Take away the bubble portion of the first chart and it looks like a market in a long-term decline. That's a bit different from a generally rising market invaded by lunatics who can't give their money away fast enough.
Only 110 people on line. How soon till we see 800 at 10PM eastern time?
Who cares about this thing called "eastern time"? Clearly the world revolves around Pacific Time, Tanta's prior snarky comments on this topic notwithstanding.
China's equity markets have less to do with funding of enterprises than in the US, so expected impact on investment could be less . . . then again, so many companies took positions here as investors. This would be the pain trans mission channel.
Rob Dawg, the sell-off is impressive and reminds of the NASDAQ too. I'm wondering how much on an impact this will have on business investment in China. I don't know enough about China ...
Who was the investment guru who moved to China? Jim Rogers? He moved at just about the peak I think. Not saying he caused it. Not saying he didn't have some valid criticism of the USA financial system. Just kind of find it funny.
This shows that business investment in both categories went negative without regard to the fundamental principles outlined in Adam Smith's more noble work.
Is it OT to mention that the Aug. 16th Gann Cycle Turn date appears to have been right (except that we don't trade on Saturdays, so it was the 15th). And the pennant on SPX/INDU appears to have broken, or needs one more down move to break it. A break would set up not only a test of the July 15th lows, but would project down to SPX 1073.35 and INDU 9558.13
The bubble was in real estate development they have been hit the hardest... I am a buyer under 2000 and don't expect the weakness to last more than a year or so once we bottom....
The reasons for Shanghai '08 and Naz '00 have a particularly insidious commonality. Both served to pull in then bust everyday people. The elephants danced and the ants got crushed.
China doesn't have the sophisticated banking system we have. Wait, don't laugh. Before you say good for them it also means when it breaks it is sudden and catastrophic. They have a whole lot of generals also quietly in charge of major industries who are going to push a button and transfer their private billions and thus take down the system. As vertically striated as the western economies may be theirs is dangerously sprse except at the very top and bottom.
I am a buyer under 2000 and don't expect the weakness to last more than a year or so once we bottom....
Ummm...why? CR's chart has the mid-2005 pre-bubble value at 1000 and falling. What's fundamentally changed in China, since mid-2005, other than the bubble itself?
Lehman May Put a Prized Unit on the Block
"Lehman Brothers, the troubled investment bank, is considering the sale of all or part of its prized money management division to private equity firms to raise billions of dollars of capital and ease the pressure caused by losses related to real estate." Lehman May Put a Prized Unit on the Block - NY Times
Banks, Brokers Face Funding Gap After the Floating-Rate Splurge
The volume of long-term credit available through traditional markets has declined in recent months, implying that there is a significant funding gap,'' the New York-based analysts wrote.The sheer volume of forthcoming maturities means there will be a huge need for these issuers to access the capital markets.'' Banks, Brokers Face Funding Gap After the Floating-Rate Splurge - Bloomberg.com
Anak Krakatau writes: China's equity markets have less to do with funding of enterprises than in the US, so expected impact on investment could be less . . . then again, so many companies took positions here as investors. This would be the pain trans mission channel.
Bingo. But as others have noted, given the lack of other investment opportunities, equities have been the choice of millions of commoners... that "pain transmission channel" should be quite effective. Expect the Gov't to hear a lot of static on that channel once the Olympic endorphin rush fades.
FT - Pressure builds on US banks
"Battered US financial groups will have to refinance billions of dollars in maturing debt over the coming months, a move likely to push banks' funding costs higher and curb their profitability, say bankers and analysts. The banks' need to raise capital to offset mounting credit related losses is forcing them to pay higher interest rates to entice investors. The extra funding costs are set to put pressure on earnings because, in many of their businesses, banks rely on the difference between borrowing and lending rates to make money. "It is difficult to see how banks will continue to repeat the heady profit growth of the past few years if they borrow at these levels," said a Wall Street banker. Banks could also be forced to raise lending rates, exacerbating the credit crunch felt by many businesses and individuals and depressing economic activity even more. Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy." Last week, financial groups including Citigroup, JPMorgan Chase and American International Group borrowed almost $20bn in new long-term debt, paying some of the highest premiums yet to lock in funding. The refinancing period is set to continue for several months as billions of dollars in bank debt come due. For example, Citigroup has more than $5bn of maturing bonds in August, but this climbs to $12.8bn in December, according to Dealogic data. Bank of America, with $7bn maturing in August, also faces higher refunding needs in December, with $9bn of maturing bonds. Adding together 10 of the biggest bank borrowers, Dealogic said that maturing bonds totalled $27bn in August, $52bn in September, $23bn in October, $20bn in November and $86bn in December. The extent of the scramble for funds became clear last week when banks tapped central lending facilities, with strong demand for one- and three-month money lent by the Federal Reserve and the European Central Bank. US commercial banks borrowed a record daily average of $17.7bn from the Fed last week. The lack of investor demand for structured finance products means that more short-term funding will need to come from traditional money market products, according to analysts." FT.com / UK - Pressure builds on US banks
All technicals aside, the move to about 9600 pretty much squares with the average equity market loss of 28% per recession (14000*72%).
Given the severity of other factors and typical overswing on reversion to the mean, any idea from the calcs as to whether 9600 would be intermediate bottom?
"Condoleezza Rice said Monday that Russia is playing a "very dangerous game"
(we are all playing a very dangerous game)
(CBS/AP) With tanks busting through Georgia's meager defenses and artillery dug in around the country's main port, the Russians made clear they are going to take their own sweet time pulling out, reports CBS News' Chief National Security Correspondent David Martin.
Russian troops still control a number of Georgian cities and by nightfall U.S. intelligence had detected no significant withdrawals. Russia's military spokesman put it very plainly: Russian troops won't withdraw, just pull back from some of their forward positions.
U.S. Secretary of State Condoleezza Rice said Monday that Russia is playing a "very dangerous game" with the U.S. and its allies and warned that NATO would not allow Moscow to win in Georgia, destabilize Europe or draw a new Iron Curtain through the continent.
(i again say we have been head-faked by the russians)
by the way according to Traub over at NYT the georgian president, saakasvili, was fond of calling russian president, Putin,... "Lilliputian", back when he thought admission to nato was a slam dunk and israel was training his army provided hardware by US)
"Expect the Gov't to hear a lot of static on that channel once the Olympic endorphin rush fades."
Yes. As of this minute, the Shanghai index has dropped 14.8% in the eight trading days since the opening ceremony, on only slightly less than usual volume.
Late '07 the government for months had been broadcasting their concern about excessively high valuations. Got their correction, in spades.
What fuels these stocks from China? Is it foreign cash, like from America?
Dunno precisely, but from what I gather the People's Bank of China requires Chinese enterprises to cash in their dollar incomes into Yuan.
This is . . . HIGHLY inflationary since China is printing this yuan -- we have been literally exporting OUR inflation to China.
Combined with the massive trade surpluses the Chinese have been running against us, this hot money was looking for returns, and chased the dragon in equities and got Shanghaid.
Bernanke Tries to Define What Institutions Fed Could Let Fail
By Craig Torres
More Photos/Details
"Aug. 18 (Bloomberg) -- Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes....
the Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac....
Reinhart, now a resident scholar at the American Enterprise Institute in Washington, is one of several Fed alumni who say they are concerned the central bank will next face requests to rescue hedge funds or insurance companies whose failure might damage the financial system."
WSJ
Freddie Sale Has Asian Intrigue
Far East Investors
Have Curbed Ardor
For Recent Offerings
"Last week, Asian investors bought only 22% of Fannie Mae's $3.5 billion of three-year notes, down from the 42% they snatched when the housing agency sold a bond of similar maturity in May." Freddie Sale Has Asian Intrigue - WSJ.com
I was just thinking about that on a walk; very relaxing yah know.
It seems to me that these banks and entities that are able to draw funds from The Fed, should be required to have specific detailed rules associated with this type of action. E.g, these banks should be required to have certain capital in place and have ratios of liquidity that are not based on Level 3 bullshit or mark-to-bullshit, or be able to rent a balance sheet linked to a Cayman Island whore house that started out as a QSPE, which was a subsidiary of a drug deal that an investment bank used to pay off a rating agency.
Yah know? It seems that this taxpayer cookie jar needs to be transparent and the banks and investors that are playing casino coke whores need to fail as soon as possible -- regardless if they have friends in The Whitehouse or sleep with people in The Treasury or snort meth with The Fed...
"Late '07 the government for months had been broadcasting their concern about excessively high valuations."
At least they knew a bubble when they saw one and weren't afraid to take the step necessary to pop it. China will come out of this a hell of a lot better then America will when everything is said and done.
FDIC Presses Bank Regulators To Use Warier Eye Flagging Woes Now Will Bolster Insurer; The 'Camels' Rating
"In private meetings, Federal Deposit Insurance Corp. officials have pushed other agencies to more forcefully downgrade the confidential rating -- which is known only to regulators and bank management -- of troubled financial institutions, according to people familiar with the talks. If the FDIC gets its way, it could result in more public enforcement actions and could give the FDIC more muscle to either force the companies to improve their balance sheets or seek a sale. It could also make it more expensive for companies to raise capital, as scrutiny from investors would likely spike. The FDIC's push is being met with resistance from regulators with primary responsibility for these institutions."
(It is far easier for the FDIC to win professional liability lawsuits against failed bank directors if it can prove the directors were warned in advance by less than healthy CAMEL ratings and other serious matters in regulatory reports of examinations. A high CAMEL gets more dumb deep pocket bank directors off the hook.) FDIC Presses Bank Regulators To Use Warier Eye - WSJ.com
That is interesting: Under Bernanke's predecessor Alan Greenspan, the Fed drew a clear line against using its portfolio to influence specific markets. An internal study published in 2002 warned that the favoring of specific entities'' mightinvite pressure from special-interest groups.'
Re: "Bernanke said in a July 8 speech that a ``strong case can be made'' for expanding the Fed's authority over the U.S. payment system, the complex network of financial plumbing that handles the exchange of money from such transactions as options trades in Chicago and stock sales in New York. The Fed also is pushing for better settlement and trading systems for securities that aren't bought and sold on exchanges."
Rob Dawg writes:
Anonymouse,
Why can't you say INDU 9600 like the rest of us? INDU 9558.13 sounds too much like all precision and no accuracy.
It's an A-B=C-D Gartley projection. On INDU, the A is 13136.69; the B is 10827.71. That's 2308.98 points. The C is 11867.11; that gives a D of 9558.13. That's one way of projecting down.
Another is to take the 10/02 low and the 10/07 high and look at Fibonacci levels. We've passed the 0.50, and the 0.618 is 9890.73. And the 0.782 is 8725.96. So 9558.13 seems a good "split the difference" for an IT bottom, because while Fibs like to get tested, they also like to fool people by initially breaking through or stopping short, only to reverse direction. An A-B=C-D projection works in addition to Fibs.
And precision is a virtue in TA. Without it, why use TA?
If this looks off topic, sorry; had to pull this from the archives:
Hence any resulting regulatory capital relief does not stem from the actual transfer of assets off the balance sheet but the acquisition of credit protection against the default of the underlying assets through asset diversification and hedging. Commonly, sponsors of synthetic securitization issue debt securities supported by credit derivative structures, such as credit-linked notes (CLNs), whose default tolerance amounts to total expected loan losses in the underlying reference portfolio. Hence investors in credit-linked obligations (CLOs) are exposed not only to inherent credit risk of the reference portfolio but also to operational risk of the issuer. Systemic stability cannot be enhanced when the system is decapitated, as exemplified by the 1998 collapse of Long Term Capital Management (LTCM), which required Fed intervention to prevent systemic instability. With world financial markets already suffering from heightened risk aversion and illiquidity from the 1997 Asian financial crisis, officials of the Federal Reserve Bank of New York judged that the precipitous unwinding of LTCM's portfolio that would follow the firm's default would significantly add to market problems, would distort market prices, and could impose large losses, not just on LTCM's creditors and counterparties, but also on other market participants not directly involved with LTCM. In an effort to avoid these difficulties, the Federal Reserve Bank of New York (FRBNY) intervened with the major creditors and counterparties of LTCM to seek an alternative to forcing LTCM into bankruptcy. The hedge-fund industry has since grown with an increased number of funds, which will make the dispersed risk crisis more complex for future Fed intervention by virtue of the large number of interested parties that need to be satisfied.
Greenspan acknowledged that derivatives, by construction, are highly leveraged, a condition that is both a large benefit and an oversized Achilles' heel. It appeared that the benefit had been reaped in the past decade, leading to a wishful declaration of the end of the business cycle. Now we are faced with the oversized Achilles' heel, with "the possibility of a chain reaction, a cascading sequence of defaults that will culminate in financial implosion if it proceeds unchecked". According to Greenspan, "only a central bank, with its unlimited power to create money, can with a high probability thwart such a process before it becomes destructive. Hence central banks have, of necessity, been drawn into becoming lenders of last resort."
Greenspan asserted that such "catastrophic financial insurance coverage" by the central bank should be reserved for only the rarest of occasions to avoid moral hazard. He observed correctly that in competitive financial markets, the greater the leverage, the higher must be the rate of return on the invested capital before adjustment for higher risk. Yet there is no evidence that higher risk in financial manipulation leads to higher return for investment in the real economy, as recent defaults by Enron, Global Crossing, WorldCom, Tyco and Conseco have shown. Higher risks in finance engineering merely provide higher returns from speculation temporarily, until the day of reckoning, at which point the high returns can suddenly turn in equally high losses.
he banker, David Li, came up with a computerized financial model to weigh the likelihood that a given set of corporations would default on their bond debt in quick succession. Think of it as a produce scale that not only weighs a bag of apples but estimates the chance that they'll all be rotten in a week.
The model fueled explosive growth in a market for what are known as credit derivatives: investment vehicles that are based on corporate bonds and give their owners protection against a default. This is a market that barely existed in the mid-1990s. Now it is both so gigantic -- measured in the trillions of dollars -- and so murky that it has drawn expressions of concern from several market watchers. The Federal Reserve Bank of New York has asked 14 big banks to meet with it this week about practices in the surging market.
Speaking for and as Darth, this is somewhat of a Cuban Missile Crisis, without leadership. The threat is real and the enemy is within -- thus, how do you save capitalism without destroying the people and entities that are responsible for this crisis?
I gotta toss this in: The problem: The scale's calibration isn't foolproof. "The most dangerous part," Mr. Li himself says of the model, "is when people believe everything coming out of it." Investors who put too much trust in it or don't understand all its subtleties may think they've eliminated their risks when they haven't.
think kenneth rogoff is talkiing about that big fat S&L or the IB that starts with the same first initial?? (that is the letter some say describe the recession - depression)?
That blows me away, every time I see it: that little story from SEPTEMBER 12, 2005 was out there for all these financial managers, all these hedge funds and they ignored the warnings of risk, for YEARS! The Fed, The SEC, FTC, all these comptroller, audit and accounting people failed to do anything to stop the SIFMA-like explosion of derivative risk -- and now we end up with these lobbies running a government in a systemic failure. Does anyone think Bernake or Paulson have a fucking clue as to how to rate risk with a Level 3 derivative that is linked to a Cayman Island Trust Fund? Does it matter if our leadership people are in a vacuum where their old outdated models are being used to solve problems that are now connected to a whole new generation of supercomputer financial engineering, which is beyond comprehension....... huh, do you punk?
Note: On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize repayment of the credit extended and to minimize disruption to financial markets. Payments by Maiden Lane LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of the LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to JPMorgan Chase & Co., and interest due to JPMorgan Chase & Co. Any remaining funds will be paid to the FRBNY
The U.S. Foreclosure Crisis: A Two-Pronged Assault on the U.S. Economy John A. Tatomhttp://www.networksfinancialinstitute.org/Lists/Publication%20Library/Attachments/120/2008-WP-10_Tatom.pdf
Under the Feds new SIV, the Fed loaned $29 billion and JPMorgan Chase lent $1 billion, with the SIV using the proceeds to acquire $30 billion of the most illiquid and dubious securities fromBear Stearns portfolio. These securities were valued on a mark-to-market basis as of March 14, 2008. The SIV is managed by Black Rock Financial Management, Inc. The interest rate on the Feds loan will be the primary credit rate and the interest rate on JPMorgan Chases loan will be the primary credit rate plus 475 basis points. Repayment is to begin no later than the second anniversary date of the loan. The Fed is the effective owner of the SIV because any profit or loss will accrue to the Fed after the first $1 billion loss, which will accrue to JPMorgan Chase. The term of the loans is 10 years, but this term is renewable at the discretion of the Fed. The SIV first appeared on the Feds balance sheet on June 26 in data for the week ending July 2, 2008 under the prophetic name Maiden Lane LLC.
All in all, these developments have transformed the financial system, making it more market-oriented, and have also increasingly blurred the traditional distinction between a bank-based and a market-based system. While these developments have resulted in financial intermediation becoming more based on market prices, they have also allowed a wider dispersion of risks across the system. Partly in light of these developments, the past decades have seen a relative decline in the importance of the traditional model of financial intermediation whereby banks obtain funding mainly via deposits and use these funds to grant loans that they hold to maturity. This model has over time been complemented with another, where banks increasingly rely on market-based funding and transfer a major part of their credit risk off balance sheet. In other words, some segments of the banking sector have moved away from the traditional originate-and-hold model and towards an originate-and-distribute model. A simple illustration of the changing nature of banking is the increasing funding gap (i.e. the difference between deposits from and loans to the non-financial private sector) of euro area MFIs, which suggests that banks are tending to rely more on non-deposit funding, such as market-based debt and securitisation. However, except for the larger banks, the majority of euro area banks have not adopted the originate-and-distribute banking model and still base their operations on the traditionaloriginate-and-hold model.
Many people in China have pawned their cars and apartments at high interest rates so that they can invest the money in stocks. I wonder how they are doing today...
Uncle Billy Vs. Mt. Pelerin writes: "A lot of learning to do regarding China...
I wonder how well their national healthcare works and how well the seniors are taken care of."
I knew a dentist going for an advanced degree at the University of Minnesota, so that he wouldn't have to go back to China to practice his trade. He said that the anesthesia given to the average Chinaman for drilling, filling, or extraction was a sugar cube - unmedicated, just to take your mind off your woes.
The key word. Talk about Nero ...
Russia Blockades Port in Georgia and Seizes Soldiers In Crawford, Tex., where President Bush is vacationing, a White House spokesman said Monday that the United States was closely watching whether Russia honored its agreement to withdraw. The spokesman, Gordon D. Johndroe, said it was too soon to say whether the Russians were in compliance.
nickel trough to peak from 2003 to 2007 was over 600% (read stainless steel and high temp nickel alloys)
also iridium and all other platinum metals bubbled heavily, iridium is used in igniters and spark plugs primarily...something like a 500% run uop for iridium....
"Usually a stock market crash leads to less business investment, and an economic slowdown."
Are you sure about that? It's not clear to most economists that that is the case - there have been plenty of stock market crashes with minimal effects on the economy.
0.618 is 9890.73. And the 0.782 is 8725.96. So 9558.13 seems a good "split the difference" for an IT bottom... And precision is a virtue in TA. Without it, why use TA?
The comment about precision is basically because you seem not to realize that you have rounded off to three significant digits (0.618) earlier in your calculation, so anything past that is meaningless in your results. 9558.13 implies that you know the number to 6 decimal places. You certainly don't if you have made those roundings in your fibonacci factors.
Claiming anything more accurate than 9560 is a precisionist fantasy.
Claiming anything more accurate than 9560 is a precisionist fantasy.
IMO cumulative rounding errors make even 3 digits a stretch. TA has an interesting bias built into the mathematics. Most errors tend to random walk and somewhat cancel but chartists looking for patterns bias towards patterns and thus accumulate error.
Yes, business investment in China may slow but government investment will pick up the slack. Beijing has trillion$ to spend and it is the typical pattern once overall growth dips below say 8% on an annual basis then money will be poured into more infrastructure. And this is not a bad thing, btw, as it will most likely accelerate China's high-speed train network, hyrdoelectric capacity, marine terminals and airports. Nice to see our government boost the economy that way were it not for Iraq, etc.
As for the Shanghai Composite -- this is a buying time folks - look to alt energy stocks, transport, select retail and property.
CR, I believe the 5% plunge was last night. Tonight, it started off down 1.5%, then gained that back.
That first chart is a grand teton with the nipple pointing.....up!
Wow. Maybe the Chinese should outlaw short selling
Wow, that looks just like a chart of MEW in the Inland Empire.
Take away the labels and I challenge anyone to not see the NASDAQ tech bubble in that chart.
Mr. Dawg,
You get a biscuit.
The NASD is in another bubble right now. The red line and green line are going to turn down sharply.
What is out there that's capable of holding pretty healthy tech profits up over the next 6 quarters?
There's way too much capacity and inventory for current demand. All those empty offices and laid off people don't need more tech.
Take away the bubble portion of the first chart and it looks like a market in a long-term decline. That's a bit different from a generally rising market invaded by lunatics who can't give their money away fast enough.
Only 110 people on line. How soon till we see 800 at 10PM eastern time?
Then it will be time to cover your shorts.
Only 110 people on line. How soon till we see 800 at 10PM eastern time?
Who cares about this thing called "eastern time"? Clearly the world revolves around Pacific Time, Tanta's prior snarky comments on this topic notwithstanding.
China's equity markets have less to do with funding of enterprises than in the US, so expected impact on investment could be less . . . then again, so many companies took positions here as investors. This would be the pain trans mission channel.
El Cliffo, yes, that is for yesterday.
Best Wishes.
Rob Dawg, the sell-off is impressive and reminds of the NASDAQ too. I'm wondering how much on an impact this will have on business investment in China. I don't know enough about China ...
Best Wishes.
A lot of learning to do regarding China. I'm still trying to get my head around a communist country with "capitalism zones."
I wonder how well their national healthcare works and how well the seniors are taken care of. Can anyone recommend any good recent books/articles?
Nikkei down 2.65.
Who was the investment guru who moved to China? Jim Rogers? He moved at just about the peak I think. Not saying he caused it. Not saying he didn't have some valid criticism of the USA financial system. Just kind of find it funny.
If anyone wants to watch the Indians freakout, here is the URL:
404 Not Found
Hey Dingo,
Jimmy has been invested in China since 99.
Actually he has cautioned against investing there for at least a year.
He was hoping the market would swan dive so he could buy more.
Looks like he called this one also.
When he is in, I'll be right behind.
I doubt they will slow down.. The Chinese government can fund some infrastructure projects with all of their banked savings...
Oh wait those savings are in US Dollars... What happens when all that currency comes out of hiding?
Price inflation for us Americans during massive credit deflation.... OUCH!
I believe Jim Rogers moved to Singapore, which is close enough to China for government work.
El Cliffo
i think CR published this post as the shanghai market was open less than an hour today (which is tomorrow there!... tuesday)
but yeah your right in that the big drop was monday which was yesterday as of this moment.
This shows that business investment in both categories went negative without regard to the fundamental principles outlined in Adam Smith's more noble work.
Is it OT to mention that the Aug. 16th Gann Cycle Turn date appears to have been right (except that we don't trade on Saturdays, so it was the 15th). And the pennant on SPX/INDU appears to have broken, or needs one more down move to break it. A break would set up not only a test of the July 15th lows, but would project down to SPX 1073.35 and INDU 9558.13
SSEC (Shanghai market) is headed back to ~1000. And the commodity bull is over.
The Great American Yard Sale
The Great American Yard Sale - TIME
The bubble was in real estate development they have been hit the hardest... I am a buyer under 2000 and don't expect the weakness to last more than a year or so once we bottom....
The reasons for Shanghai '08 and Naz '00 have a particularly insidious commonality. Both served to pull in then bust everyday people. The elephants danced and the ants got crushed.
China doesn't have the sophisticated banking system we have. Wait, don't laugh. Before you say good for them it also means when it breaks it is sudden and catastrophic. They have a whole lot of generals also quietly in charge of major industries who are going to push a button and transfer their private billions and thus take down the system. As vertically striated as the western economies may be theirs is dangerously sprse except at the very top and bottom.
the shape of the recession
-x
--x
---x
----x
-----x
------x
-------xxxxxx
--------------x
---------------x
----------------x
-----------------x------xxx-----xx
------------------xxx-------xxx---xxx
I am a buyer under 2000 and don't expect the weakness to last more than a year or so once we bottom....
Ummm...why? CR's chart has the mid-2005 pre-bubble value at 1000 and falling. What's fundamentally changed in China, since mid-2005, other than the bubble itself?
What percent of Chinese population is invested in the stock market?
i'm heavily invested in china...screw america
Why is it that only NBC sorts medal tally by total medal count and not gold count?
talk about cliff diving
in less than 2 months rhodium has lost nearly 50% of its price!!!!!!
Lehman May Put a Prized Unit on the Block
"Lehman Brothers, the troubled investment bank, is considering the sale of all or part of its prized money management division to private equity firms to raise billions of dollars of capital and ease the pressure caused by losses related to real estate."
Lehman May Put a Prized Unit on the Block - NY Times
Anonymouse,
Why can't you say INDU 9600 like the rest of us? INDU 9558.13 sounds too much like all precision and no accuracy.
Mock Turtle,
Hopefully now everyone understands what I mean by stairstep decay functions.
Banks, Brokers Face Funding Gap After the Floating-Rate Splurge
The volume of long-term credit available through traditional markets has declined in recent months, implying that there is a significant funding gap,'' the New York-based analysts wrote.The sheer volume of forthcoming maturities means there will be a huge need for these issuers to access the capital markets.''
Banks, Brokers Face Funding Gap After the Floating-Rate Splurge - Bloomberg.com
Hey Mock,
Seen the chart on Rhodium from 03 to now? Wicked wild ride. It's a military metal. Our guys in Greenville (L3) use a lot of that stuff.
Ross
yeah out here in boeing country rhodium is a "must have" for jet engine turbines, and other 21st century uses
Rob Dawg
affirmative, stair step decay
WAPO Cartoon
Housing going straight to hell
http://www.washingtonpost.com/wp-srv/opinion/ssi/images/Toles/c_08182008_520.gif?ref=patrick.net
agree...EST is worthless.
Anak Krakatau writes: China's equity markets have less to do with funding of enterprises than in the US, so expected impact on investment could be less . . . then again, so many companies took positions here as investors. This would be the pain trans mission channel.
Bingo. But as others have noted, given the lack of other investment opportunities, equities have been the choice of millions of commoners... that "pain transmission channel" should be quite effective. Expect the Gov't to hear a lot of static on that channel once the Olympic endorphin rush fades.
FFDIC, you're on a roll. Now tell us what you really think.
we're on the highway to hell
YouTube -
FT - Pressure builds on US banks
"Battered US financial groups will have to refinance billions of dollars in maturing debt over the coming months, a move likely to push banks' funding costs higher and curb their profitability, say bankers and analysts. The banks' need to raise capital to offset mounting credit related losses is forcing them to pay higher interest rates to entice investors. The extra funding costs are set to put pressure on earnings because, in many of their businesses, banks rely on the difference between borrowing and lending rates to make money. "It is difficult to see how banks will continue to repeat the heady profit growth of the past few years if they borrow at these levels," said a Wall Street banker. Banks could also be forced to raise lending rates, exacerbating the credit crunch felt by many businesses and individuals and depressing economic activity even more. Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy." Last week, financial groups including Citigroup, JPMorgan Chase and American International Group borrowed almost $20bn in new long-term debt, paying some of the highest premiums yet to lock in funding. The refinancing period is set to continue for several months as billions of dollars in bank debt come due. For example, Citigroup has more than $5bn of maturing bonds in August, but this climbs to $12.8bn in December, according to Dealogic data. Bank of America, with $7bn maturing in August, also faces higher refunding needs in December, with $9bn of maturing bonds. Adding together 10 of the biggest bank borrowers, Dealogic said that maturing bonds totalled $27bn in August, $52bn in September, $23bn in October, $20bn in November and $86bn in December. The extent of the scramble for funds became clear last week when banks tapped central lending facilities, with strong demand for one- and three-month money lent by the Federal Reserve and the European Central Bank. US commercial banks borrowed a record daily average of $17.7bn from the Fed last week. The lack of investor demand for structured finance products means that more short-term funding will need to come from traditional money market products, according to analysts."
FT.com / UK - Pressure builds on US banks
DCRogers - It has never been a recession because it is a depression.
owner earnings,do you mean cover,or change?
Anonymouse:
All technicals aside, the move to about 9600 pretty much squares with the average equity market loss of 28% per recession (14000*72%).
Given the severity of other factors and typical overswing on reversion to the mean, any idea from the calcs as to whether 9600 would be intermediate bottom?
"Condoleezza Rice said Monday that Russia is playing a "very dangerous game"
(we are all playing a very dangerous game)
(CBS/AP) With tanks busting through Georgia's meager defenses and artillery dug in around the country's main port, the Russians made clear they are going to take their own sweet time pulling out, reports CBS News' Chief National Security Correspondent David Martin.
Russian troops still control a number of Georgian cities and by nightfall U.S. intelligence had detected no significant withdrawals. Russia's military spokesman put it very plainly: Russian troops won't withdraw, just pull back from some of their forward positions.
U.S. Secretary of State Condoleezza Rice said Monday that Russia is playing a "very dangerous game" with the U.S. and its allies and warned that NATO would not allow Moscow to win in Georgia, destabilize Europe or draw a new Iron Curtain through the continent.
(i again say we have been head-faked by the russians)
by the way according to Traub over at NYT the georgian president, saakasvili, was fond of calling russian president, Putin,... "Lilliputian", back when he thought admission to nato was a slam dunk and israel was training his army provided hardware by US)
(trips and falls on a "decaying stairstep")....Help me...I've fallen, and can't get up!!!
It'll be interesting to see what happens through the night, and into the morning....if the Asian fall-off continues, and if Europe follows suit.
DCRogers:
"Expect the Gov't to hear a lot of static on that channel once the Olympic endorphin rush fades."
Yes. As of this minute, the Shanghai index has dropped 14.8% in the eight trading days since the opening ceremony, on only slightly less than usual volume.
Late '07 the government for months had been broadcasting their concern about excessively high valuations. Got their correction, in spades.
FFDIC writes:
DCRogers - It has never been a recession because it is a depression.
with a small but significant chance that we might be facing a financial system meltdown with concomitant social disorder.
Hi,
I'm new here. What fuels these stocks from China? Is it foreign cash, like from America?
What fuels these stocks from China? Is it foreign cash, like from America?
Dunno precisely, but from what I gather the People's Bank of China requires Chinese enterprises to cash in their dollar incomes into Yuan.
This is . . . HIGHLY inflationary since China is printing this yuan -- we have been literally exporting OUR inflation to China.
Combined with the massive trade surpluses the Chinese have been running against us, this hot money was looking for returns, and chased the dragon in equities and got Shanghaid.
mock turtle,
Your clever chart pisses me off; why didn't I think of that? I think your chart fails to show The Covered Bond Bump
-x
--x
---x
----x
-----x
------x
-------xxxx
--------------------x
---------------------x
----------------------x
-----------------------xxxx-----x
------------------x----xx-------xxx
------------------x----xx----------xxx
Something evil this way comes.
Good and evil. Truth
Good and bad. actuality
Depends on whether you are a saint or a czar.
Czars RULE.
Just a cycle. Trade em if you got em.
Darth Kona thanks, i mean sorry
Bernanke Tries to Define What Institutions Fed Could Let Fail
By Craig Torres
More Photos/Details
"Aug. 18 (Bloomberg) -- Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes....
the Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac....
Reinhart, now a resident scholar at the American Enterprise Institute in Washington, is one of several Fed alumni who say they are concerned the central bank will next face requests to rescue hedge funds or insurance companies whose failure might damage the financial system."
Bernanke Tries to Define What Institutions Fed Could Let Fail - Bloomberg.com
WSJ
Freddie Sale Has Asian Intrigue
Far East Investors
Have Curbed Ardor
For Recent Offerings
"Last week, Asian investors bought only 22% of Fannie Mae's $3.5 billion of three-year notes, down from the 42% they snatched when the housing agency sold a bond of similar maturity in May."
Freddie Sale Has Asian Intrigue - WSJ.com
Australian CB says will cut rates soon.
Race to the bottom has begun Beggar thy neighbor inflation.
So soon! Buy something.......heavy.
"I'll see your rate cut and raise you one."
No discipline is this enviroment. Softness, old women, cowards, cheats, thieves and flim flam men. It is our just deserts.
Oh oh, The "Flim Flam Man" with George C. Scott. Required viewing for next weeks posts. GREAT flic.
mock,
I was just thinking about that on a walk; very relaxing yah know.
It seems to me that these banks and entities that are able to draw funds from The Fed, should be required to have specific detailed rules associated with this type of action. E.g, these banks should be required to have certain capital in place and have ratios of liquidity that are not based on Level 3 bullshit or mark-to-bullshit, or be able to rent a balance sheet linked to a Cayman Island whore house that started out as a QSPE, which was a subsidiary of a drug deal that an investment bank used to pay off a rating agency.
Yah know? It seems that this taxpayer cookie jar needs to be transparent and the banks and investors that are playing casino coke whores need to fail as soon as possible -- regardless if they have friends in The Whitehouse or sleep with people in The Treasury or snort meth with The Fed...
"Late '07 the government for months had been broadcasting their concern about excessively high valuations."
At least they knew a bubble when they saw one and weren't afraid to take the step necessary to pop it. China will come out of this a hell of a lot better then America will when everything is said and done.
FDIC Presses Bank Regulators To Use Warier Eye Flagging Woes Now Will Bolster Insurer; The 'Camels' Rating
"In private meetings, Federal Deposit Insurance Corp. officials have pushed other agencies to more forcefully downgrade the confidential rating -- which is known only to regulators and bank management -- of troubled financial institutions, according to people familiar with the talks. If the FDIC gets its way, it could result in more public enforcement actions and could give the FDIC more muscle to either force the companies to improve their balance sheets or seek a sale. It could also make it more expensive for companies to raise capital, as scrutiny from investors would likely spike. The FDIC's push is being met with resistance from regulators with primary responsibility for these institutions."
(It is far easier for the FDIC to win professional liability lawsuits against failed bank directors if it can prove the directors were warned in advance by less than healthy CAMEL ratings and other serious matters in regulatory reports of examinations. A high CAMEL gets more dumb deep pocket bank directors off the hook.)
FDIC Presses Bank Regulators To Use Warier Eye - WSJ.com
That is interesting: Under Bernanke's predecessor Alan Greenspan, the Fed drew a clear line against using its portfolio to influence specific markets. An internal study published in 2002 warned that the favoring of specific entities'' mightinvite pressure from special-interest groups.'
I always thought the CAMEL ratings were bullshit, as well as Dupont Analysis... I need to find scotty...
Re: "Bernanke said in a July 8 speech that a ``strong case can be made'' for expanding the Fed's authority over the U.S. payment system, the complex network of financial plumbing that handles the exchange of money from such transactions as options trades in Chicago and stock sales in New York. The Fed also is pushing for better settlement and trading systems for securities that aren't bought and sold on exchanges."
That is setting up Covered Bonds!
A cute gimme for filler. Thx.
Camels are cigarettes and DuPont makes paint.
FICAS are green leafy plants.
Ratings are for children.
Who knows what evil lurks in the heart of man? Da shadow do.
Rob Dawg writes:
Anonymouse,
Why can't you say INDU 9600 like the rest of us? INDU 9558.13 sounds too much like all precision and no accuracy.
It's an A-B=C-D Gartley projection. On INDU, the A is 13136.69; the B is 10827.71. That's 2308.98 points. The C is 11867.11; that gives a D of 9558.13. That's one way of projecting down.
Another is to take the 10/02 low and the 10/07 high and look at Fibonacci levels. We've passed the 0.50, and the 0.618 is 9890.73. And the 0.782 is 8725.96. So 9558.13 seems a good "split the difference" for an IT bottom, because while Fibs like to get tested, they also like to fool people by initially breaking through or stopping short, only to reverse direction. An A-B=C-D projection works in addition to Fibs.
And precision is a virtue in TA. Without it, why use TA?
If this looks off topic, sorry; had to pull this from the archives:
Hence any resulting regulatory capital relief does not stem from the actual transfer of assets off the balance sheet but the acquisition of credit protection against the default of the underlying assets through asset diversification and hedging. Commonly, sponsors of synthetic securitization issue debt securities supported by credit derivative structures, such as credit-linked notes (CLNs), whose default tolerance amounts to total expected loan losses in the underlying reference portfolio. Hence investors in credit-linked obligations (CLOs) are exposed not only to inherent credit risk of the reference portfolio but also to operational risk of the issuer. Systemic stability cannot be enhanced when the system is decapitated, as exemplified by the 1998 collapse of Long Term Capital Management (LTCM), which required Fed intervention to prevent systemic instability. With world financial markets already suffering from heightened risk aversion and illiquidity from the 1997 Asian financial crisis, officials of the Federal Reserve Bank of New York judged that the precipitous unwinding of LTCM's portfolio that would follow the firm's default would significantly add to market problems, would distort market prices, and could impose large losses, not just on LTCM's creditors and counterparties, but also on other market participants not directly involved with LTCM. In an effort to avoid these difficulties, the Federal Reserve Bank of New York (FRBNY) intervened with the major creditors and counterparties of LTCM to seek an alternative to forcing LTCM into bankruptcy. The hedge-fund industry has since grown with an increased number of funds, which will make the dispersed risk crisis more complex for future Fed intervention by virtue of the large number of interested parties that need to be satisfied.
Greenspan acknowledged that derivatives, by construction, are highly leveraged, a condition that is both a large benefit and an oversized Achilles' heel. It appeared that the benefit had been reaped in the past decade, leading to a wishful declaration of the end of the business cycle. Now we are faced with the oversized Achilles' heel, with "the possibility of a chain reaction, a cascading sequence of defaults that will culminate in financial implosion if it proceeds unchecked". According to Greenspan, "only a central bank, with its unlimited power to create money, can with a high probability thwart such a process before it becomes destructive. Hence central banks have, of necessity, been drawn into becoming lenders of last resort."
Greenspan asserted that such "catastrophic financial insurance coverage" by the central bank should be reserved for only the rarest of occasions to avoid moral hazard. He observed correctly that in competitive financial markets, the greater the leverage, the higher must be the rate of return on the invested capital before adjustment for higher risk. Yet there is no evidence that higher risk in financial manipulation leads to higher return for investment in the real economy, as recent defaults by Enron, Global Crossing, WorldCom, Tyco and Conseco have shown. Higher risks in finance engineering merely provide higher returns from speculation temporarily, until the day of reckoning, at which point the high returns can suddenly turn in equally high losses.
Darth Kona
the standards and transparency to recommend, i support.
the trouble is that the Fed is in code 3, triple red alert, defcon 1
they are bailing the titanic like the hell hounds are at their heels
i dont think reasonable, fair , prudent, or just come into play here...they are in full panic mode.
i meant the standards YOU recommend i support
Large US bank collapse ahead, says ex-IMF economist
Large U.S. bank collapse ahead, says ex-IMF economist
| Reuters
Great hits from the past:
Gaussian copula and credit derivatives
Information Processing: Gaussian copula and credit derivatives
he banker, David Li, came up with a computerized financial model to weigh the likelihood that a given set of corporations would default on their bond debt in quick succession. Think of it as a produce scale that not only weighs a bag of apples but estimates the chance that they'll all be rotten in a week.
The model fueled explosive growth in a market for what are known as credit derivatives: investment vehicles that are based on corporate bonds and give their owners protection against a default. This is a market that barely existed in the mid-1990s. Now it is both so gigantic -- measured in the trillions of dollars -- and so murky that it has drawn expressions of concern from several market watchers. The Federal Reserve Bank of New York has asked 14 big banks to meet with it this week about practices in the surging market.
ShortCourage,
Suck on that too Sheila and goodnight.
Mock,
Speaking for and as Darth, this is somewhat of a Cuban Missile Crisis, without leadership. The threat is real and the enemy is within -- thus, how do you save capitalism without destroying the people and entities that are responsible for this crisis?
I gotta toss this in: The problem: The scale's calibration isn't foolproof. "The most dangerous part," Mr. Li himself says of the model, "is when people believe everything coming out of it." Investors who put too much trust in it or don't understand all its subtleties may think they've eliminated their risks when they haven't.
FFDIC
think kenneth rogoff is talkiing about that big fat S&L or the IB that starts with the same first initial?? (that is the letter some say describe the recession - depression)?
That blows me away, every time I see it: that little story from SEPTEMBER 12, 2005 was out there for all these financial managers, all these hedge funds and they ignored the warnings of risk, for YEARS! The Fed, The SEC, FTC, all these comptroller, audit and accounting people failed to do anything to stop the SIFMA-like explosion of derivative risk -- and now we end up with these lobbies running a government in a systemic failure. Does anyone think Bernake or Paulson have a fucking clue as to how to rate risk with a Level 3 derivative that is linked to a Cayman Island Trust Fund? Does it matter if our leadership people are in a vacuum where their old outdated models are being used to solve problems that are now connected to a whole new generation of supercomputer financial engineering, which is beyond comprehension....... huh, do you punk?
did i write a CDO squared or CDO cubed?
to tell the truth in all the excitement of grabbing all the leverage i could i lost count myself
but seeing as how this is the most powerful hedge fund in the world, and could blow your head, i mean financial system clear off
what you got to ask yourself bernanke is do you feel lucky,
well do ya punk, i mean chairman?
YouTube -
OT?
Note: On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize repayment of the credit extended and to minimize disruption to financial markets. Payments by Maiden Lane LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of the LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to JPMorgan Chase & Co., and interest due to JPMorgan Chase & Co. Any remaining funds will be paid to the FRBNY
Maiden Lane LLC
"Large US bank collapse ahead, says ex-IMF economist"
Hate to tell him but there will be more then one.
CDO
CDO CDO
CDO CDO CDO
The U.S. Foreclosure Crisis: A Two-Pronged Assault on the U.S. Economy John A. Tatomhttp://www.networksfinancialinstitute.org/Lists/Publication%20Library/Attachments/120/2008-WP-10_Tatom.pdf
Under the Feds new SIV, the Fed loaned $29 billion and JPMorgan Chase lent $1 billion, with the SIV using the proceeds to acquire $30 billion of the most illiquid and dubious securities fromBear Stearns portfolio. These securities were valued on a mark-to-market basis as of March 14, 2008. The SIV is managed by Black Rock Financial Management, Inc. The interest rate on the Feds loan will be the primary credit rate and the interest rate on JPMorgan Chases loan will be the primary credit rate plus 475 basis points. Repayment is to begin no later than the second anniversary date of the loan. The Fed is the effective owner of the SIV because any profit or loss will accrue to the Fed after the first $1 billion loss, which will accrue to JPMorgan Chase. The term of the loans is 10 years, but this term is renewable at the discretion of the Fed. The SIV first appeared on the Feds balance sheet on June 26 in data for the week ending July 2, 2008 under the prophetic name Maiden Lane LLC.
The Spiral-Part III
The Fuhrer goes private
Released today
Going Private
Conjure says, "BWAHAHAHA! Great cinema!"
mp
Great stuff, it was funny as Hillary and now, just as good with hedge funds .. ROTFLMAO!
The series is at youtube as well:
YouTube - The Spiral - Part I - Those Vultures
Some nice charts at The Big Picture
The zillow map is nice...
As the secretary said many times before, we have no plans to use the authority that we've been given, so I'm not going to comment on any speculation," Treasury resident hottie spokeswoman Jennifer Zuccarelli told a news briefing on Monday.
Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
okay insomniacs: one day, and that day may never come, we'll look back longingly with thoughts of 'if only I had liquidated at 9,500
Hahah! Thanks for the laugh mp! I thought this was all started by the Hitler-Dallas Cowboys parody...
Hitler a Cowboys fan!
Yes, yes, I know this is a financial blog... but sports transcends...
Yes, yes, I know this is a financial blog... but sports transcends...
Champion Hubris, Master of the Universe, all that stuff applies in sports, politics, finance, doggie beauty salons, you name it...
With all of the investigations pending, I wonder how the shredding companies in New York City are doing?
'300 bankers boxes? No problem.
I wonder how the shredding companies in New York City are doing?
Don't forget the IT departments: "Can you edit the last 24 months of emails to show we've just been shopping on-line and looking at porn?"
THE ROLE OF BANKS IN THE MONETARY POLICYTRANSMISSION MECHANISM
http://www.ecb.int/pub/pdf/other/pp85-98mb200808en.pdf
All in all, these developments have transformed the financial system, making it more market-oriented, and have also increasingly blurred the traditional distinction between a bank-based and a market-based system. While these developments have resulted in financial intermediation becoming more based on market prices, they have also allowed a wider dispersion of risks across the system. Partly in light of these developments, the past decades have seen a relative decline in the importance of the traditional model of financial intermediation whereby banks obtain funding mainly via deposits and use these funds to grant loans that they hold to maturity. This model has over time been complemented with another, where banks increasingly rely on market-based funding and transfer a major part of their credit risk off balance sheet. In other words, some segments of the banking sector have moved away from the traditional originate-and-hold model and towards an originate-and-distribute model. A simple illustration of the changing nature of banking is the increasing funding gap (i.e. the difference between deposits from and loans to the non-financial private sector) of euro area MFIs, which suggests that banks are tending to rely more on non-deposit funding, such as market-based debt and securitisation. However, except for the larger banks, the majority of euro area banks have not adopted the originate-and-distribute banking model and still base their operations on the traditionaloriginate-and-hold model.
Many people in China have pawned their cars and apartments at high interest rates so that they can invest the money in stocks. I wonder how they are doing today...
i din't understand...
could u explain me all this?
Regards,
Jeetu
Packers Movers
Uncle Billy Vs. Mt. Pelerin writes:
"A lot of learning to do regarding China...
I wonder how well their national healthcare works and how well the seniors are taken care of."
I knew a dentist going for an advanced degree at the University of Minnesota, so that he wouldn't have to go back to China to practice his trade. He said that the anesthesia given to the average Chinaman for drilling, filling, or extraction was a sugar cube - unmedicated, just to take your mind off your woes.
Sugar cubes are a step up from the foot powered dental drills I saw in use in Leyte, the Philippines.
The key word. Talk about Nero ...
Russia Blockades Port in Georgia and Seizes Soldiers
In Crawford, Tex., where President Bush is vacationing, a White House spokesman said Monday that the United States was closely watching whether Russia honored its agreement to withdraw. The spokesman, Gordon D. Johndroe, said it was too soon to say whether the Russians were in compliance.
Bernanke Tries to Define What Institutions Fed Could Let Fail
Well, he's let the Fed fail, so what else matters?
3 visitors online as I get to the bottom of these comments, market is going much much lower today...
Joh
Cheney's old Russian Sputnik shredder with built in hair drying capacity is working overtime. Don't let it overheat....
speaking of metal run ups
nickel trough to peak from 2003 to 2007 was over 600% (read stainless steel and high temp nickel alloys)
also iridium and all other platinum metals bubbled heavily, iridium is used in igniters and spark plugs primarily...something like a 500% run uop for iridium....
AAA is good as Gold!
"Usually a stock market crash leads to less business investment, and an economic slowdown."
Are you sure about that? It's not clear to most economists that that is the case - there have been plenty of stock market crashes with minimal effects on the economy.
0.618 is 9890.73. And the 0.782 is 8725.96. So 9558.13 seems a good "split the difference" for an IT bottom... And precision is a virtue in TA. Without it, why use TA?
The comment about precision is basically because you seem not to realize that you have rounded off to three significant digits (0.618) earlier in your calculation, so anything past that is meaningless in your results. 9558.13 implies that you know the number to 6 decimal places. You certainly don't if you have made those roundings in your fibonacci factors.
Claiming anything more accurate than 9560 is a precisionist fantasy.
Claiming anything more accurate than 9560 is a precisionist fantasy.
IMO cumulative rounding errors make even 3 digits a stretch. TA has an interesting bias built into the mathematics. Most errors tend to random walk and somewhat cancel but chartists looking for patterns bias towards patterns and thus accumulate error.
That only looks bad on a linear scale. It is "all logarithms these days".
Yes, business investment in China may slow but government investment will pick up the slack. Beijing has trillion$ to spend and it is the typical pattern once overall growth dips below say 8% on an annual basis then money will be poured into more infrastructure. And this is not a bad thing, btw, as it will most likely accelerate China's high-speed train network, hyrdoelectric capacity, marine terminals and airports. Nice to see our government boost the economy that way were it not for Iraq, etc.
As for the Shanghai Composite -- this is a buying time folks - look to alt energy stocks, transport, select retail and property.