bad enough if you want more than 10k of your own money out of a bank. They file papers & act like your a drug smuggler or worse.

Now it seems if you want your 401k....well....we saw that one coming quite awhile back didn't we

Edited May 6, 2009 by flying

[midas]

Here is something that will shake a few more of any confidence.....

http://online.wsj.com/article/SB124148012581385199.html

Bad enough if you want more than 10k of your own money out of a bank. They file papers & act like your a drug smuggler or worse.

Now it seems if you want your 401k....well....we saw that one coming quite awhile back didn't we

Yes ........... I remember reading about this " most unimaginable scenario " 8-10 years ago.

Do you think this is just the thin end of the wedge and eventually the government will claim the whole lot

( in one form or another ) ?

[flying]

Yes ........... I remember reading about this " most unimaginable scenario " 8-10 years ago.

Do you think this is just the thin end of the wedge and eventually the government will claim the whole lot

( in one form or another ) ?

Yes I do think the govt will grab IRA's, 401K's etc. & claim they will be there when we need them........later

So much so that I am cashing out my low risk (govt securities) IRA out tomorrow. It is not gigantic & I will swallow the 10% penalty the govt wants to put on me for having the audacity to ask for MY $$$ back. Then of course after that they will also want to tax the remaining 90% as income....of course.

You know what really caught my eye in that article?

This

Most participants in the 15,000 plans holding the fund haven't been able to make any withdrawals or transfers since late September. "To sell property at inappropriately low prices in order to generate cash for a few would hurt the majority of investors and violate our fiduciary obligations," said Terri Hale, spokeswoman for Principal Financial Group Inc., the parent of the fund's manager. The fund, which had $4.3 billion in net assets at the end of April, still is making distributions for death, disability, hardship and retirement at normal retirement age.

And this..............

State Street Corp. in March notified investors of new withdrawal restrictions in its securities-lending funds. Until at least the end of the year, plans can make monthly withdrawals of only 2% to 4% of their account balance, the notice said.

I mean what gives them the right? Are they reducing their fees or stopping their pay checks while this down turn hangs? I think not.........How can this even be legal?

Invest in yourself !

Edited May 6, 2009 by flying

[midas]

So who would you prefer to believe- CNBC and others who say that

this whole financial crisis is over or someone like John F. Wasik who

argues people are " looking at a lost generation for U.S. home values. "

How can there be a sustained and meaningful recovery on this basis?

U.S. Home Prices May Be Lost for a Generation: John F. Wasik

Far too many analysts are calling a bottom to the housing market after home prices in 20 metropolitan areas declined at a slower pace in February, according to the Standard & Poor's/Case-Shiller Index.

Don't be blinded by the glint of optimism in headlines about rising consumer confidence and slowing price declines. Demographic and market realities tell a more sobering story.

There's the reality that the market is glutted with homes. A record 19 million homes stood empty at the end of 2008.

Although we may not be headed for a 1930s-style Depression, there's plenty of evidence to suggest that boomers are dumping their four- and five-bedroom suburban homes for two- and three- bedroom condominiums.

It's also unlikely that the "Generation X," born between 1965 and 1976 (or more derisively called "baby busters"), will bid up home prices. They are only 44 million strong, not as wealthy and even more in debt from college loans.

http://www.bloomberg.com/apps/news?pid=new...id=aiiT.sNeq2YQ

[Naam]

and here's a suggestion to divert one's mind away from the global financial crisis:

Hey is that the pool I saw in the picture of your house? Carry On then

please refrain from insulting me Flying! there's nothing wrong with the girl of course but do you really think i'd build a pool with these kind of cheap tiles inside and around?

this is what my pool looks like:

[BEENTHEREDONETHAT]

and here's a suggestion to divert one's mind away from the global financial crisis:

Hey is that the pool I saw in the picture of your house? Carry On then

please refrain from insulting me Flying! there's nothing wrong with the girl of course but do you really think i'd build a pool with these kind of cheap tiles inside and around?

this is what my pool looks like:

No doubt Naam that is one fine looking pool with great tiles, but the diversion pool shot was more interesting, and more diverting.

[Naam]

No doubt Naam that is one fine looking pool with great tiles, but the diversion pool shot was more interesting, and more diverting.

agreed!

[Naam]

back to the topic "financial crisis"! let's take a look what a doom&gloomer pool looks like:

[lannarebirth]

back to the topic "financial crisis"! let's take a look what a doom&gloomer pool looks like:

Or it may be the home of a GM stock/bond holder after a visit from the government. Looks like Ranhco Mirage.

[12DrinkMore]

I mean what gives them the right? Are they reducing their fees or stopping their pay checks while this down turn hangs? I think not.........How can this even be legal?

Yes, indeed, what gives these bastards the right to deny access to your own money?

The quote that got me mad was

Some investors have lost hope of recovering their money. Judith Sterner, a 69-year-old part-time nurse, had more than $12,000 in the fund when she tried to transfer that balance to a money market last fall. But her transfer was denied, and her stake has since declined to less than $10,000.

So the savers are ONCE AGAIN being held to ransom so that the wealthy and powerful can make more money?

How can anybody have any faith or confidence left, when savers and pensioners are simply not allowed to protect themselves against the market manipulators? It seems like the markets are being held ARTIFICIALLY high, as there are clearly sellers around who are not allowed to sell, but have to sit and watch their money disappearing day by day.

And to be told "sorry you cannot have your money because it will mean that other people will loose" when YOUR OWN money is disappearing down the toilet and at the age of 69 there is no way to recover the losses by working is surely a breech of human rights?

Sue the bastards.

I though we were in a capitalist economy? Seems that it only applies the wealthy, everybody else has to bow down and be forced into socialism through taxes, laws and now restrictive access to one's own assets.

I wonder if they will move to confiscate gold again?

(oh and thanks Naam for the photo of a very nicely rounded and unrestricted assette :D )

Edited May 6, 2009 by 12DrinkMore