"Its called a "Mark On Close" order and is institutional. OFTEN USED BY MUTUAL FUNDS. The specialist is free to execute them any time they'd like BUT they price to the person ordering them AT THE CLOSE!
Remember, mutual funds give you the price at the END OF THE DAY.
So on an up day, the specialist will run 'em early and POCKET THE DIFFERENCE!
On a day when you might get whipsawed HE IS NOT GOING TO DO THAT because it will roach him. So he puts them through at the close and you get exactly what you saw. "
--
I expect Peak Debt to occur during the 2007H2, i.e., the household debt would start to decline. That in itself would cause recession. Lot of decline in household debt would be a result of mortgage defaults.
Most likely, the whole retail sector will be taking a hit based on dwindling MEW. My guess is that commercial real estate is the next leg down. CRE has been in a bubble of its own for quite some time but was completely overshadowed by residential. More importantly, the recent mention in the MSM that "there is definitely no commercial real estate bubble" leads me to believe that iceberg was hit not so long ago.
My understanding is the big 3 are increasing inventory as a precaution in case the talks with the UAW (deadline in September) go south and there is a strike. So it may be difficult to say with certainty how much inventory is growing as a result of slow sales and how much it is growing as a result of intentional inventory build. Either way, there will probably be another incentive war late this year.
Hey all you debt bears, how do we find out what AHM does with their orderly liquidation (fire sale)? There must be a lot of concern among holders of the same debt issues.
ALso, I would imagine this isn't the only outfit extending credit to AHM that is unhappy...
Yal-forget those theories. what happened at s&p 1440 was it hit a multi yr support line extending from 7/06 to 3/07 to todays 1440, dead on. many big traders use only technicals like this to buy hard. they ignore fundamentals to their detriment. i happen to think we will plunge down thru this level, perhaps after a bounce. if this happens, pile on hard. what i'm saying only applies to the s&p and not necessarily to financials or HB's which are clearly in a downtrend with no end in sight.
For all the carry trade conspiracy conspiracy theorists.
This is from John Authers at the FT
" The Short View: End to carry trade?
By John Authers, Investment Editor
Published: August 1 2007 18:27 | Last updated: August 1 2007 18:27
The credit market is not the only source of liquidity for world markets that is under threat. The yen carry trade selling short the yen, at its low interest rates, and buying high-yielding currencies such as the New Zealand dollar also looks sickly.
This trade, popular with hedge funds, is vulnerable to a rise by the yen. And in the last month, the dollar has lost 4.3 per cent against the yen, while the kiwi has lost more than 7 per cent.
This subject generates intense controversy. It is impossible to prove how important carry trade cash is for world stock markets.
But so far this year, the S&P 500 and the New Zealand dollar/yen exchange rate have tracked each other almost perfectly. The S&P strengthens on days when the kiwi goes up, and drops on days when the yen recovers. On fundamentals, there are few reasons why these two markets should be aligned. Thus this shows that traders believe cheap carry trade money is important for US stocks.
The yen could easily fall back from here. Japan is gripped by political uncertainty. But many analysts think the Bank of Japan will raise rates this month, and little chance of this has been priced into the market. So there is a risk of further appreciation for the yen, taking carry trade cash away with it. This adds yet more doubt when markets scarcely need it.
Some say the carry trade is not the speculative bubble it first appears. They rely on Mrs Watanabe the archetypal Japanese retail investor. With tiny interest rates at home and a weakening yen, it makes sense for Mrs Watanabe to put her money overseas. She weakens the yen and boosts other markets as she does so. She even seems to be making more bets against the yen at present.
But Mrs Watanabe may not be reliable. A few weeks ago, she was sitting on gains of 40 per cent in a year, in yen terms on foreign stocks, as measured by the FTSE World ex-Japan index which has since dropped 9 per cent. Might she take profits?"
The news today of the Big 3 sales plunge may explain the late rally in the Dow. Wall Street is looking for any bad news as a cue for the Fed to lower rates. Not going to happen IMHO.
[Wall Street is looking for any bad news as a cue for the Fed to lower rates. Not going to happen IMHO.]
Employment numbers weak - Check
Yield curve more inverted - Check
Weakness in the credit markets - Check
Dollar making (a feeble) stand - Check
Inflation readings within range - Check
NAPM-Chicago down - Check
25bpts?
Could happen but look out for oil to the moon even more than equities...
Bought a Toyota Prius hybrid this weekend, the eco-yuppie car of choice, the one that people happily paid list price for, the one that people put $500 down on just to get on a waiting list....
...They had 15 of them. The sales slime were vicious, but I still got it for a grand or so under list.
No conspiracy theory but its pretty easy to move a 30 stock (DOW), market cap weighted average. Just but a bunch of GM (tons of dow points as gm is a big cap weight) once the trading desk sees the move they pile in...
If your the FED and you have a Banking/financial system "issue" you just tell the IB's to buy GM- done.
The market manipulation by the Japanese and Chinese central banks is messing up the global economy and must stop. Of course, there's no simple answer as to how currencies should be managed, but it would help if we recognized the problem...
American International Group Inc., the world's biggest insurer, may be sitting on losses of as much as $2.3 billion from securities backed by subprime mortgages, analysts said.
In a ``worst-case scenario,'' AIG may lose $2.3 billion from its investments in subprime mortgage bonds as well as loans given to borrowers with poor or limited credit, A.G. Edwards Inc. analysts in St. Louis said today in a report. Analysts at Goldman Sachs Group Inc. issued a report today estimating losses of as much as $1.4 billion.
AIG, which hasn't formally disclosed its holdings, owned about $33 billion of the securities at the end of March
"Experts and some automakers pointed to concerns about the housing markets and gasoline prices as weighing on American consumers who might have been considering a auto purchases."
A strike by the UAW at this time would be the height of idiocy. Their employers are losing market share and struggling to maintain profitability and the union guys want to strike? That would just bring the demise of one of the Big Three that much closer.
In Yahoo News' report on General Motors' 2nd quarter earnings report, the reporter quoted a GM executive to the effect that "The company likely is to seek concessions from the union and wants to cut a $25 per hour labor cost disparity with its Japanese competitors." I
UAW workers still cost $25 an hour more than Japanese auto workers?!! Japan is one of the most expensive places in the world to do business and the UAW's people are still $25 an hour above the Japanese! If the UAW chooses to strike, they'll be slitting their own throats.
Jim Jubak (MSN Money) figured out the AIG exposure to the CDOs a couple weeks ago and dropped them from his portfolio.
6/29 and 7/13 articles cover AIG, and then:
7/20/2007: I now think discretion is the better part of valor in the financial sector and I'm selling American International Group out of Jubak's Picks. I continue to believe that the giant insurance company has relatively little exposure to the meltdown in the market for bonds and derivatives built out of subprime mortgage loans. But I can't say I know that with the kind of confidence that would make me stay the course given the rising tide of risk.
I look at it this way: We have a roaring F.I.RE economy, and that's about it. The RE and the F are toast. The "I" will take a hit because the whole mess requires constant cross-pollination.
(P.S. I've seen a nice diagram showing how the F.I.RE. economy developed. Anyone recall where that might be? Something on mises.org?)
Can Ointment
Cant Mention
Main Content
Titan Conmen
Am Continent [sic]
A Conmen Tint
None Act Mint
Net Not Manic
No Intact Men
Conmen Taint
Cannon Me Tit [oooww!]
Mine Cant Not
Name Con Tint
Con Tint, Amen
Mean Con Tint
Neat, Mint Con
Main Con Tent
Am Content In
Am Con Intent
Man Into Cent
Tin Cent Moan
It Tan Conmen [!]
Tan Tonic Men
A Cent Mint? No!
A Con Men Tint
A Con Mint Net
Men Not In Act
No Tact Inn Em
In Men, No Tact
Man, It No Cent
Tint An' Con Em'
No Tan Tic Men
It Tan Con Men!
No Tact Inn Me
"UAW workers still cost $25 an hour more than Japanese auto workers?!!"
Uhhh, yeah dude it's all healthcare etc. If we didn't have such a bloated corrupt system we could actually pay the autoworkers competitive real wages they could live on.
A quote today, from Goldman Sachs chief economist in the WSJ, on the link between housing and consumption:
"I'm more concerned than the median [Fed policy maker] mainly because I think the consumption and housing link is more important than they do," said Jan Hatzius, chief U.S. economist at Goldman Sachs. "I think they probably will change their view."
I think so too. I'm sure these auto numbers, and the possible link to housing, will be discussed at the FOMC meeting next Tuesday.
The Dow was up over 1%/150 points yet the nyse composite was only up .019%.
The dow was up 150 points but the advance deline was led by decliners.
This shows how easy the "Headline" number can be manipulated with cash.
No conspiracy, just the facts maaaaam.
Of course this is only a short term fix- if the levy brakes you can't stop it.
"No conspiracy theory but its pretty easy to move a 30 stock (DOW), market cap weighted average. Just but a bunch of GM (tons of dow points as gm is a big cap weight) once the trading desk sees the move they pile in...
If your the FED and you have a Banking/financial system "issue" you just tell the IB's to buy GM- done.
In Yahoo News' report on General Motors' 2nd quarter earnings report, the reporter quoted a GM executive to the effect that "The company likely is to seek concessions from the union and wants to cut a $25 per hour labor cost disparity with its Japanese competitors."
Ask the executive if he knows the pay differential between Japanese management & GM? Grade for grade comparison? Or other overhead differentials? That's an eye popper I bet but they don't report that.
The UAW isn't the problem, they might be one of the symptoms, but they aren't 'the problem'.
An FYI - direct labor is somewhere between 5-10% of the total cost to assemble automobiles... Something like 60-70% of the cost is purchased parts & components (some UAW there like at Delphi but lots less than even five years ago)...
If you want to read a pretty good book on the subject I recommend 'The Machine That Changed The World' by Womack. A bit dated but still relevant. It cuts through a lot of the crap.
Heh, this is great! At the bottom of the HaloScan comments are two adds, one for a Newt Gingrich newsletter and one that promises Ann Coulter Weekly - FOR FREE!
Guys, after what's just happened over the last several days, I don't think anyone now denies that "housing" is spilling over into autos and the broader economy. If this drop isn't linked to housing, then what is it linked to?
You can bet it's going to be discussed at the Fed meeting. Even Mr. Market has now gotten the message.
Detroit Dan, right now I don't see any ads for Haloscan. Usually I see ads for "mesothelimia" lawyers - rumored to be the highest paying google keyword on a PPC basis! Who knows how the ad provider decides the relevant keywords for a comment system.
I hope Haloscan makes a few bucks - and keeps their system up and running! The features are decent, but the system is frequently too slow.
A couple of years ago I heard a GM executive chuckle when asked about Chinese competition in the auto industry. I believe the exact quote would be:
"Heh, heh. I don't think the American consumer will be satisfied with the quality of a Chinese made car."
HaloScan is okay as far as I'm concerned. Simple, which is a plus, and it allows some html formatting. They certainly get some smelly advertisers though...
Wow, A billion here, a billion there --- the pier is getting quite crowded.
"Leading investment banks on both sides of the Atlantic are saddled with almost $500 billion (£246 billion) in agreed leveraged loans that they are unable to parcel out to other investors."
All the earmarks of PPT activities at the close today....
No, no, no. Forget the PPT stuff, there's much more reasonable explanations for this.
Speculators with lots of money have made focused attacks on vunerable positions in the past for profit (e.g. the currency attacks during the Asian financial crisis).
With record short interest on the NYSE, there are likely a lot of vunerable or skittish short positions out there (because they don't have enough cash to handle significant losses), so why not "attack" them to make a quick buck?
I don't know that this is necessarily what's happening, but it seems to me a much better explanation than bringing out the apocryphal PPT on a day with no crisis.
And based on this theory, I've been saying to expect this sort of thing to happen for weeks now. And it's been happening. So I think that lends some credibility the argument.
"I don't think the American consumer will be satisfied with the quality of a Chinese made car."
Ahhh but would they be content with 2 of them for the same price? And I'm being kind. The market for basic world cars is so large there is a qualitative aspect to the quantity equation.
]First Federal Bank of California continues to exceed the capital requirements necessary to be deemed "well capitalized" for regulatory capital purposes]
Wait till the Q3 & Q4 defaults stack up. Gonna need to re-compute.
Question though - Does this make them an easier aquisition target? Not more attractive, mind you.
Anyone know anything about bridge reconstruction? And I mean real bridges, not bridge loans? When I took the bus home from downtown Minneapolis this evening, I got a look at thousands of tons of steel and concrete blocking the barge traffic that usually carries harvested grain and soybeans out of Minnesota. You may have caught something about it on CNN.
If that sucker isn't out of the way in two months, watch for food prices to spike.
Its a mere adjustment the sub-prime and housing issues will be contained. We have the bestest most innovative economy in the world. We also have the best goverment and enlightened politicians. Its all fine and this doom and gloom is so overstated. Opps, wait. I am not at work. I can speak the truth--its going to get worse.....
u guys need to realize that todays last half hour rally was not the result of a squeeze or 401K purchase or PPT or mark on close rally. it was purely technical in nature and meant to scoop up as many shares as fast as possible for the buyers who believe solely in technicals w/o fundamentals. this is evidenced by the rapidity of the rise with large gaps in btwn and in the last half hour when most ppl didn't have time to respond. it represented the convergence of not just one technical support point but two. the first as i already elaborated was at the underlying trendline connecting the lows of 7/06, 3/07 and today at 1440-50. the other was exactly at the 200 day moving average. when you have convergence like this you see big jumps. watch carefully for any drop below this that holds, then pile on the shorts.
The mystery of "where are the losses?" has confounded hedge funds searching for opportunities to bet against banks whose day of reckoning has yet to come.
This is great. even the hedgies are hunting down their own searching for the kill. trouble is, this stuff is so opaque, even they can't find it. this underlying rot will take years to sort out.
J. Michael Neal, glad to hear you weren't one of the victims. We have a couple of friends in Minneapolis who commute on that road and immediately telephoned them. Fortunately, they made it across.
Profiting from future Hedge Fund losses is a suckers game. The lawyers know where to go, they will profit from past hedge fund losses. Much easier to identify!
The rally at the close was not 'contained' to the SP 500 or Dow. Look at what Russell 2000 did; what 'trendline' had it broken? That was irrational, wholesale buying.
"...The fund was actually invested in senior secured corporate loans, which are mainly the leveraged debt used in private equity-backed buy-outs and these assets were fundamentally sound and performing well, the fund insisted.
What caused the embarrassing loss was supply-demand imbalances in the market which in plain English means many need to sell but few want to buy. ..."
If your asset-backed securities [ABS] exposure gets you into trouble and you start facing redemptions or rising margin calls, you start selling your liquid positions, which creates contagion, Mr Vaughan-Smith says.
I don't know who this guy is, but there's a truth.
From a prime brokers perspective, theyre lending money through repo contracts on secured assets that might have three potential values, he says. A prime broker cant force a manager to choose a model that is more in line with his view, but he can adjust his margin requirements to adjust risk exposure.
Yesterday, the yen tumbled hard and reached a bottom at about 6AM.
The market exhibited sawtooth activity during the day.
At the end, the yen tumbled again, and the market went up.
The fellow who pointed out the differences between the indices and the whole market is spot on.
Remember, in the words of Banker, these are very intelligent people. Remember also that the way you make the carry trade hum is to be in and out very, very quickly. And they can do it. Hedge funds use models that depend on sub one-second responses to market moves.
I will now take my medication.
But I am increasingly intrigued with the idea that if you have instantaneous access to infinite leverage, you control the market, any market.
After all, isn't that the premise of this entire blog? Seriously, isn't it?
It goes like this. A group of people in the US who were not qualified to borrow money borrowed a ton of money and controlled the market: drove housing prices into the ionosphere.
Unfortunately, in contrast to their brethren on Wall Street, they didn't realize that they had to get out quick. They thought they were buying a home.
``Someone who's investing in lower-quality securities to help performance, even to a limited extent like the Fidelity fund, is taking a chance,'' said Paul Herbert, an analyst at Chicago-based research firm Morningstar Inc.
Sir, you are clearly a man of the world. Are you enjoying our casino?
The fund, which attempts to provide returns that exceed the rate of inflation by purchasing Treasury inflation-protected securities, or TIPS, had 0.5 percent of assets in derivatives linked to subprime loans, according to Morningstar.
Sir, might I interest you in a teaspoon of garbage for your glass of wine this evening? It is "lucky" garbage. All the high rollers seem to enjoy it.
It also was hurt because 18 percent of its assets were in the Fidelity Ultra-Short Central fund, another subprime holder.
Sir, management regrets to inform you that the sludge in the bottom of your glass may have been toxic. The wine steward has been fired.
Some inflation-protected bond funds invest in other securities because the TIPS market consists of 24 bonds with a combined value of $437 billion, limiting a manager's choices, Morningstar's Herbert said.
Sir, I know you are upset. There's only so much wine in the world though.
Managers also seek higher returns with lower-rated securities.
Sir, I know other restaurants have not run out of wine. In our defense, we were simply attempting to enhance your dining experience while you enjoy our casino. Keep in mind that the drink was complimentary.
CR: "I'm sure these auto numbers, and the possible link to housing, will be discussed at the FOMC meeting next Tuesday."
what do you think are the odds of a surprize rate cut ?
When is the Fed announcing the results of the FOMC meeting ?
more and more I tend to think that the Fed would be willing to trash the dollar in sake of economic "stability" ( the " " is because I think rate cut will only be good in the shorts term - they are failing to take care of the fundemental ills of world economy that were outlined yesterday in the quote from Galbraith book on 1929 crash)
"But I am increasingly intrigued with the idea that if you have instantaneous access to infinite leverage, you control the market, any market."
"After all, isn't that the premise of this entire blog? Seriously, isn't it?"
"It goes like this. A group of people in the US who were not qualified to borrow money borrowed a ton of money and controlled the market: drove housing prices into the ionosphere."
This points up an even greater truth, however.... Whoever controls money supply has the ULTIMATE power. If there weren't massive liquidity fueled by fractional reserve banking denominated in fiat notes, we wouldn't be having this discussion. This whole system we're operating in is patently evil. Do any of you have a suggestion on how we might rectify this, or are we all screwed?
Speaking for myself, I'm a saver. I actually do productive work to make money, and I save some for a project I have planned in the future. I'm disciplined and prudent. How is it that we ended up with a system that screws over people like me who are trying to do the right thing?
Someday, somebody is going to pay. That's going to be an interesting day to witness. I hope I live long enough to see it.
"what do you think are the odds of a surprize rate cut ?"
Less than zero. You think the dollar index is low now? Ha! Cut rates and watch it TOTALLY TANK.
Raise FFR? You think foreclosures are high now?... Sheesh. Just wait 'til THAT happens.
FFR will remain un-changed until '08... maybe well into '08.
That's just my opinion, of course.
Ben is as boxed in as a doe that's fell in a well. Listen to his voice tremor during testimony to the commitee... he sounds like he's about to pee his pants. Must be humiliating.
How is it that we ended up with a system that screws over people like me who are trying to do the right thing?
It happens when banks get political power. The banks work by removing your money from your control and spinning it elsewhere. If you save, and don't let them spin it, it pisses them off by inhibiting their 'earnings'. This causes the banks to push on the politicians (buy them) and they change laws to protect banks above consumers and average citizens.
The banks are the evil. One of these days you people are going to have to admit this.
No rate cut this time unless things we get a major crash before next meeting.
If this happens we should set some $ apart to pay for a place at the Bankerdome. Buy some ammo too.
Now, a few months to year down the road, once the pain works thorough the economy and inflationary pressures turn to deflationary ones, they'll have to cut even if the $ tanks. That's down the road, not imminent.
A government bailout, German in this case has to be justified by a threat to the system since otherwise it would represent a subsidy to one "private" company over another, one "sector" over another, one pressure group over another.
Any such comments over IKB should be interpreted as the free market in political ideas CYA PR that they are, until we are to see the numbers.
Good idea re: mortgage crisis, instead of stiffing just US citizens, diversify it all to German banks and they will pass it on to their taxpayers.
The yen-carry trade and some kind of misalignment among major currencies is not good for the global economy,'' Korean Finance Minister Kwon Okyu told CNBC from Sydney yesterday.This time, I would like to discuss this matter with colleagues and hopefully we can do something.''
WASHINGTON: Investment banks that bundle and sell home mortgages often commissioned reports showing growing risks in subprime loans to less creditworthy borrowers but did not pass on much of the information to credit rating agencies or investors, according to some of those who prepared the reports.
My personal preliminary theory, based on no more information than anyone else, and nothing more than my being a structural engineer that worked as a forensic engineer for a decade or so:
Bridge resurfacing work jammed the bidge deck expansion joints with too much debris, the high temperature today caused the bridge to try to expand, the lack of available expansion joint caused tremendous in the bridge deck structure, causing failure in a steel truss member or bridge bearing joints.
And, I believe the failure would have been caught in traffic cameras for the bridge. If it was bumper-to-bumper at the time, the footage would indicate that. From the footage, not yet released, I think authorities know that many more are dead, under the water.
Yesterday was a beautiful entry for bulls.. Huge support, Yen at a high level to enter on if you can access the carry trade. Now ride it up as it tests upper resistance.
"The Company repurchased 623,654 shares of its common stock at an average
price of $59.98 during the second quarter of 2007. During the first six months
of 2007, shares repurchased totaled 767,954 at an average price of $60.57. As of
July 26, 2007, shares eligible for repurchase under the Company's stock
repurchase program totaled 710,425."
and here it is for Aug 1st:
Pursuant to previous Board action, the Company has remaining authority to purchase 100,698 shares of Company stock.
Since January 1, 2007, the Company has repurchased 1,371,381 shares at an average price of $54.27 per share.
So in July alone they repurchased 609,727 in an avg price of $45.77 .
Given that the price had only crossed $45 4 days ago (except a small drop to $44.6 when the quarter results were published) it show that Fed focused their buying in the last 4 days in a desperate move to support their share price. About 10% of the volume last week was Fed repurchase. At this rate (buying 150K shares per day) they will have enough for about 10 trading days. I am sure they can stretch it a bit more.
My WAG would be bet on the food cost spike, engineering folks in the community can speak with more authority but getting the shipping channel cleared would appear to be a non-trivial exercise.
What barge traffic is corked off by the bridge collapse? My guess is that it will take more than 'Bob the Builder' and a backhoe to get river traffic up and running again, any engineering types online to hazard a guess?
The unions want socialized medicine to defray a lot of the costs. So that would bring the cost down. I think some of the hourly wage is reported higher because of medical to retires.
GM, F are never prepared for a slowdown.
Workers call GM Generous Motors and benifits are on the order of lunacy. Low quality work combined with high absentism. All bad out there.
This is how Karl explain it. Makes sense:
"Its called a "Mark On Close" order and is institutional. OFTEN USED BY MUTUAL FUNDS. The specialist is free to execute them any time they'd like BUT they price to the person ordering them AT THE CLOSE!
Remember, mutual funds give you the price at the END OF THE DAY.
So on an up day, the specialist will run 'em early and POCKET THE DIFFERENCE!
On a day when you might get whipsawed HE IS NOT GOING TO DO THAT because it will roach him. So he puts them through at the close and you get exactly what you saw. "
--
I expect Peak Debt to occur during the 2007H2, i.e., the household debt would start to decline. That in itself would cause recession. Lot of decline in household debt would be a result of mortgage defaults.
Jas
Most likely, the whole retail sector will be taking a hit based on dwindling MEW. My guess is that commercial real estate is the next leg down. CRE has been in a bubble of its own for quite some time but was completely overshadowed by residential. More importantly, the recent mention in the MSM that "there is definitely no commercial real estate bubble" leads me to believe that iceberg was hit not so long ago.
"This is fully contained in the auto sector!" BenB
CR - any report on automotive inventory? I read the article but didn't see anything about inventory.
If inventory is building it will increase the stress in Q3 & Q4 as OEMs cut the build & it kicks back through the supply chain.
dryfly, I'm hoping Professor Hamilton digs into the numbers this month. I'll post a link when / if he does.
I didn't see anything about inventory.
Best Wishes.
"I have a container for every problem!" BenB
My understanding is the big 3 are increasing inventory as a precaution in case the talks with the UAW (deadline in September) go south and there is a strike. So it may be difficult to say with certainty how much inventory is growing as a result of slow sales and how much it is growing as a result of intentional inventory build. Either way, there will probably be another incentive war late this year.
Don - you are so very correct... I had forgotten about the contract talks, shame on me.
Yup - add that little nugget to the volatility mix... whether there is a strike or not.
No strike: excess inventory... eventual cut backs or fire sales to clear.
Strike: loss of incomes & loss of production once inventory is depleted.
Are we having fun yet?
BTW - thanks CR, I'll watch Dr Hamilton's site too.
OT
CR, do you see the Financial Times article about the German government organizing a bailout of IKB? FT.com / US / Economy & Fed - Germany rescues subprime lender
A UAW strike would be an excellent scapegoat upon which to lay blame for a recession, should one be starting in, say, September.
Hey all you debt bears, how do we find out what AHM does with their orderly liquidation (fire sale)? There must be a lot of concern among holders of the same debt issues.
ALso, I would imagine this isn't the only outfit extending credit to AHM that is unhappy...
RAIT Financial says American Home has not made payments
| Reuters
Yal-forget those theories. what happened at s&p 1440 was it hit a multi yr support line extending from 7/06 to 3/07 to todays 1440, dead on. many big traders use only technicals like this to buy hard. they ignore fundamentals to their detriment. i happen to think we will plunge down thru this level, perhaps after a bounce. if this happens, pile on hard. what i'm saying only applies to the s&p and not necessarily to financials or HB's which are clearly in a downtrend with no end in sight.
All the earmarks of PPT activities at the close today....
For all the carry trade conspiracy conspiracy theorists.
This is from John Authers at the FT
" The Short View: End to carry trade?
By John Authers, Investment Editor
Published: August 1 2007 18:27 | Last updated: August 1 2007 18:27
The credit market is not the only source of liquidity for world markets that is under threat. The yen carry trade selling short the yen, at its low interest rates, and buying high-yielding currencies such as the New Zealand dollar also looks sickly.
This trade, popular with hedge funds, is vulnerable to a rise by the yen. And in the last month, the dollar has lost 4.3 per cent against the yen, while the kiwi has lost more than 7 per cent.
This subject generates intense controversy. It is impossible to prove how important carry trade cash is for world stock markets.
But so far this year, the S&P 500 and the New Zealand dollar/yen exchange rate have tracked each other almost perfectly. The S&P strengthens on days when the kiwi goes up, and drops on days when the yen recovers. On fundamentals, there are few reasons why these two markets should be aligned. Thus this shows that traders believe cheap carry trade money is important for US stocks.
The yen could easily fall back from here. Japan is gripped by political uncertainty. But many analysts think the Bank of Japan will raise rates this month, and little chance of this has been priced into the market. So there is a risk of further appreciation for the yen, taking carry trade cash away with it. This adds yet more doubt when markets scarcely need it.
Some say the carry trade is not the speculative bubble it first appears. They rely on Mrs Watanabe the archetypal Japanese retail investor. With tiny interest rates at home and a weakening yen, it makes sense for Mrs Watanabe to put her money overseas. She weakens the yen and boosts other markets as she does so. She even seems to be making more bets against the yen at present.
But Mrs Watanabe may not be reliable. A few weeks ago, she was sitting on gains of 40 per cent in a year, in yen terms on foreign stocks, as measured by the FTSE World ex-Japan index which has since dropped 9 per cent. Might she take profits?"
Volatility scares carry as much as anything... the last few days whether up or down should give these folks a reason to pause & reflect.
It would be pretty easy to get caught on the wrong side of one of these run away markets. Add leverage and that makes for disaster.
Looks like high-end European cars are still doing well. No liquidity crisis at the high-end of the market yet.
Still contained to us poor uns.
Best regards to all,
It would be pretty easy to get caught on the wrong side of one of these run away markets. Add leverage and that makes for disaster.
So sayeth the wise man.
The news today of the Big 3 sales plunge may explain the late rally in the Dow. Wall Street is looking for any bad news as a cue for the Fed to lower rates. Not going to happen IMHO.
[Wall Street is looking for any bad news as a cue for the Fed to lower rates. Not going to happen IMHO.]
Employment numbers weak - Check
Yield curve more inverted - Check
Weakness in the credit markets - Check
Dollar making (a feeble) stand - Check
Inflation readings within range - Check
NAPM-Chicago down - Check
25bpts?
Could happen but look out for oil to the moon even more than equities...
Bought a Toyota Prius hybrid this weekend, the eco-yuppie car of choice, the one that people happily paid list price for, the one that people put $500 down on just to get on a waiting list....
...They had 15 of them. The sales slime were vicious, but I still got it for a grand or so under list.
barely, your model describes perfectly the soon 16,000 DOW.
No conspiracy theory but its pretty easy to move a 30 stock (DOW), market cap weighted average. Just but a bunch of GM (tons of dow points as gm is a big cap weight) once the trading desk sees the move they pile in...
If your the FED and you have a Banking/financial system "issue"
you just tell the IB's to buy GM- done.
The market manipulation by the Japanese and Chinese central banks is messing up the global economy and must stop. Of course, there's no simple answer as to how currencies should be managed, but it would help if we recognized the problem...
Typo- thats buy a bunch of GM not but a bunch
Hazard, I would get out of equities on any strength, especially if the fed lowers.
Inflation will RAGE as the dollar tanks under Hank's watchful "Strong Dollar" eye.
Yen carry will explode and no one can even guess what fury of consequences that might yield. It depends on our fine Japanese friends...
From Bloomberg,
American International Group Inc., the world's biggest insurer, may be sitting on losses of as much as $2.3 billion from securities backed by subprime mortgages, analysts said.
In a ``worst-case scenario,'' AIG may lose $2.3 billion from its investments in subprime mortgage bonds as well as loans given to borrowers with poor or limited credit, A.G. Edwards Inc. analysts in St. Louis said today in a report. Analysts at Goldman Sachs Group Inc. issued a report today estimating losses of as much as $1.4 billion.
AIG, which hasn't formally disclosed its holdings, owned about $33 billion of the securities at the end of March
ice grammar :
"Experts and some automakers pointed to concerns about the housing markets and gasoline prices as weighing on American consumers who might have been considering a auto purchases."
A strike by the UAW at this time would be the height of idiocy. Their employers are losing market share and struggling to maintain profitability and the union guys want to strike? That would just bring the demise of one of the Big Three that much closer.
In Yahoo News' report on General Motors' 2nd quarter earnings report, the reporter quoted a GM executive to the effect that "The company likely is to seek concessions from the union and wants to cut a $25 per hour labor cost disparity with its Japanese competitors." I
UAW workers still cost $25 an hour more than Japanese auto workers?!! Japan is one of the most expensive places in the world to do business and the UAW's people are still $25 an hour above the Japanese! If the UAW chooses to strike, they'll be slitting their own throats.
Highly doubtful that the Fed will will lower 25 bpts. A 25 bpts hike will be the first shot of methadone or 1st of 12 steps, whichever term fits best.
Jim Jubak (MSN Money) figured out the AIG exposure to the CDOs a couple weeks ago and dropped them from his portfolio.
6/29 and 7/13 articles cover AIG, and then:
7/20/2007: I now think discretion is the better part of valor in the financial sector and I'm selling American International Group out of Jubak's Picks. I continue to believe that the giant insurance company has relatively little exposure to the meltdown in the market for bonds and derivatives built out of subprime mortgage loans. But I can't say I know that with the kind of confidence that would make me stay the course given the rising tide of risk.
I look at it this way: We have a roaring F.I.RE economy, and that's about it. The RE and the F are toast. The "I" will take a hit because the whole mess requires constant cross-pollination.
(P.S. I've seen a nice diagram showing how the F.I.RE. economy developed. Anyone recall where that might be? Something on mises.org?)
OT
Fun With Anagrams:
Can Ointment
Cant Mention
Main Content
Titan Conmen
Am Continent [sic]
A Conmen Tint
None Act Mint
Net Not Manic
No Intact Men
Conmen Taint
Cannon Me Tit [oooww!]
Mine Cant Not
Name Con Tint
Con Tint, Amen
Mean Con Tint
Neat, Mint Con
Main Con Tent
Am Content In
Am Con Intent
Man Into Cent
Tin Cent Moan
It Tan Conmen [!]
Tan Tonic Men
A Cent Mint? No!
A Con Men Tint
A Con Mint Net
Men Not In Act
No Tact Inn Em
In Men, No Tact
Man, It No Cent
Tint An' Con Em'
No Tan Tic Men
It Tan Con Men!
No Tact Inn Me
"UAW workers still cost $25 an hour more than Japanese auto workers?!!"
Uhhh, yeah dude it's all healthcare etc. If we didn't have such a bloated corrupt system we could actually pay the autoworkers competitive real wages they could live on.
"Indy Mac buying AHM remnants"?
AHM ops/retail has been told to expect an announcement tomorrow that INDY-MAC is purchasing AHM retail, wholesale, ops, servicing rights.
Thus far, no funding. supposedly, funding will resume tomorrow.
I think not
OT. Get a load of this guy!
YouTube -
A quote today, from Goldman Sachs chief economist in the WSJ, on the link between housing and consumption:
"I'm more concerned than the median [Fed policy maker] mainly because I think the consumption and housing link is more important than they do," said Jan Hatzius, chief U.S. economist at Goldman Sachs. "I think they probably will change their view."
I think so too. I'm sure these auto numbers, and the possible link to housing, will be discussed at the FOMC meeting next Tuesday.
Best to all.
Case in point on my post below,
The Dow was up over 1%/150 points yet the nyse composite was only up .019%.
The dow was up 150 points but the advance deline was led by decliners.
This shows how easy the "Headline" number can be manipulated with cash.
No conspiracy, just the facts maaaaam.
Of course this is only a short term fix- if the levy brakes you can't stop it.
"No conspiracy theory but its pretty easy to move a 30 stock (DOW), market cap weighted average. Just but a bunch of GM (tons of dow points as gm is a big cap weight) once the trading desk sees the move they pile in...
If your the FED and you have a Banking/financial system "issue"
you just tell the IB's to buy GM- done.
About PPT action - I think XOM singlehandedly pulled the DOW up as it jumped $2.50 in the last 15min. DOn't know why they jumped. PPT?
In Yahoo News' report on General Motors' 2nd quarter earnings report, the reporter quoted a GM executive to the effect that "The company likely is to seek concessions from the union and wants to cut a $25 per hour labor cost disparity with its Japanese competitors."
Ask the executive if he knows the pay differential between Japanese management & GM? Grade for grade comparison? Or other overhead differentials? That's an eye popper I bet but they don't report that.
The UAW isn't the problem, they might be one of the symptoms, but they aren't 'the problem'.
An FYI - direct labor is somewhere between 5-10% of the total cost to assemble automobiles... Something like 60-70% of the cost is purchased parts & components (some UAW there like at Delphi but lots less than even five years ago)...
If you want to read a pretty good book on the subject I recommend 'The Machine That Changed The World' by Womack. A bit dated but still relevant. It cuts through a lot of the crap.
Heh, this is great! At the bottom of the HaloScan comments are two adds, one for a Newt Gingrich newsletter and one that promises Ann Coulter Weekly - FOR FREE!
I mean ads (with one d). (I was so excited, I pressed "Publish" right away...)
Guys, after what's just happened over the last several days, I don't think anyone now denies that "housing" is spilling over into autos and the broader economy. If this drop isn't linked to housing, then what is it linked to?
You can bet it's going to be discussed at the Fed meeting. Even Mr. Market has now gotten the message.
Ann Coulter Weekly? Where is my Arbogast Industries barf bag when I need it?
Anyone here have an interest in FED's stock? YIKES! Bye Bye gains...
Expired
Do we all see the same ads, or I am targeted because of known proclivity for such erudite commentary?
yeah i am short; i like the part about average price of $54.27 per share vs. $42.82 today. overpaid? catch a falling knife!
mp, that link is awesome, thanks! Never heard of Vitaly Dmitriev before. Wow!
120 bass piano accordion, here.
Now you got me looking, amazing what's out there:
Jo Ann Castle go to 1:59
Myron Floren
and for those who thought Lawrence Welk was lame, shame on you!
Detroit Dan, right now I don't see any ads for Haloscan. Usually I see ads for "mesothelimia" lawyers - rumored to be the highest paying google keyword on a PPC basis! Who knows how the ad provider decides the relevant keywords for a comment system.
I hope Haloscan makes a few bucks - and keeps their system up and running! The features are decent, but the system is frequently too slow.
Best to all.
A couple of years ago I heard a GM executive chuckle when asked about Chinese competition in the auto industry. I believe the exact quote would be:
"Heh, heh. I don't think the American consumer will be satisfied with the quality of a Chinese made car."
HaloScan is okay as far as I'm concerned. Simple, which is a plus, and it allows some html formatting. They certainly get some smelly advertisers though...
P.S. I've seen a nice diagram showing how the F.I.RE. economy developed. Anyone recall where that might be? Something on mises.org?)
Lumpeninvestor
I think is iTulip.com
OT some one say the "B" word?
Credit markets leave banks saddled with £250bn of debt - Times Online
Wow, A billion here, a billion there --- the pier is getting quite crowded.
"Leading investment banks on both sides of the Atlantic are saddled with almost $500 billion (£246 billion) in agreed leveraged loans that they are unable to parcel out to other investors."
Credit markets leave banks saddled with £250bn of debt - Times Online
oops, same article as the post above!!
All the earmarks of PPT activities at the close today....
No, no, no. Forget the PPT stuff, there's much more reasonable explanations for this.
Speculators with lots of money have made focused attacks on vunerable positions in the past for profit (e.g. the currency attacks during the Asian financial crisis).
With record short interest on the NYSE, there are likely a lot of vunerable or skittish short positions out there (because they don't have enough cash to handle significant losses), so why not "attack" them to make a quick buck?
I don't know that this is necessarily what's happening, but it seems to me a much better explanation than bringing out the apocryphal PPT on a day with no crisis.
And based on this theory, I've been saying to expect this sort of thing to happen for weeks now. And it's been happening. So I think that lends some credibility the argument.
"I don't think the American consumer will be satisfied with the quality of a Chinese made car."
Ahhh but would they be content with 2 of them for the same price? And I'm being kind. The market for basic world cars is so large there is a qualitative aspect to the quantity equation.
]First Federal Bank of California continues to exceed the capital requirements necessary to be deemed "well capitalized" for regulatory capital purposes]
Wait till the Q3 & Q4 defaults stack up. Gonna need to re-compute.
Question though - Does this make them an easier aquisition target? Not more attractive, mind you.
Anyone know anything about bridge reconstruction? And I mean real bridges, not bridge loans? When I took the bus home from downtown Minneapolis this evening, I got a look at thousands of tons of steel and concrete blocking the barge traffic that usually carries harvested grain and soybeans out of Minnesota. You may have caught something about it on CNN.
If that sucker isn't out of the way in two months, watch for food prices to spike.
Its a mere adjustment the sub-prime and housing issues will be contained. We have the bestest most innovative economy in the world. We also have the best goverment and enlightened politicians. Its all fine and this doom and gloom is so overstated. Opps, wait. I am not at work. I can speak the truth--its going to get worse.....
u guys need to realize that todays last half hour rally was not the result of a squeeze or 401K purchase or PPT or mark on close rally. it was purely technical in nature and meant to scoop up as many shares as fast as possible for the buyers who believe solely in technicals w/o fundamentals. this is evidenced by the rapidity of the rise with large gaps in btwn and in the last half hour when most ppl didn't have time to respond. it represented the convergence of not just one technical support point but two. the first as i already elaborated was at the underlying trendline connecting the lows of 7/06, 3/07 and today at 1440-50. the other was exactly at the 200 day moving average. when you have convergence like this you see big jumps. watch carefully for any drop below this that holds, then pile on the shorts.
The mystery of "where are the losses?" has confounded hedge funds searching for opportunities to bet against banks whose day of reckoning has yet to come.
Subprime Detectives Search for Next Victim - WSJ.com
This is great. even the hedgies are hunting down their own searching for the kill. trouble is, this stuff is so opaque, even they can't find it. this underlying rot will take years to sort out.
J. Michael Neal, glad to hear you weren't one of the victims. We have a couple of friends in Minneapolis who commute on that road and immediately telephoned them. Fortunately, they made it across.
(tons of dow points as gm is a big cap weight)
uhhhh , can you check your math on that sir
Profiting from future Hedge Fund losses is a suckers game. The lawyers know where to go, they will profit from past hedge fund losses. Much easier to identify!
From CNN Money:
Bear Stearns sued over hedge fund losses
CNNMoney.com: 404 Page Not Found
ummmmm.....hey fixed income people, the Dow is price weighted.
The rally at the close was not 'contained' to the SP 500 or Dow. Look at what Russell 2000 did; what 'trendline' had it broken? That was irrational, wholesale buying.
ty regent,
24/7 wall st site has a nice chit-chat about it
Bobb Dobbs - but you didn't get the 3K tax credit and car-pool stickerslike people did last year paying sticker prices
Asian markets are now lower after recovering this morning from yesterdays haircut.
Major World Indices - Yahoo! Finance
Liquidity alarm bells sound...
"...The fund was actually invested in senior secured corporate loans, which are mainly the leveraged debt used in private equity-backed buy-outs and these assets were fundamentally sound and performing well, the fund insisted.
What caused the embarrassing loss was supply-demand imbalances in the market which in plain English means many need to sell but few want to buy. ..."
FT.com / In depth - Liquidity alarm bells sound
another bag holder:
Fidelity Inflation Bond Fund Punished by Subprime Loan Losses - Bloomberg.com
If your asset-backed securities [ABS] exposure gets you into trouble and you start facing redemptions or rising margin calls, you start selling your liquid positions, which creates contagion, Mr Vaughan-Smith says.
I don't know who this guy is, but there's a truth.
From a prime brokers perspective, theyre lending money through repo contracts on secured assets that might have three potential values, he says. A prime broker cant force a manager to choose a model that is more in line with his view, but he can adjust his margin requirements to adjust risk exposure.
Another excellent comment from the same article.
Yesterday, the yen tumbled hard and reached a bottom at about 6AM.
The market exhibited sawtooth activity during the day.
At the end, the yen tumbled again, and the market went up.
The fellow who pointed out the differences between the indices and the whole market is spot on.
Remember, in the words of Banker, these are very intelligent people. Remember also that the way you make the carry trade hum is to be in and out very, very quickly. And they can do it. Hedge funds use models that depend on sub one-second responses to market moves.
I will now take my medication.
But I am increasingly intrigued with the idea that if you have instantaneous access to infinite leverage, you control the market, any market.
After all, isn't that the premise of this entire blog? Seriously, isn't it?
It goes like this. A group of people in the US who were not qualified to borrow money borrowed a ton of money and controlled the market: drove housing prices into the ionosphere.
Unfortunately, in contrast to their brethren on Wall Street, they didn't realize that they had to get out quick. They thought they were buying a home.
Yal,
From your link...
``Someone who's investing in lower-quality securities to help performance, even to a limited extent like the Fidelity fund, is taking a chance,'' said Paul Herbert, an analyst at Chicago-based research firm Morningstar Inc.
Sir, you are clearly a man of the world. Are you enjoying our casino?
The fund, which attempts to provide returns that exceed the rate of inflation by purchasing Treasury inflation-protected securities, or TIPS, had 0.5 percent of assets in derivatives linked to subprime loans, according to Morningstar.
Sir, might I interest you in a teaspoon of garbage for your glass of wine this evening? It is "lucky" garbage. All the high rollers seem to enjoy it.
It also was hurt because 18 percent of its assets were in the Fidelity Ultra-Short Central fund, another subprime holder.
Sir, management regrets to inform you that the sludge in the bottom of your glass may have been toxic. The wine steward has been fired.
Some inflation-protected bond funds invest in other securities because the TIPS market consists of 24 bonds with a combined value of $437 billion, limiting a manager's choices, Morningstar's Herbert said.
Sir, I know you are upset. There's only so much wine in the world though.
Managers also seek higher returns with lower-rated securities.
Sir, I know other restaurants have not run out of wine. In our defense, we were simply attempting to enhance your dining experience while you enjoy our casino. Keep in mind that the drink was complimentary.
CR: "I'm sure these auto numbers, and the possible link to housing, will be discussed at the FOMC meeting next Tuesday."
what do you think are the odds of a surprize rate cut ?
When is the Fed announcing the results of the FOMC meeting ?
more and more I tend to think that the Fed would be willing to trash the dollar in sake of economic "stability" ( the " " is because I think rate cut will only be good in the shorts term - they are failing to take care of the fundemental ills of world economy that were outlined yesterday in the quote from Galbraith book on 1929 crash)
This: Rio's First-Half Profit Falls 14% on Rising Costs (Update6) - Bloomberg.com is odd.
Arbogast said,
"But I am increasingly intrigued with the idea that if you have instantaneous access to infinite leverage, you control the market, any market."
"After all, isn't that the premise of this entire blog? Seriously, isn't it?"
"It goes like this. A group of people in the US who were not qualified to borrow money borrowed a ton of money and controlled the market: drove housing prices into the ionosphere."
This points up an even greater truth, however.... Whoever controls money supply has the ULTIMATE power. If there weren't massive liquidity fueled by fractional reserve banking denominated in fiat notes, we wouldn't be having this discussion. This whole system we're operating in is patently evil. Do any of you have a suggestion on how we might rectify this, or are we all screwed?
Speaking for myself, I'm a saver. I actually do productive work to make money, and I save some for a project I have planned in the future. I'm disciplined and prudent. How is it that we ended up with a system that screws over people like me who are trying to do the right thing?
Someday, somebody is going to pay. That's going to be an interesting day to witness. I hope I live long enough to see it.
Yal asked,
"what do you think are the odds of a surprize rate cut ?"
Less than zero. You think the dollar index is low now? Ha! Cut rates and watch it TOTALLY TANK.
Raise FFR? You think foreclosures are high now?... Sheesh. Just wait 'til THAT happens.
FFR will remain un-changed until '08... maybe well into '08.
That's just my opinion, of course.
Ben is as boxed in as a doe that's fell in a well. Listen to his voice tremor during testimony to the commitee... he sounds like he's about to pee his pants. Must be humiliating.
Sorry... that last one addressed to Yal was me. I own whatever blasphemous crap I spew.
How is it that we ended up with a system that screws over people like me who are trying to do the right thing?
It happens when banks get political power. The banks work by removing your money from your control and spinning it elsewhere. If you save, and don't let them spin it, it pisses them off by inhibiting their 'earnings'. This causes the banks to push on the politicians (buy them) and they change laws to protect banks above consumers and average citizens.
The banks are the evil. One of these days you people are going to have to admit this.
dotcommunist said,
"The banks are the evil. One of these days you people are going to have to admit this."
Damn right. BUT.. the one bank that really drives it is the Fed Reserve, is it not?
...if you have instantaneous access to infinite leverage, you control the market, any market.
Definitely influence the heck out of it.
Unfortunately, in contrast to their brethren on Wall Street, they didn't realize that they had to get out quick.
Uh... Wall Street seems to have found itself holding the bag lately, too.
No rate cut this time unless things we get a major crash before next meeting.
If this happens we should set some $ apart to pay for a place at the Bankerdome. Buy some ammo too.
Now, a few months to year down the road, once the pain works thorough the economy and inflationary pressures turn to deflationary ones, they'll have to cut even if the $ tanks. That's down the road, not imminent.
Phil
A government bailout, German in this case has to be justified by a threat to the system since otherwise it would represent a subsidy to one "private" company over another, one "sector" over another, one pressure group over another.
Any such comments over IKB should be interpreted as the free market in political ideas CYA PR that they are, until we are to see the numbers.
Good idea re: mortgage crisis, instead of stiffing just US citizens, diversify it all to German banks and they will pass it on to their taxpayers.
Some ABS CDOs could see super senior write-downs, warns Bear Stearns report
Credit Trading and Investing News - CreditFlux.com
Hyperion (HTR) is a closed end fund that contains leveraged MBS.
The people who trade it clearly think that MBS are completely radioactive:
Hyperion Total Return Fund (HTR)
7/27/2007\t
Closing NAV: \t$8.55 \t \t
Closing Share Price: \t$7.95 \t \tPremium/(Discount): \t-7.02%
The yen-carry trade and some kind of misalignment among major currencies is not good for the global economy,'' Korean Finance Minister Kwon Okyu told CNBC from Sydney yesterday.This time, I would like to discuss this matter with colleagues and hopefully we can do something.''
Korea Goes Where Soros Fears to Tread -- the Yen: William Pesek - Bloomberg.com
Uh-Oh
WASHINGTON: Investment banks that bundle and sell home mortgages often commissioned reports showing growing risks in subprime loans to less creditworthy borrowers but did not pass on much of the information to credit rating agencies or investors, according to some of those who prepared the reports.
Search - Global Edition - The New York Times
Really, no kidding.
J Michael Neal:
Minneapolis Bidge Collapse
My personal preliminary theory, based on no more information than anyone else, and nothing more than my being a structural engineer that worked as a forensic engineer for a decade or so:
Bridge resurfacing work jammed the bidge deck expansion joints with too much debris, the high temperature today caused the bridge to try to expand, the lack of available expansion joint caused tremendous in the bridge deck structure, causing failure in a steel truss member or bridge bearing joints.
And, I believe the failure would have been caught in traffic cameras for the bridge. If it was bumper-to-bumper at the time, the footage would indicate that. From the footage, not yet released, I think authorities know that many more are dead, under the water.
Nothing more than my theories at this point.
Yesterday was a beautiful entry for bulls.. Huge support, Yen at a high level to enter on if you can access the carry trade. Now ride it up as it tests upper resistance.
The yen says a sideways market in the U.S. indices today.
If there is a move to the upside, the big guys who are long a lot of stuff they don't want to be long will sell into it.
A big down move. Doubt it. If there is, look to see if the yen weakens. If it does, it means the big guys are going to step in a stop the carnage.
Anyone can dig up from Fed report how much of the previous buyback they used up until June 30th ?
My impression is that about a 1/3 of it was used in July alone. If this is the case the current buy back will not hold more than 4 weeks.
OK Found it.
Here is the info for June 30th:
"The Company repurchased 623,654 shares of its common stock at an average
price of $59.98 during the second quarter of 2007. During the first six months
of 2007, shares repurchased totaled 767,954 at an average price of $60.57. As of
July 26, 2007, shares eligible for repurchase under the Company's stock
repurchase program totaled 710,425."
and here it is for Aug 1st:
Pursuant to previous Board action, the Company has remaining authority to purchase 100,698 shares of Company stock.
Since January 1, 2007, the Company has repurchased 1,371,381 shares at an average price of $54.27 per share.
So in July alone they repurchased 609,727 in an avg price of $45.77 .
Given that the price had only crossed $45 4 days ago (except a small drop to $44.6 when the quarter results were published) it show that Fed focused their buying in the last 4 days in a desperate move to support their share price. About 10% of the volume last week was Fed repurchase. At this rate (buying 150K shares per day) they will have enough for about 10 trading days. I am sure they can stretch it a bit more.
Actually, I guess all my speculation about market activities really just amounts to how I would do it if I had access to free money.
I think the key is that most of the people in the stock market absolutely do NOT want to be left behind.
So, if you can goose an index up or get on board an index when it makes a move, your chances of getting out before it turns down are excellent.
Bear Stearns exec sees market fall as healthy
Bear Stearns exec sees market fall as healthy
| Reuters
Bet the investors in their blown up funds might have a different take on that.
J. Michael,
My WAG would be bet on the food cost spike, engineering folks in the community can speak with more authority but getting the shipping channel cleared would appear to be a non-trivial exercise.
What barge traffic is corked off by the bridge collapse? My guess is that it will take more than 'Bob the Builder' and a backhoe to get river traffic up and running again, any engineering types online to hazard a guess?
Lend just warned they are going to fold.
Yen falling.
The big guys have decided that the indices will be up at the open and they want to go along.
I suspect however that, as yesterday, they will sell into the rallies.
You see, I can't help continually coming back to the fact that the Clinton's are out of the market.
Any guesses on MBI's sit down this morning at the open?
Expired
Energygreen:
no effect on shipping, only a couple minor terminals upriver of 35w bridge-all other barge terminals south or on Minnesota River.
A pain in the butt for at least three years until a new bridge is partially finished.
@Ravenor
The unions want socialized medicine to defray a lot of the costs. So that would bring the cost down. I think some of the hourly wage is reported higher because of medical to retires.
GM, F are never prepared for a slowdown.
Workers call GM Generous Motors and benifits are on the order of lunacy. Low quality work combined with high absentism. All bad out there.
herma,
Thanks. found it.
iTulip's F.I.R.E. economy