If history is any indication, these are signaling that there is more unreported losses coming in the next few weeks.
In other words, sometimes the market has a bad day and the ABX barely moves, signaling the pain is priced in or has nothing to do specifically with the mortgage market. This pain is NOT priced in!
There's been lot of headfakes from this market . . . but I think it's another down day tomorrow, and a lot more of them on the horizon. Dow 10,500 by November.
The other major indicator that turned today was the Bernanke meter. For the first time, the market tanked when he talked. Remember back last spring and summer when the bulls used to bid things up the minute his face showed on the tube?
There is more anti-Bernanke rhetoric now than ever. He's become the MSM whipping boy.
Did anyone catch Congresswoman Kaptur from Toledo, OH, asking Mr Bernanke about being the former CEO of Goldman Sachs? When he pointed out that he had only been CEO of the Princeton Economics department, she said, "Oh, I'm sorry I thought you were the other guy". It really gives one terrific confidence to know that one's representatives are right on top of things.
I propose that from here on in, everyone here should refer to Paulson as "the other guy". I suppose we could refer to Bernanke as "that guy", perhaps...
I'm sure someone else on this blog has more solid information on this than I do, but isn't A2/P2 commercial paper backed by a bank guarantee just like asset backed commercial paper?
What I'm wondering is whether this spread reflects a change in concern about default for the issuing firm or whether -- just maybe -- this reflects a change in the worries about the value of the bank guarantee?
Aheadofthecurve, I posted the video at the bottom of the posts - very funny!
Gary, what a day. I'm definitely going to have more on starts soon - maybe this weekend. I'll take an indepth look as opposed to just reporting.
Yes, my posting has been sparse - but so has the news. Tanta has something she was working on this morning, but maybe I scared her off with all my posts!
As a democrat and former northwest Ohioan, I can say with confidence the Marcy Kaptur is not one of congress' brightest lights. Unfortunately, she's not one of the dimmest either.
What is the chance Congress or the FED will rescue the monolines if they default? To save everybody from the resulting melt-down, wouldn't they provide all of the capital needed to keep the monolines from defaulting???
Question which I belive is related to this: If the "Stable Value Fund" that my 401K offers has holdings are 19.2% AAA and 80.8 AA, and examples of the assets in the fund include "Guaranteed Investment Contracts, Bank Investment Contracts, and Security Backed Contracts", how concerned should I be if I moved money into this fund?
This one is a little beyond my understanding... Thanks
Query tool, that was the safest investment in my 401k . . . so I closed it out and opened an IRA with the money last summer. Of course, if you still work at the same company, that might not be an option for you. Good luck.
Not to worry. The Fed will just hold more anonymous auctions. Then they will dish out rainbow stew with a silver spoon for lunch. Then Ben will wave his magic wand over the economy while flying on his winged unicorn.
Unless Conjure Bag eats the unicorn first, that is.
dead cat bounce tommorrow for the market. Then more pain next week when the actual AAA is removed on one of the monolines and everyone tries to figure out what the hell will happen next.
Hopefully REBear is here...Take a look
1. 15-Jan-2008 (8K filing)
Unregistered Sale of Equity Securities, Other Events, Financial Statements and Exhi
Item 3.02 Unregistered Sales of Equity Securities.
(a) On January 15, 2008, Citigroup Inc. ("Citigroup") announced it has raised a total of $12.5 billion of capital through the sale of convertible preferred securities in a private offering which has been completed, subject to settlement
Citi announced plans to sell the convertible stock on Tuesday, as part of an effort to raise at least $14.5 billion of capital. (Reporting by Dan Wilchins; Editing by Brian Moss) from release today.
SO My question is this is Citi under water and needs another 2B? The premium is huge on this extra 2B!!
Yup, I'm still with this company and I've got 5 years of the maximum contribution to my 401K plus 6% company match sitting here, so you do the math. This "Stable Value Fund" is the safest thing I can put it in. I guess a low cost total market bond index fund is the 2nd safest.....
Watch for a surprise drop of 50 bps from Uncle Benny tomorrow or Monday, especially if it looks like it'll be another big down day. You know Paulson and Bush are melting the phone lines to the Fed tonight.
Was checking on some Buffett buys to see how he has fared with his recent purchases in the market. In fact his buys last year are a bit above his cost: JNJ, UNH, SNY. Others may be down a bit, I haven't researched all.
The stable value fund is probably safer then the bond fund, but by no means risk free.
If you look at the investments of the bond fund you referred to, you might see that it has some CDO or CMO type exposure. For an example just look at Fidelity's bond funds. Most of them are full of that junk.
I guess those tax cuts for the rich didnt work out so well.
Jan. 17 (Bloomberg) -- The Bush administration is close to completing an economic-stimulus proposal that will include $800 rebates for individuals and $1,600 for households as well as tax breaks for businesses, people familiar with the plan said.
Offer good only if you promise to buy a 50 plasma TV with the money. (If you already have that, please buy mortgage backed securities.) We dont want them to save it or pay off debt.
Well UNH was too cheap to resist at 46. I picked up some. The reaction to the anti-depressant story was hugely overdone. They work in most patients if you match them to the right drug. You may have to takes try 2 or 3 to find the best match in some cases. The zetia MRK/SGP was real, but affects only those 2.
Overall, the market reaction in the non-financials seems overdone. INTC had a 51 % INCREASE in profits and gets slaughtered because it was 2 cents under the prediction of some anal-lyst who has never run a company in the real world. Now let's say you owned a business that increased profits 51% y-o-y. Would you be happy or unhappy?
Watch for a surprise drop of 50 bps from Uncle Benny tomorrow or Monday, especially if it looks like it'll be another big down day. You know Paulson and Bush are melting the phone lines to the Fed tonight.
Another 50 bps at the Jan 30th meeting.
I think if it weren't for the $90+ dollar oil Bernanke would have been cutting like a madman already.
I wouldn't be surprised by an emergency cut, but I have a hard time imagining 100bps this month with oil still at $90 unless they've got a secret plan to keep it down.
Atherton-Newport Investments LLC, an Irvine-based apartment owner that counts a number of professional athletes as investors, said on Thursday it had filed for Chapter 11 bankruptcy.
The filing, made in the federal bankruptcy court in Santa Ana, was prompted by one of Atherton-Newports creditors, the company said. The bankruptcy filing says the company counts $10 million to $50 million of both assets and liabilities.
Prominent creditors listed in the bankruptcy filing include Los Angeles Angels of Anaheim slugger Vladimir Guerrero, Etan Thomas of the NBA's Washington Wizards, and Nikolai Khabibulin of the NHL's Chicago Blackhawks.
Atherton-Newport, formed in 2001, says it currently controls about 5,000 apartments in Las Vegas, Phoenix, Seattle and South Florida, as well as two housing developments in Southern California.
these ABX threads always go way off topic. don't you guys want to discuss the effect of slow prepayments and high losses as it relates to the switch of time-tranched subprime AAAs from sequential to pro rata payment when the subs are lost and what this means for the valuation of the LCF ABX AAAs? me neither, i'm tired. as you were...
bacon, it is hard to value something that probably has minimal value.
remember way back when I was excoriated on these boards for commenting that everything below AA was only worth a bid in the mils...well, we are getting closer.
Someday this war's gonna end...meanwhile I am contemplating calling my servicer for an heloc takeunder number;-}
What is the chance Congress or the FED will rescue the monolines if they default? To save everybody from the resulting melt-down, wouldn't they provide all of the capital needed to keep the monolines from defaulting???
tedzbear,
People don't understand that this isn't just about troubled companies. It's also about troubled concepts and products.
I mean things like bond insurance, bond enhancement, the ability to transfer a credit rating from one company to another by the payment of a fee, etc.
Some of this has always been wacky. It just took time and trouble to see it.
In addition to ratings failures, there are failures here on the part of insurance regulators. The regulators never did the job on MBIA, Ambac, etc. because they really didn't understand the products or risks; because insurance regulation is state and these companies are national; and because of conflicts-of-interests (states regulating bond insurers and also getting benefits of their products).
All that is history. Insurance regulators can't let this happen again.
I hope everyone is sitting down when they read this one-
"In addition, the Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, Countrywide may be required to pay Bank of America a termination fee equal to $160 million."
I'm approaching my first b'day living every day with Cr and Tanta and all you wonderful posters. Thank you all, of course most especially CR and Tanta. My question is OT but relates to query_tool: is there any fiduciary responsiblity on the part of an employer for the offerings available for selection in a 401K / 403B?
CR / Tanta / Others,
18 months back when i first visited this blog, i had no knowledge of how financials worked. Thanks to you, i now know a few things. Is there any certification i can take to cement whatever i have learnt here ( bonds, derivatives, mortgages, options) for some future use? A mortgage ubernerd certificate or a Bonds and Derivative certificate ... I understand i will need to read more than just what's posted on this blog ...
Thanks
I agree : Congresswoman Kaptur's faux pas was shocking - its not that she was talking about the bio ( delete that, just the name ) of the chairman of the ECB or the BoE is it ?
But of course, she comes from the general pop. a woman of the people so to speak - and in a culture that has systematically devalued "old-school learning" and academic prowess and knowledge ( anecdotally, I recall the hits that robDawg got for referring to his child being offered a place at an Ivy League school), this does not surprise me.
With BernanSpan out talking and the market in total chaos it reminded me of the final scene in "Animal House" when Kevin Bacon is assuring everyone all is well and don't panic and he gets trampled by the rampaging crowd!
It is starting to feel a little nervous out there!
( anecdotally, I recall the hits that robDawg got for referring to his child being offered a place at an Ivy League school), this does not surprise me.
For the record she's only had that second face to face interview with a local rep/alumnus. No offer yet. The point was IIRC about the new pricing strategies pioneered by H and now being quickly adopted elsewhere once the realized they weren't even getting the best applicants from the middle classes due to cost issues.
Those were the exact same choices I had in my 401k. I had retired and kept the monies in my old company 401k.
But several months ago, I pulled all the money out put it in IRAs invested where I wanted it to go. As a bonus I got away from Schwab (not that I have anything aginst them, its just their investment philosophy is/was different than mine).
Yes, I agree the stable value fund seems your best choice.
Thank you for taking the time to explain the commercial paper spreads..I am new to the site and a rank amateur trying to learn the basics.. that was good reading for me
Sweetums lost a full year's income listening to Cramer and MSM, and trading last year; tonight she tells me "it must be a bottom - Cramer's lost it".
The upshot: We had a calm, data-driven heart-to-heart (a first). Thanks to CR and Tanta, she agreed that I was right all along. We devised a plan that spreads all of our non-403B into a risk adjusted short and ultrashort strategic plan. The rest, as safe as is available to me (thus my question above re: query_tool.)
3 of 4 kids in college, I PayPal'ed what I could. Thanks again to CR, Tanta and all of the posters. Celebrating the first "I was right" of the New Year!
is there any fiduciary responsiblity on the part of an employer for the offerings available for selection in a 401K / 403B?
michi_doc,
The responsibility lies with the entities who act as ERISA fiduciaries, and almost all individuals associated with the plan's investment selection and administration are ERISA fiduciaries. Outside vendors and attorneys can be also. The employer company is not always a fiduciary. The individual fiduciary's liability is personal, not under a corporate liability shield.
The responsibility in a 401(k) is for the choice of investments offered (the menu) and especially if company stock is included. Fiduciaries also can be responsible for bad investment decisions made by individuals unless they qualify for a safe harbor from liability called 404c. You can check any plan's 404c status at Free Employee Benefits Data - FreeERISA in the 5500 data base of public documents.
Federal Reserve Chairman Ben Bernanke endorsed the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy
$800?
come on guys... those cds trader's banked millions the last 5 years...
if you want us to spend, give everyone at least 10g's..
we can all get a flight to the bahama's on the next a380 flight
As we constantly hear about how GS has cleaned up, I've begun to wonder if they've sown the seeds of their own demise due to their incessant need to tell everyone just how clever they are.
When you have a very large position in the market, and everyone knows what that position is, well...we all now how that turned out for LTCM...
Well GS has said they have no writedown enough times that if they do have write-downs they will need an entire wing in the Club Fed for them. I'm coming to think it might be true.
Ot,our local paper reports a December median of $466,500.Peak was $619k in 8/05.Prices in sebastopol and sonoma (city) are up...no bottom end sales in either town,and dec was the slowest month on record.70% of sales in '05,'06 and '07 were "exotic" loans.If you are thinking of retiring to the wine country,2012 to 2015 looks about right.
"Countrywide may be required to pay Bank of America a termination fee equal to $160 million."
Subject to -
(e) by Parent, if (i) the Board of Directors of Company shall have (A) failed to recommend in the
Proxy Statement the approval and adoption of this Agreement, (B) made any Change of
Recommendation, (C) approved or recommended, or publicly proposed to approve or recommend, any
Alternative Proposal, whether or not permitted by the terms hereof or (D) failed to recommend to
Companys stockholders that they reject any tender offer or exchange offer that constitutes an
Alternative Transaction within the ten business day period specified in Rule 14e-2(a) of the Exchange
Act, (ii) Company shall have breached its obligations under Section 6.11 in any material respect adverse
to Parent or (iii) Company shall have breached its obligations under Section 6.3 in any material respect
by failing to call, convene and hold a meeting of its stockholders in accordance with Section 6.3; or
(f) by either Company or Parent, if its Board of Directors determines in good faith that the other party
has substantially engaged in bad faith in breach of its obligations under Section 6.12.
i'm inclined to think that the derivative index on these securities is skewed reflecting hedging and other activities not so much the underlying asset.
am i dense or have i completely missed where RMBS pools have actually defaulted on the payments to the tranche holders?
pardon me if i missed all that, too busy trying to actually navigate the ground level action here.
still get a good laugh knowing that either career path i chose for myself in 2001 would have led me to the same dirty dank drying up well
ambac or real estate? it was a tough decision back then. "structured finance" that's SOOOO COOOL.
my capstone B-School finance course was taught by a sitting board member of Ambac and former board member of Citi. it was alllll about SIV, credit enhancement, securitization, an 'risk distintermediation'
the gentlemen that taught the class became a mentor and advisor to me and got me set up at Ambac. but then i took the RE line hook bait and sinker and here we are.
i reached out to him recently and haven't heard back. i'm sure he's busy.
and PS when my browser underlines "disintermediation" and "securitization" because it doesn't recognize them as words - what does that tell ya? LOL (or did i spell them wronghahaahah)
and wrt to anniversaries, i guess this is my 2.9th year here because i remember when it first got started and it was crispy, dry, and cr commenting in an echo chamber. several others too whose names escape me. we're on generation 3 here i think now.
hey, rich -
the freeERISA site requires much registration information. Can you or others give me feedback about spam? I'm not going there, as they say...
Conjure would like to address his CR friends directly, so I am turning over the keyboard to Mr. Conjure Bag.
Ladies and Gentlemen, Mr. Conjure Bag.
FRIENDS, AS YOU KNOW, UNLESS YOU'VE BEEN LIVING ON PLUTO THE LAST FEW WEEKS, THE BULL MARKET IN EQUITIES, WHICH I PRONOUNCED TO BE OVER IN NOVEMBER, IS OVER.
THE Q1-08 RECESSION, WHICH I FORECASTED IN AUGUST OF LAST YEAR, IS NOW UPON US.
OUR HEDGE FUND FRIENDS HAVE BEEN QUIETLY MOVING OUT OF U.S. EQUITIES FOR THE LAST SEVEN MONTHS AND INTO COMMODITIES. THEY STARTED TO DO SO SHORTLY AFTER THE BEAR STEARNS HEDGE FUNDS IMPLOSION, WHICH I TERMED A "SYSTEMIC EVENT," TRIGGERED THE CURRENT CREDIT CRISIS. THEY ID THIS BECAUSE IT'S THE ONLY GAME LEFT AND THEY WERE ABLE TO RATIONALIZE THE MOVE ON GROUNDS OF GLOBAL "DECOUPLING." I HAVE NEWS FOR THEM. THERE IS NO DECOUPLING. ASIA, CHINA IN PARTICULAR, WILL SOON SLOW DOWN.
I AM GOING TO TAKE THEIR MONEY. THEY HAVE, IMO, CREATED YET ANOTHER BUBBLE IN COMMODITIES AND I AM GOING TO SKIN THEM. JIMMY ROGERS, ARE YOU LISTENING?
UNFORTUNATELY, AS MY FRIEND DRYFLY NOTED IN A PREVIOUS THREAD, FALLING COMMODITY PRICES WOULD HAVE A MAJOR IMPACT ON MIDWEST LAND PRICES. SO BE IT.
IN SHORT, I AM BEARISH, BEARISH AS HELL. THE FED HASN'T A SINGLE CLUE AND THE INSURERS WILL SOON IMPLODE. MORE WRITEOFFS ARE COMING. I AM ADVANCING MY CLOCK TO
11:59:03
I HATE MP'S TOFU STIR FRY. IF YOU'VE EVER TRIED IT, YOU KNOW WHY I ATE THE NEIGHBOR'S DOG YESTERDAY.
Sweetums lost a full year's income listening to Cramer and MSM, and trading last year; tonight she tells me "it must be a bottom - Cramer's lost it".
The upshot: We had a calm, data-driven heart-to-heart (a first). Thanks to CR and Tanta, she agreed that I was right all along. We devised a plan that spreads all of our non-403B into a risk adjusted short and ultrashort strategic plan."
Michidoc,
because your significant other tried to 'trade' the market and failed miserably probably it is not a great reason for you to embark upon the same course armed with 'information' from posters on this blog (myself being one). taking your life savings and putting it in 'a risk adjusted short and ultrashort strategic plan' is a recipe for further disaster.
david_in_ct | 01.17.08 - 8:32 pm | #
In reply, I'm up 43% average, YOY the last 5 years, which is why I can be so cavalier. I basically retired at 52, my home is paid off, but still manage every dollar conservatively, and still work so my brain doesn't atrophy.
Sweetums, however, isn't doing so well. My point was the benefit of this blog and its posters to the overall money management of our marital unit.
Your point, expressed in your previous posts, is well taken: diversify.
My issue now will be: according to your previous posts, if I had followed your advice, what would my gain have been?
michidoc
i have no desire to engage in a who has a bigger dick contest. the tone and content of your post lead me to believe that you were a novice investor that was having a hard time of it. my only offer was to try to keep that person from continuing down a path that would likely end in ruin. since you have informed me otherwise, then by all means follow your leveraged short ideas.
best of luck
d
david_in_ct | 01.17.08 - 8:53 pm |
I love you and all the posters on this blog. This is a celebratory night, tomorrow is options expirations and maybe a BB 'surprise'. Let's all enjoy the moment.
Could oil prices fall in the short term? Sure. This time of year oil usually falls anyway. In view of declining production, though, I'd like conjure to explain how oil prices will fall long-term.
"Right now the spread is indicating that "fear" is very high. It is actually very rare for CP defaults, but they do happen (see table 5 in the above Fed link)."
The ABCP market in Canada has been frozen for months. The funds using it are refusing to pay out to investors. If I were a Super Colander Tin Foil Hat wearer, I would say that looks like a default. Just sayin'
"Merrill Lynch Plans to Write Off ACA Bond Insurance"
Jan. 17 (Bloomberg) -- Merrill Lynch & Co., the biggest underwriter of collateralized debt obligations, said it will write off $2.6 billion in default protection from bond insurers including ACA Capital Holdings Inc. because it's worthless.
Merrill Lynch cut $1.9 billion of debt insured by ACA, whose debt ratings were lowered 12 levels to CCC in December, and $679 million from other insurers. Guarantors including MBIA Inc. and Ambac Financial Group Inc. are under threat of losing their AAA ratings from Moody's Investors Service and Standard & Poor's.
``We are reserving against ACA dollar for dollar so it's 100 percent reserved,'' said John Thain, chief executive officer of New York-based Merrill Lynch, during a conference call today with analysts and journalists.
riskc:
though i am sympathetic to your viewpoint, my nature is to generally keep making the same 'mistake'. sometimes it leads to finding a kindred spirit.
thanks
d
mp,
i think for conjure to be correct in the long term he is going to have to devour 2 billion or so indians and asians.
hope you have a sturdy leash for him.
d
mp-Metals, I agree. Not so sure about grains. Much of Australia is on the borderline of sufficient rain. Climate cahnge may render much of Australian wheat fields questionable.
boy was i wrong. I think dry fly was one of the first commenters ever, using "dry fly" instead of the contemporary "dryfly"
I used dry fly, Dry Fly, dryfly and various misspellings of all because there were so few people then & IE was so squirly. Didn't matter folks would have known my posts by the dots [...] and misspellings alone.
Then the wave of trolls and imposters jumped in and I settled on one name.
Remember 'farting through silk'? Probably more pooh than gas after today.
Anyway - I found this place reading on a tip from vader (we chatted often on another forum dedicated to 'unemployed IT geeks & engineers' and also on Angry Bear - CR used to post there & I followed it back here & quit going to AB soon after that, too partisan).
That was a while ago... in computer years anyway. CR & tanta have done nice work.
i'm such a dork. what i believe is tanta's first comment ever on CR:
(sorry for the formatting)
"Hey, CR, I was just over at Angry Bear. What one gets for reading one's feeds in the wrong order.__I find it impossible to believe that "Option ARMs" account for 40% of current securitizations. I will try to check the UBS citation, but 40% is the last number I heard for total "interest only ARM" production.__These things are different. The "IO ARM" gives you a period between 3 and 10 years during which you are required to pay no more than interest only. At the end of the IO period, the payment is amortized over the remaining 20-27 years, and you start paying down principal.__The "Option ARM" is an ugly little variation on the "standard" IO ARM. The "Option ARM" lets you decide on any given month whether you want to pay principal and interest, interest only, or even a minimum payment less than accrued interest, meaning that you get negative amortization that month. In other words, it's the horror product of the late 80s (negative amortization) married to the horror product of the early 00s (interest only).__Real "Option ARMs" are still a much smaller piece of the business than IO ARMs, I am sure. But at the rate this stuff mutates . . .__What was interesting about the actual S&P change is that they updated the foreclosure frequency factors. The "traditional" view of IO ARMs is that foreclosure isn't more frequent, but the loss is more severe when it happens (because the balance is higher in the years when foreclosure is most likely). So the "Option ARM" combines the FC frequency of negative amortization with the loss severity of interest only. The fact that no consumer seems to understand what these things are is icing on the cake which someone left out in the rain. __I hope my retirement account isn't buying any of those REMICs._
Grains ? I know this is not a trading blog - so I'll just say - Grains ? Let me tell you a story.
So I went to the Boulder LiquorMart (cheap cos the uni students shop there) to get a case of Avery IPA today ( good market day and all that ) - she rang it up as $8.99 a six-pack, so I queried that, she insisted it was 8.99 and took them back to the cooler area where it was posted as 7.49 a six pack. So, they pulled down the old posted price but as she rang up the refund she and two others ( supervisors I suppose ) they all talk of the price of hops going sky-high !
So I sympathise ( but not enough to refuse the refund ) and talk about the limit up trading two days in a row in corn, of China imposing price controls on Tsing Tao beer (I shall complain if they jack up its price in my usual Chinese restaurant) and so on..
mp-Without food, we are dead pretty quickly. Without oil, not much food. If you want to base everything on the next 2 weeks, go ahead, anything can happen. Pats might even lose (but I doubt it)
Ahead, by way of explanation, I don't think Conjure is talking about petroleum. He's talking about metals and grains, particularly grains.
I think conjure is dead nuts right on about metals (esp. base metals) & grain (esp. corn) being a 'bubble' - farm land too. Scarcity is one thing - but there looks to be more goin' on. Just my ignorant guess...
Oil is already down 10% from its high; oil services and NG stocks are down about 16%. I think we're about back to where to hedgies moved in last year. I'd like to get back into positions in those areas but I don't think they've hit bottom. I'm thinking $75-80/bbl oil will be my cue.
K/sk - hops is a different issue from grains. Look into it.
Commodities clearly have room to fall... all of them
there are clearly intrinsic fundamental reasons why the various commodities are higher today than in the past, and will be higher in the future than they are now.
But the sheer rapid rise stinks of speculation IMO.
recession could decrease the prices of all commodities... although they may drop less than other investment classes (stocks, bonds, Treasurys, etc)
The panic from the streets is palpable, with Bernanke served up as sacrifical lamb (unless conjure eats him first)
So I'm wondering if we may indeed see a "surprise" 50bps cut tomorrow. it would put Friday up on a good note, make the week not look so bad, and we could have warm fuzzies all weekend.
Then another 25-50 again on the 30'th.
would that be enough to forestall an immediate crash? at least cause a dead cat bounce?
My investment strategy (failing) has been to have some long positions open the last few weeks, until AFTER the Jan 30'th meeting, and then short like crazy the day after the FFR drop...
YTL-I don't argue with you in the short term, next few months, though grain will depend on weather to a large extent. On oil, I agree with Federson more or less.
I think that one has to be careful with commodities. Some metals are showing strength on fundamentals, some are riding the coat tails. Same for grains, although the fundamentals for corn are driven by stupid subsidies. Corrections are happening now even with the stock slaughter today.
F. Frederson,
75-80 bbl oil is possible. But LT trends are up, and if that idiot Bernutty cuts 75bps, well...that's off the table.
Succinctly...Industrial metals are bubbly...grains are odd, I'm not sure...
Hopps. They'll take my beer when they pry my cold dead fingers from the bottle.
YTL-To me this market seems very dangerous either way. I've raised a lot of cash. As for the positions I have (mostly drug, biotech and some oil). I'm just going to leave them and check back in a few months. If they're down, I might buy more then. But right now, don't do something, just stand there looks like the wisest course.
I believe that farmland prices for vegetable and fruit production are a major bubble here in California. Prices paid in my area have tripled during the housing boom as growers sold land for development and had to quickly buy land with the proceeds. The difference between renting and buying farmland mirrors that of housing. There is plenty of land from bigger less profitable crops that can be converted to higher value crops quickly. Yet oversupply of most crops keeps returns down limiting the need to convert this land. The land is just too expensive to justify growing low value crops.
I laugh every time I see some gentleman farmer who builds a house and decides that he is going to plant an orchard around it and pay different companies to manage it. He will be lucky to pay the property taxes. And if I read another for-sale listing that says how much profit "potential" there is I will puke.
Ok, maybe I stated the obvious, but you can't make ethanol out of hops, only flavor it. Hops prices have more than doubled this fall due to real shortages, but it's not a tradeable market. (PS: Word is that A-B grows its own hops, so hasn't faced the same problems as homebrewers, brewpubs, etc. Might be a play there for the adventureous. TINFA, of course.)
75-80 bbl oil is possible. But LT trends are up, and if that idiot Bernutty cuts 75bps, well...
Definitely energy is up over the LT, but I think there is still some speculative premium, as well as a security premium. Could be wrong though - I could end up like the twits at CERA, predicting a price that will never be seen again.
Yeah, CERA just came out today and said production from existing fields is falling 4.5 % per year, but don't worry, we can increase production 8 %/ year. And I'm the tooth fairy...
As for the positions I have (mostly drug, biotech and some oil). I'm just going to leave them and check back in a few months. If they're down, I might buy more then. But right now, don't do something, just stand there looks like the wisest course.
Agreed. Until this year I've been mainly a buy and holder.
Then I got terrified about a year ago, and have been SLOWWWWLY moving from long equity position to Treasurys and Gold and Cash.
But I have a little play money to play around with...
My goal was to change another chunk of long positions to cash after Jan 30th and just wait things out... and then short a little with my play money (it's not a lot... just there to help me learn and put my $$$ where my mind is).
this is where my "timing" was bad.
Too many variables for me... If I could drop one (specifically govt intervention) then it'd be so much easier...
but as they say, if my aunt had a d*ck she'd be my uncle.
Hey, I was telling a storrryyy - and I don't look it up, I only drink it ! for free too - on some Saturdays, I'll drop into the Avery brewery into the tasting room - many times they have stuff that is never put on sale ( can't be sold ) for example dry hopped beer ( where they add extra hops into the keg ( or whatever they are called nowadays, firkin rings a bell ) after its brewed ) and so on. Besides I did part of my growing up on the Kent/Sussex border and cross-country running thru muddy mucky Shady Lane was too much like hard work so I used to cut across the hop fields so I know hops.. ( their value if not their price ).
Anyway, the long and short of this is, how about a bet in the T Boone Pickens style. The loser takes out a sub, or puts $60 in the tip jar, to the CR newsletter.
I suggest we use the DBA ( disclaimer: I own it ) its a Agricultural commodities index, approximately equally weighted ( by value not weight) corn, wheat, soybean and sugar. Its at 37.50 today. I bet we'll hit 42.5 before 32.5. You a taker, mp ?
Strongs links are falling apart.
Bovespa index, one of the strongest, broke a key point with high volume.
It means that we reached the point of recognition.
sk, I don't bet and neither does Conjure, but does Rochester ring a bell?
mp
A fellow campanologist ?! Nope, I didn't get that far up north in my childhood - all the sports team fixtures were with schools along the coast - the Cinque ports and more - as ancient as Rochester but different.
Or did you mean nobody rings a bell at the top of the market ?
Welcome to a market dynamic that will continue to slaughter longs: if you want your failing company to stay afloat, you have to take on expensive debt (harming future profits) or sell off equity (diluting existing equity). Either way, its bad for existing shareholders (and shares). MBIA and Ambac are learning that, as are holders of Citigroup, and as did holders of Countrywide, ad infinitum. It's not enough to be "bailed out" in this market; the piper must be paid, and he will be paid not only in bankruptcy but also more widely in share value. So needless to say, we expect continuing pain for financials (and much of the consumer-exposed market) for quite some time.
Yearning to Learn.
My play was the same. I was playing long in the emerging markets for month end. I was expecting at least a 75% basis cut but had to cut my losses by going into short term government bonds. I think that it will be interesting in near term. The FED may cut early but it is a risk that they may not. I had to pull out because I was tired of 2% losses here and there. Hopefully, this will give me a chance (timing) to get back in when oil hits 60. Either way, I think that we are all in interesting times where you need to play for return of capital rather than return on capital.
An experienced European banker told EIR this morning that "the problems of 2008 are of a completely different order of magnitude than those we saw in 2007."
We have entered a period now, he explained, in which large banks and financial firms are opening their books to external auditors, after having announced losses for the fourth quarter of 2007 according to their own internal surveys. But these external audits are now finding different values than those previously announced. (Surprise, surprise!ed.) Thus, said the banker, we might expect a whole series of aggravated balance sheets, including legal bankruptcies of banks and financial companies.
Whereas the losses officially calculated by central banks are already tremendous, in the order of hundreds of billions of dollars, the real write-off concerns some $3 trillion, the source said. That is what is starting to emerge now.
Take this as the real context for the reports and rumors of $40 billion or so in "new" losses, swirling in recent days around just two financial firms, Citigroup and Merrill Lynch.
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
"Yeah, CERA just came out today and said production from existing fields is falling 4.5 % per year, but don't worry, we can increase production 8 %/ year. And I'm the tooth fairy..."
It drives me nuts when CERA makes claims about increased production. They NEVER show exactly which fields will provide those increases. It's always an assumption based summary extrapolating history models. Doesn't work that way, but Daniel Yergin has influential friends and gets alot of press time. Matthew Simmons puts CERA to shame.
Daniel Yergin has influential friends and gets alot of press time.
He's been riding on the reputation of The Prize for 17 years now. Good book, but CERA's recent forcasting has either been lousy or hacktacular, depending on your level of cynicism.
Thanks Owner Earnings- Fortunately, I don't have any of my 401K in Fidelity Bond funds. I am planning to move all of my Fidelity stock funds to Money Market for now. I will get advice from Fidelity tomorrow maybe she will suggest a safer stock fund...
i'm inclined to think that the derivative index on these securities is skewed reflecting hedging and other activities not so much the underlying asset.
CR,
I don't know the attach/detach points of the underlying bonds well enough to know what these indexes mean.
What are the ABX indexes saying about the severity of foreclosures and recoveries? It seems to me that at 65 they are suggesting that almost half of all subprime mortgages will go bust.
I think bubble overstates it, more like over extended and due for a sharp and very tradable correction in a long term up trend. For the first time in history most chinese are able to actually have some pork in their pork fried rice, and it takes many pounds of grain to make one pound of pork (appologies to the beloved mortgage pig). It takes a lot of copper to wire all the houses in China and India. Yeah China will probably going to have to spend some of their reserves to keep up consumption of pork and metals. However, with the recession in the U.S. Chinese growth will slow sharply. I doubt they go all the way to recession, but maybe a few years of 5% growth rather than 10%+. However, I could easilly be wrong on that. For a longer version, check out my recent post on Zacks.com
If history is any indication, these are signaling that there is more unreported losses coming in the next few weeks.
In other words, sometimes the market has a bad day and the ABX barely moves, signaling the pain is priced in or has nothing to do specifically with the mortgage market. This pain is NOT priced in!
There's been lot of headfakes from this market . . . but I think it's another down day tomorrow, and a lot more of them on the horizon. Dow 10,500 by November.
The other major indicator that turned today was the Bernanke meter. For the first time, the market tanked when he talked. Remember back last spring and summer when the bulls used to bid things up the minute his face showed on the tube?
There is more anti-Bernanke rhetoric now than ever. He's become the MSM whipping boy.
Did anyone catch Congresswoman Kaptur from Toledo, OH, asking Mr Bernanke about being the former CEO of Goldman Sachs? When he pointed out that he had only been CEO of the Princeton Economics department, she said, "Oh, I'm sorry I thought you were the other guy". It really gives one terrific confidence to know that one's representatives are right on top of things.
I propose that from here on in, everyone here should refer to Paulson as "the other guy". I suppose we could refer to Bernanke as "that guy", perhaps...
CR, think you'll cover WM or additional color on the starts?
I mean, your posting HAS been rather sparse today.
I'm sure someone else on this blog has more solid information on this than I do, but isn't A2/P2 commercial paper backed by a bank guarantee just like asset backed commercial paper?
What I'm wondering is whether this spread reflects a change in concern about default for the issuing firm or whether -- just maybe -- this reflects a change in the worries about the value of the bank guarantee?
From MBIA's CDO-squared to surplus notes... very creative.
Aheadofthecurve, I posted the video at the bottom of the posts - very funny!
Gary, what a day. I'm definitely going to have more on starts soon - maybe this weekend. I'll take an indepth look as opposed to just reporting.
Yes, my posting has been sparse - but so has the news. Tanta has something she was working on this morning, but maybe I scared her off with all my posts!
Best to all.
As a democrat and former northwest Ohioan, I can say with confidence the Marcy Kaptur is not one of congress' brightest lights. Unfortunately, she's not one of the dimmest either.
What is the chance Congress or the FED will rescue the monolines if they default? To save everybody from the resulting melt-down, wouldn't they provide all of the capital needed to keep the monolines from defaulting???
Question which I belive is related to this: If the "Stable Value Fund" that my 401K offers has holdings are 19.2% AAA and 80.8 AA, and examples of the assets in the fund include "Guaranteed Investment Contracts, Bank Investment Contracts, and Security Backed Contracts", how concerned should I be if I moved money into this fund?
This one is a little beyond my understanding... Thanks
Par to 80 in days...who needs a hot stove...
CR, ably handled as always.
Query tool, that was the safest investment in my 401k . . . so I closed it out and opened an IRA with the money last summer. Of course, if you still work at the same company, that might not be an option for you. Good luck.
Perhaps an indicator that we've hit peak calamity is when CR posts only the super-big blowups.
albrt,
I can say with confidence the Marcy Kaptur is not one of congress' brightest lights. Unfortunately, she's not one of the dimmest either.
Chinese population: 1,321,851,888
U.S. population: 300,000,000
U.S. representative: 435
Roughly the top 25% IQ of Chinese exceed U.S. population. And we're represented by the dim ones.
So sad.
Not to worry. The Fed will just hold more anonymous auctions. Then they will dish out rainbow stew with a silver spoon for lunch. Then Ben will wave his magic wand over the economy while flying on his winged unicorn.
Unless Conjure Bag eats the unicorn first, that is.
dead cat bounce tommorrow for the market. Then more pain next week when the actual AAA is removed on one of the monolines and everyone tries to figure out what the hell will happen next.
Hopefully REBear is here...Take a look
1. 15-Jan-2008 (8K filing)
Unregistered Sale of Equity Securities, Other Events, Financial Statements and Exhi
Item 3.02 Unregistered Sales of Equity Securities.
(a) On January 15, 2008, Citigroup Inc. ("Citigroup") announced it has raised a total of $12.5 billion of capital through the sale of convertible preferred securities in a private offering which has been completed, subject to settlement
SO My question is this is Citi under water and needs another 2B? The premium is huge on this extra 2B!!
Thoughts please
Gary --
Yup, I'm still with this company and I've got 5 years of the maximum contribution to my 401K plus 6% company match sitting here, so you do the math. This "Stable Value Fund" is the safest thing I can put it in. I guess a low cost total market bond index fund is the 2nd safest.....
A2 P2 CP is not necessarily backed by an LOC or a bank. It's just lower in credit quality than A1 P1.
And that stable value fund may very well have GIC's with MBIA or AMBAC. They were big in the GIC business until, well, now.
"I'll take an indepth look as opposed to just reporting"
CR. a question:
Did you mean to say "you will put some color on that"
Yesterday, I predicted the MBIA surplus notes would hit 50 today, was I way off or just early?
Anyone read the details of Merrill's press release today? They still have $30 billion in subprime exposure of which at least $23 billion is hedged.
Problem is they just wrote $3 billion of their hedges down to $0.
Who else might have a counterparty risk problem? GS? Naaaa
I'll put the Dow at 9,500 or under by election time.
Watch for a surprise drop of 50 bps from Uncle Benny tomorrow or Monday, especially if it looks like it'll be another big down day. You know Paulson and Bush are melting the phone lines to the Fed tonight.
Another 50 bps at the Jan 30th meeting.
Blonde,
Just early and lowballing it at that!
Was checking on some Buffett buys to see how he has fared with his recent purchases in the market. In fact his buys last year are a bit above his cost: JNJ, UNH, SNY. Others may be down a bit, I haven't researched all.
query_tool
The stable value fund is probably safer then the bond fund, but by no means risk free.
If you look at the investments of the bond fund you referred to, you might see that it has some CDO or CMO type exposure. For an example just look at Fidelity's bond funds. Most of them are full of that junk.
Aheadofthecurve:
Embarrassing as it was, Congresswoman Kaptur's blunder was a classic example of "truthiness," IMO.
Tax cuts for the poor?
I guess those tax cuts for the rich didnt work out so well.
Jan. 17 (Bloomberg) -- The Bush administration is close to completing an economic-stimulus proposal that will include $800 rebates for individuals and $1,600 for households as well as tax breaks for businesses, people familiar with the plan said.
Offer good only if you promise to buy a 50 plasma TV with the money. (If you already have that, please buy mortgage backed securities.) We dont want them to save it or pay off debt.
Bush Stimulus Plan Includes $1,600 Rebate, People Say (Update2) - Bloomberg.com
Well UNH was too cheap to resist at 46. I picked up some. The reaction to the anti-depressant story was hugely overdone. They work in most patients if you match them to the right drug. You may have to takes try 2 or 3 to find the best match in some cases. The zetia MRK/SGP was real, but affects only those 2.
Overall, the market reaction in the non-financials seems overdone. INTC had a 51 % INCREASE in profits and gets slaughtered because it was 2 cents under the prediction of some anal-lyst who has never run a company in the real world. Now let's say you owned a business that increased profits 51% y-o-y. Would you be happy or unhappy?
Watch for a surprise drop of 50 bps from Uncle Benny tomorrow or Monday, especially if it looks like it'll be another big down day. You know Paulson and Bush are melting the phone lines to the Fed tonight.
Another 50 bps at the Jan 30th meeting.
I think if it weren't for the $90+ dollar oil Bernanke would have been cutting like a madman already.
I wouldn't be surprised by an emergency cut, but I have a hard time imagining 100bps this month with oil still at $90 unless they've got a secret plan to keep it down.
ac-I'm guessing that's what Shrubs visit to the Kingdom was about. I don't think he went just to try falconry, as much fun as that may be.
ac I am agreeing w/ you 100 before month end.
Also more news out of SoCal:
Atherton-Newport Investments LLC, an Irvine-based apartment owner that counts a number of professional athletes as investors, said on Thursday it had filed for Chapter 11 bankruptcy.
The filing, made in the federal bankruptcy court in Santa Ana, was prompted by one of Atherton-Newports creditors, the company said. The bankruptcy filing says the company counts $10 million to $50 million of both assets and liabilities.
Prominent creditors listed in the bankruptcy filing include Los Angeles Angels of Anaheim slugger Vladimir Guerrero, Etan Thomas of the NBA's Washington Wizards, and Nikolai Khabibulin of the NHL's Chicago Blackhawks.
Atherton-Newport, formed in 2001, says it currently controls about 5,000 apartments in Las Vegas, Phoenix, Seattle and South Florida, as well as two housing developments in Southern California.
Moody's cuts homebuilders' credit ratings
Not sure this sort of thing even counts as news anymore.
SO My question is this is Citi under water and needs another 2B? The premium is huge on this extra 2B!!
Thoughts please
Barley
I don't understand your question, but I'll try and answer it anyway.
The $12.5 private placement is what gets their Teir 1 Ratio to a pro forma 8.2% instead of 7.x% GAAP.
I think the $2b is going out to the market so they can determine the amount of shares the private placement converts to.
these ABX threads always go way off topic. don't you guys want to discuss the effect of slow prepayments and high losses as it relates to the switch of time-tranched subprime AAAs from sequential to pro rata payment when the subs are lost and what this means for the valuation of the LCF ABX AAAs? me neither, i'm tired. as you were...
What trading strategies are you using? As opposed to investing for the long term.
Mine which is quite simple which I've used for a while - stop loss @ 10-20% of current value - take out basis asap - let it ride until stopped out.
bacon, it is hard to value something that probably has minimal value.
remember way back when I was excoriated on these boards for commenting that everything below AA was only worth a bid in the mils...well, we are getting closer.
Someday this war's gonna end...meanwhile I am contemplating calling my servicer for an heloc takeunder number;-}
What is the chance Congress or the FED will rescue the monolines if they default? To save everybody from the resulting melt-down, wouldn't they provide all of the capital needed to keep the monolines from defaulting???
tedzbear,
People don't understand that this isn't just about troubled companies. It's also about troubled concepts and products.
I mean things like bond insurance, bond enhancement, the ability to transfer a credit rating from one company to another by the payment of a fee, etc.
Some of this has always been wacky. It just took time and trouble to see it.
In addition to ratings failures, there are failures here on the part of insurance regulators. The regulators never did the job on MBIA, Ambac, etc. because they really didn't understand the products or risks; because insurance regulation is state and these companies are national; and because of conflicts-of-interests (states regulating bond insurers and also getting benefits of their products).
All that is history. Insurance regulators can't let this happen again.
Conjure Bag is in his corner, staring at the monitors and smoking furiously, which means he'll shortly have something to say.
Michael Lewis on Goldman
What Does Goldman Know That We Don't?: Michael Lewis (Update1) - Bloomberg.com
Agree or disagree, he's a really good writer on both financial issues and baseball.
I hope everyone is sitting down when they read this one-
"In addition, the Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, Countrywide may be required to pay Bank of America a termination fee equal to $160 million."
Expired
I'm approaching my first b'day living every day with Cr and Tanta and all you wonderful posters. Thank you all, of course most especially CR and Tanta. My question is OT but relates to query_tool: is there any fiduciary responsiblity on the part of an employer for the offerings available for selection in a 401K / 403B?
michi_doc, on your one year anniversary, it's customary to bring cake for everyone. just sayin'.
Does a Bell's Expedition Stout (if you don't know it, it's practically chewable) count? Don't know about the candle, tho'...
risk capital, what? I've never seen that before - is that a mistake?
"Countrywide may be required to pay Bank of America a termination fee equal to $160 million."
Wow, Countrywide must have been close to going under.
Best Wishes.
"Did anyone catch Congresswoman Kaptur from Toledo, OH, asking Mr Bernanke about being the former CEO of Goldman Sachs?"
I just watched it. THAT is funny! No, on second thought, that is terrifying.
cr-
we learn more every day(:-
new one on me as well, if you read the 8k, I found the language surrounding "alternative resolutions" interesting as well.
as a matter of fact, I said WTF to myself.
CR / Tanta / Others,
18 months back when i first visited this blog, i had no knowledge of how financials worked. Thanks to you, i now know a few things. Is there any certification i can take to cement whatever i have learnt here ( bonds, derivatives, mortgages, options) for some future use? A mortgage ubernerd certificate or a Bonds and Derivative certificate ... I understand i will need to read more than just what's posted on this blog ...
Thanks
Barley @ 6:11,
thanks!
I agree : Congresswoman Kaptur's faux pas was shocking - its not that she was talking about the bio ( delete that, just the name ) of the chairman of the ECB or the BoE is it ?
But of course, she comes from the general pop. a woman of the people so to speak - and in a culture that has systematically devalued "old-school learning" and academic prowess and knowledge ( anecdotally, I recall the hits that robDawg got for referring to his child being offered a place at an Ivy League school), this does not surprise me.
-K
With BernanSpan out talking and the market in total chaos it reminded me of the final scene in "Animal House" when Kevin Bacon is assuring everyone all is well and don't panic and he gets trampled by the rampaging crowd!
It is starting to feel a little nervous out there!
REBear, you are now officially an UberNerd (well, actually Tanta has to do the honors!). How is that?
michi_doc, one year? It's been three fun filled years for me!
Best to all.
Um, did the Nikkei just open down 400?
query_tool,
You have to put your 401k money somewhere, and the stable value fund is the best choice. You should not worry about it.
( anecdotally, I recall the hits that robDawg got for referring to his child being offered a place at an Ivy League school), this does not surprise me.
For the record she's only had that second face to face interview with a local rep/alumnus. No offer yet. The point was IIRC about the new pricing strategies pioneered by H and now being quickly adopted elsewhere once the realized they weren't even getting the best applicants from the middle classes due to cost issues.
query_tool,
Those were the exact same choices I had in my 401k. I had retired and kept the monies in my old company 401k.
But several months ago, I pulled all the money out put it in IRAs invested where I wanted it to go. As a bonus I got away from Schwab (not that I have anything aginst them, its just their investment philosophy is/was different than mine).
Yes, I agree the stable value fund seems your best choice.
I'm approaching my first b'day living every day with Cr and Tanta and all you wonderful posters.
michi_doc, one year? It's been three fun filled years for me!
With all these anniversaries i think a counterparty is in order!
Thank you for taking the time to explain the commercial paper spreads..I am new to the site and a rank amateur trying to learn the basics.. that was good reading for me
Sweetums lost a full year's income listening to Cramer and MSM, and trading last year; tonight she tells me "it must be a bottom - Cramer's lost it".
The upshot: We had a calm, data-driven heart-to-heart (a first). Thanks to CR and Tanta, she agreed that I was right all along. We devised a plan that spreads all of our non-403B into a risk adjusted short and ultrashort strategic plan. The rest, as safe as is available to me (thus my question above re: query_tool.)
3 of 4 kids in college, I PayPal'ed what I could. Thanks again to CR, Tanta and all of the posters. Celebrating the first "I was right" of the New Year!
michi_doc,
The responsibility lies with the entities who act as ERISA fiduciaries, and almost all individuals associated with the plan's investment selection and administration are ERISA fiduciaries. Outside vendors and attorneys can be also. The employer company is not always a fiduciary. The individual fiduciary's liability is personal, not under a corporate liability shield.
The responsibility in a 401(k) is for the choice of investments offered (the menu) and especially if company stock is included. Fiduciaries also can be responsible for bad investment decisions made by individuals unless they qualify for a safe harbor from liability called 404c. You can check any plan's 404c status at Free Employee Benefits Data - FreeERISA in the 5500 data base of public documents.
UA (under armor - that expensive athletic appreal co) - missed stock is down 20% AH.
the consumer is dead....
Where are Sebastian and O-joe? Have they been summoned to the white house for a special meeting with Kudlow?
mp - re: Grapes of Wrath
Was in the Central Valley today so stopped by the Oil & Gas Job Fair at the Doubbletree in Bakersfield.
Job Applicant lines weaving in, out & about...it won't be much longer.
.
Federal Reserve Chairman Ben Bernanke endorsed the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy
$800?
come on guys... those cds trader's banked millions the last 5 years...
if you want us to spend, give everyone at least 10g's..
we can all get a flight to the bahama's on the next a380 flight
As we constantly hear about how GS has cleaned up, I've begun to wonder if they've sown the seeds of their own demise due to their incessant need to tell everyone just how clever they are.
When you have a very large position in the market, and everyone knows what that position is, well...we all now how that turned out for LTCM...
Some of us know, some of us now!
Well GS has said they have no writedown enough times that if they do have write-downs they will need an entire wing in the Club Fed for them. I'm coming to think it might be true.
Ot,our local paper reports a December median of $466,500.Peak was $619k in 8/05.Prices in sebastopol and sonoma (city) are up...no bottom end sales in either town,and dec was the slowest month on record.70% of sales in '05,'06 and '07 were "exotic" loans.If you are thinking of retiring to the wine country,2012 to 2015 looks about right.
"Countrywide may be required to pay Bank of America a termination fee equal to $160 million."
Subject to -
(e) by Parent, if (i) the Board of Directors of Company shall have (A) failed to recommend in the
Proxy Statement the approval and adoption of this Agreement, (B) made any Change of
Recommendation, (C) approved or recommended, or publicly proposed to approve or recommend, any
Alternative Proposal, whether or not permitted by the terms hereof or (D) failed to recommend to
Companys stockholders that they reject any tender offer or exchange offer that constitutes an
Alternative Transaction within the ten business day period specified in Rule 14e-2(a) of the Exchange
Act, (ii) Company shall have breached its obligations under Section 6.11 in any material respect adverse
to Parent or (iii) Company shall have breached its obligations under Section 6.3 in any material respect
by failing to call, convene and hold a meeting of its stockholders in accordance with Section 6.3; or
(f) by either Company or Parent, if its Board of Directors determines in good faith that the other party
has substantially engaged in bad faith in breach of its obligations under Section 6.12.
i'm inclined to think that the derivative index on these securities is skewed reflecting hedging and other activities not so much the underlying asset.
am i dense or have i completely missed where RMBS pools have actually defaulted on the payments to the tranche holders?
pardon me if i missed all that, too busy trying to actually navigate the ground level action here.
still get a good laugh knowing that either career path i chose for myself in 2001 would have led me to the same dirty dank drying up well
ambac or real estate? it was a tough decision back then. "structured finance" that's SOOOO COOOL.
my capstone B-School finance course was taught by a sitting board member of Ambac and former board member of Citi. it was alllll about SIV, credit enhancement, securitization, an 'risk distintermediation'
the gentlemen that taught the class became a mentor and advisor to me and got me set up at Ambac. but then i took the RE line hook bait and sinker and here we are.
i reached out to him recently and haven't heard back. i'm sure he's busy.
and PS when my browser underlines "disintermediation" and "securitization" because it doesn't recognize them as words - what does that tell ya? LOL (or did i spell them wronghahaahah)
and wrt to anniversaries, i guess this is my 2.9th year here because i remember when it first got started and it was crispy, dry, and cr commenting in an echo chamber. several others too whose names escape me. we're on generation 3 here i think now.
hey, rich -
the freeERISA site requires much registration information. Can you or others give me feedback about spam? I'm not going there, as they say...
!!!CONJURE COMMUNIQUE!!!
Conjure would like to address his CR friends directly, so I am turning over the keyboard to Mr. Conjure Bag.
Ladies and Gentlemen, Mr. Conjure Bag.
FRIENDS, AS YOU KNOW, UNLESS YOU'VE BEEN LIVING ON PLUTO THE LAST FEW WEEKS, THE BULL MARKET IN EQUITIES, WHICH I PRONOUNCED TO BE OVER IN NOVEMBER, IS OVER.
THE Q1-08 RECESSION, WHICH I FORECASTED IN AUGUST OF LAST YEAR, IS NOW UPON US.
OUR HEDGE FUND FRIENDS HAVE BEEN QUIETLY MOVING OUT OF U.S. EQUITIES FOR THE LAST SEVEN MONTHS AND INTO COMMODITIES. THEY STARTED TO DO SO SHORTLY AFTER THE BEAR STEARNS HEDGE FUNDS IMPLOSION, WHICH I TERMED A "SYSTEMIC EVENT," TRIGGERED THE CURRENT CREDIT CRISIS. THEY ID THIS BECAUSE IT'S THE ONLY GAME LEFT AND THEY WERE ABLE TO RATIONALIZE THE MOVE ON GROUNDS OF GLOBAL "DECOUPLING." I HAVE NEWS FOR THEM. THERE IS NO DECOUPLING. ASIA, CHINA IN PARTICULAR, WILL SOON SLOW DOWN.
I AM GOING TO TAKE THEIR MONEY. THEY HAVE, IMO, CREATED YET ANOTHER BUBBLE IN COMMODITIES AND I AM GOING TO SKIN THEM. JIMMY ROGERS, ARE YOU LISTENING?
UNFORTUNATELY, AS MY FRIEND DRYFLY NOTED IN A PREVIOUS THREAD, FALLING COMMODITY PRICES WOULD HAVE A MAJOR IMPACT ON MIDWEST LAND PRICES. SO BE IT.
IN SHORT, I AM BEARISH, BEARISH AS HELL. THE FED HASN'T A SINGLE CLUE AND THE INSURERS WILL SOON IMPLODE. MORE WRITEOFFS ARE COMING. I AM ADVANCING MY CLOCK TO
11:59:03
I HATE MP'S TOFU STIR FRY. IF YOU'VE EVER TRIED IT, YOU KNOW WHY I ATE THE NEIGHBOR'S DOG YESTERDAY.
HAVE A NICE DAY.
Thank you, Conjure Bag.
!!!END OF CONJURE COMMUNIQUE!!!
Sweetums lost a full year's income listening to Cramer and MSM, and trading last year; tonight she tells me "it must be a bottom - Cramer's lost it".
The upshot: We had a calm, data-driven heart-to-heart (a first). Thanks to CR and Tanta, she agreed that I was right all along. We devised a plan that spreads all of our non-403B into a risk adjusted short and ultrashort strategic plan."
Michidoc,
because your significant other tried to 'trade' the market and failed miserably probably it is not a great reason for you to embark upon the same course armed with 'information' from posters on this blog (myself being one). taking your life savings and putting it in 'a risk adjusted short and ultrashort strategic plan' is a recipe for further disaster.
Panic selling of UK Reit fund; no more withdrawals for a year.
Panic selling shuts £2bn fund |
Money |
The Guardian
I haven't paid much attention to US Reits. How are they faring?
thanks alle
david_in_ct | 01.17.08 - 8:32 pm | #
In reply, I'm up 43% average, YOY the last 5 years, which is why I can be so cavalier. I basically retired at 52, my home is paid off, but still manage every dollar conservatively, and still work so my brain doesn't atrophy.
Sweetums, however, isn't doing so well. My point was the benefit of this blog and its posters to the overall money management of our marital unit.
Your point, expressed in your previous posts, is well taken: diversify.
My issue now will be: according to your previous posts, if I had followed your advice, what would my gain have been?
YOU KNOW WHY I ATE THE NEIGHBOR'S DOG YESTERDAY.
Add conjure to the list of good reasons to have your pet neutered.
Shnapster ya slay me!
michidoc
i have no desire to engage in a who has a bigger dick contest. the tone and content of your post lead me to believe that you were a novice investor that was having a hard time of it. my only offer was to try to keep that person from continuing down a path that would likely end in ruin. since you have informed me otherwise, then by all means follow your leveraged short ideas.
best of luck
d
OT:
boy was i wrong. I think dry fly was one of the first commenters ever, using "dry fly" instead of the contemporary "dryfly"
Elaine Supkis ruled the roost here for a while, sort of a prehistoric Tanta.
quick list of the main heavy hitters from Q12005:
Movie Guy
Anne
K Harris
Brad
pgl
Elaine Supkis
Fatbear
Jm
Calmo
Spencer
Tom Marney
Jennifer
Daven Bennett
Cm
DOR
Ken Haugton
Vader
malabar
thought it was interesting that setser and pgl usd to spend a lot of time the comments back in the day.
oh and this line made me laugh from one of the early blog posts"
Spot oil prices reached $55 per barrel earlier today.
halo is spotty in its archiving of comments at times, but i'll find more gems.
ahh, entertainment when old, with children, and work-a-day
david_in_ct | 01.17.08 - 8:53 pm |
I love you and all the posters on this blog. This is a celebratory night, tomorrow is options expirations and maybe a BB 'surprise'. Let's all enjoy the moment.
david_in_ct -
allow me to teach you something you should absolutely never forget-
scroll down-
PEOPLE ARE LIARS
david_in_ct -
allow me to teach you something you should absolutely never forget-
scroll down-
PEOPLE ARE LIARS
mp-Far be it from me to dispute with your friend conjure, but the world's existing oil fields are losing 4.5 % of their production every year.
http://www.marketwatch.com/tvradio/player.asp?guid={92D112B3-4C26-47FA-B83E-F029010B07BE}
Could oil prices fall in the short term? Sure. This time of year oil usually falls anyway. In view of declining production, though, I'd like conjure to explain how oil prices will fall long-term.
CR,
"Right now the spread is indicating that "fear" is very high. It is actually very rare for CP defaults, but they do happen (see table 5 in the above Fed link)."
The ABCP market in Canada has been frozen for months. The funds using it are refusing to pay out to investors. If I were a Super Colander Tin Foil Hat wearer, I would say that looks like a default. Just sayin'
Cheers,
Anybody see this story on Bloomberg?
"Merrill Lynch Plans to Write Off ACA Bond Insurance"
Jan. 17 (Bloomberg) -- Merrill Lynch & Co., the biggest underwriter of collateralized debt obligations, said it will write off $2.6 billion in default protection from bond insurers including ACA Capital Holdings Inc. because it's worthless.
Merrill Lynch cut $1.9 billion of debt insured by ACA, whose debt ratings were lowered 12 levels to CCC in December, and $679 million from other insurers. Guarantors including MBIA Inc. and Ambac Financial Group Inc. are under threat of losing their AAA ratings from Moody's Investors Service and Standard & Poor's.
``We are reserving against ACA dollar for dollar so it's 100 percent reserved,'' said John Thain, chief executive officer of New York-based Merrill Lynch, during a conference call today with analysts and journalists.
Ahead, by way of explanation, I don't think Conjure is talking about petroleum. He's talking about metals and grains, particularly grains.
riskc:
though i am sympathetic to your viewpoint, my nature is to generally keep making the same 'mistake'. sometimes it leads to finding a kindred spirit.
thanks
d
Sorry about the stale Merrill Lynch news, I'm a little behind today! I missed the first half of today's posts!
PEOPLE ARE LIARS
risk capital | 01.17.08 - 9:02 pm | #
Except me. Another PayPal for CR and Tanta for that comment. Signing off and upset.
mp,
i think for conjure to be correct in the long term he is going to have to devour 2 billion or so indians and asians.
hope you have a sturdy leash for him.
d
mp-Metals, I agree. Not so sure about grains. Much of Australia is on the borderline of sufficient rain. Climate cahnge may render much of Australian wheat fields questionable.
boy was i wrong. I think dry fly was one of the first commenters ever, using "dry fly" instead of the contemporary "dryfly"
I used dry fly, Dry Fly, dryfly and various misspellings of all because there were so few people then & IE was so squirly. Didn't matter folks would have known my posts by the dots [...] and misspellings alone.
Then the wave of trolls and imposters jumped in and I settled on one name.
Remember 'farting through silk'? Probably more pooh than gas after today.
Anyway - I found this place reading on a tip from vader (we chatted often on another forum dedicated to 'unemployed IT geeks & engineers' and also on Angry Bear - CR used to post there & I followed it back here & quit going to AB soon after that, too partisan).
That was a while ago... in computer years anyway. CR & tanta have done nice work.
David, in the long term, as Keynes said, we are all dead.
Ahead, as I said, in the long run we are all dead.
i'm such a dork. what i believe is tanta's first comment ever on CR:
(sorry for the formatting)
"Hey, CR, I was just over at Angry Bear. What one gets for reading one's feeds in the wrong order.__I find it impossible to believe that "Option ARMs" account for 40% of current securitizations. I will try to check the UBS citation, but 40% is the last number I heard for total "interest only ARM" production.__These things are different. The "IO ARM" gives you a period between 3 and 10 years during which you are required to pay no more than interest only. At the end of the IO period, the payment is amortized over the remaining 20-27 years, and you start paying down principal.__The "Option ARM" is an ugly little variation on the "standard" IO ARM. The "Option ARM" lets you decide on any given month whether you want to pay principal and interest, interest only, or even a minimum payment less than accrued interest, meaning that you get negative amortization that month. In other words, it's the horror product of the late 80s (negative amortization) married to the horror product of the early 00s (interest only).__Real "Option ARMs" are still a much smaller piece of the business than IO ARMs, I am sure. But at the rate this stuff mutates . . .__What was interesting about the actual S&P change is that they updated the foreclosure frequency factors. The "traditional" view of IO ARMs is that foreclosure isn't more frequent, but the loss is more severe when it happens (because the balance is higher in the years when foreclosure is most likely). So the "Option ARM" combines the FC frequency of negative amortization with the loss severity of interest only. The fact that no consumer seems to understand what these things are is icing on the cake which someone left out in the rain. __I hope my retirement account isn't buying any of those REMICs._
Tanta | 06.27.05 - 5:19 pm | #"
i could be wrong though.
He's talking about...grains, particularly grains.
mp | 01.17.08 - 9:07 pm | #
Grains ? I know this is not a trading blog - so I'll just say - Grains ? Let me tell you a story.
So I went to the Boulder LiquorMart (cheap cos the uni students shop there) to get a case of Avery IPA today ( good market day and all that ) - she rang it up as $8.99 a six-pack, so I queried that, she insisted it was 8.99 and took them back to the cooler area where it was posted as 7.49 a six pack. So, they pulled down the old posted price but as she rang up the refund she and two others ( supervisors I suppose ) they all talk of the price of hops going sky-high !
So I sympathise ( but not enough to refuse the refund ) and talk about the limit up trading two days in a row in corn, of China imposing price controls on Tsing Tao beer (I shall complain if they jack up its price in my usual Chinese restaurant) and so on..
Grains ? I'll take that bet for the moment.
-K
We definitely have a market here.
I just put a very large portion of my capital into a small cap copper play.
Here's hoping conjure gets a hairball.
mp-Without food, we are dead pretty quickly. Without oil, not much food. If you want to base everything on the next 2 weeks, go ahead, anything can happen. Pats might even lose (but I doubt it)
Ahead, by way of explanation, I don't think Conjure is talking about petroleum. He's talking about metals and grains, particularly grains.
I think conjure is dead nuts right on about metals (esp. base metals) & grain (esp. corn) being a 'bubble' - farm land too. Scarcity is one thing - but there looks to be more goin' on. Just my ignorant guess...
Feed him a nice plump Shitzu he's earned it.
THEY HAVE, IMO, CREATED YET ANOTHER BUBBLE IN COMMODITIES
Yup!
Oil is already down 10% from its high; oil services and NG stocks are down about 16%. I think we're about back to where to hedgies moved in last year. I'd like to get back into positions in those areas but I don't think they've hit bottom. I'm thinking $75-80/bbl oil will be my cue.
K/sk - hops is a different issue from grains. Look into it.
"K/sk - hops is a different issue from grains. Look into it."
Thank you, F. Frederson.
mp is to Conjure Bag
as
Miley Cyrus is to Hannah Montana?
Commodities clearly have room to fall... all of them
there are clearly intrinsic fundamental reasons why the various commodities are higher today than in the past, and will be higher in the future than they are now.
But the sheer rapid rise stinks of speculation IMO.
recession could decrease the prices of all commodities... although they may drop less than other investment classes (stocks, bonds, Treasurys, etc)
I'm not smart enough to make a bet...
But the sheer rapid rise stinks of speculation IMO.
Amen.
I'm not smart enough to make a bet...
Me either and I'm surrounded by the stuff.
for the knowledgeable:
The panic from the streets is palpable, with Bernanke served up as sacrifical lamb (unless conjure eats him first)
So I'm wondering if we may indeed see a "surprise" 50bps cut tomorrow. it would put Friday up on a good note, make the week not look so bad, and we could have warm fuzzies all weekend.
Then another 25-50 again on the 30'th.
would that be enough to forestall an immediate crash? at least cause a dead cat bounce?
My investment strategy (failing) has been to have some long positions open the last few weeks, until AFTER the Jan 30'th meeting, and then short like crazy the day after the FFR drop...
clearly timing is bad.
Bad timing. bad bad bad.
YTL-I don't argue with you in the short term, next few months, though grain will depend on weather to a large extent. On oil, I agree with Federson more or less.
mp,
I think that one has to be careful with commodities. Some metals are showing strength on fundamentals, some are riding the coat tails. Same for grains, although the fundamentals for corn are driven by stupid subsidies. Corrections are happening now even with the stock slaughter today.
F. Frederson,
75-80 bbl oil is possible. But LT trends are up, and if that idiot Bernutty cuts 75bps, well...that's off the table.
Succinctly...Industrial metals are bubbly...grains are odd, I'm not sure...
Hopps. They'll take my beer when they pry my cold dead fingers from the bottle.
Cheers,
YTL-To me this market seems very dangerous either way. I've raised a lot of cash. As for the positions I have (mostly drug, biotech and some oil). I'm just going to leave them and check back in a few months. If they're down, I might buy more then. But right now, don't do something, just stand there looks like the wisest course.
I believe that farmland prices for vegetable and fruit production are a major bubble here in California. Prices paid in my area have tripled during the housing boom as growers sold land for development and had to quickly buy land with the proceeds. The difference between renting and buying farmland mirrors that of housing. There is plenty of land from bigger less profitable crops that can be converted to higher value crops quickly. Yet oversupply of most crops keeps returns down limiting the need to convert this land. The land is just too expensive to justify growing low value crops.
I laugh every time I see some gentleman farmer who builds a house and decides that he is going to plant an orchard around it and pay different companies to manage it. He will be lucky to pay the property taxes. And if I read another for-sale listing that says how much profit "potential" there is I will puke.
Thank you, F. Frederson.
Ok, maybe I stated the obvious, but you can't make ethanol out of hops, only flavor it.
Hops prices have more than doubled this fall due to real shortages, but it's not a tradeable market. (PS: Word is that A-B grows its own hops, so hasn't faced the same problems as homebrewers, brewpubs, etc. Might be a play there for the adventureous. TINFA, of course.)
75-80 bbl oil is possible. But LT trends are up, and if that idiot Bernutty cuts 75bps, well...
Definitely energy is up over the LT, but I think there is still some speculative premium, as well as a security premium. Could be wrong though - I could end up like the twits at CERA, predicting a price that will never be seen again.
Yeah, CERA just came out today and said production from existing fields is falling 4.5 % per year, but don't worry, we can increase production 8 %/ year. And I'm the tooth fairy...
As for the positions I have (mostly drug, biotech and some oil). I'm just going to leave them and check back in a few months. If they're down, I might buy more then. But right now, don't do something, just stand there looks like the wisest course.
Agreed. Until this year I've been mainly a buy and holder.
Then I got terrified about a year ago, and have been SLOWWWWLY moving from long equity position to Treasurys and Gold and Cash.
But I have a little play money to play around with...
My goal was to change another chunk of long positions to cash after Jan 30th and just wait things out... and then short a little with my play money (it's not a lot... just there to help me learn and put my $$$ where my mind is).
this is where my "timing" was bad.
Too many variables for me... If I could drop one (specifically govt intervention) then it'd be so much easier...
but as they say, if my aunt had a d*ck she'd be my uncle.
Hey, I was telling a storrryyy - and I don't look it up, I only drink it ! for free too - on some Saturdays, I'll drop into the Avery brewery into the tasting room - many times they have stuff that is never put on sale ( can't be sold ) for example dry hopped beer ( where they add extra hops into the keg ( or whatever they are called nowadays, firkin rings a bell ) after its brewed ) and so on. Besides I did part of my growing up on the Kent/Sussex border and cross-country running thru muddy mucky Shady Lane was too much like hard work so I used to cut across the hop fields so I know hops.. ( their value if not their price ).
Anyway, the long and short of this is, how about a bet in the T Boone Pickens style. The loser takes out a sub, or puts $60 in the tip jar, to the CR newsletter.
I suggest we use the DBA ( disclaimer: I own it ) its a Agricultural commodities index, approximately equally weighted ( by value not weight) corn, wheat, soybean and sugar. Its at 37.50 today. I bet we'll hit 42.5 before 32.5. You a taker, mp ?
Its quite ok if not. This is all just fun.
-K
oops, here is the link to the DBA etf:
DBA: Holdings for POWERSHARES DB AGRIC - Yahoo! Finance
-K
Strongs links are falling apart.
Bovespa index, one of the strongest, broke a key point with high volume.
It means that we reached the point of recognition.
EWZ
AMBAC told to stop raising capital
The fun begins.
Shareholder tells Ambac to halt capital plan, give up AAA rating - MarketWatch
sk, I don't bet and neither does Conjure, but does Rochester ring a bell?
West Malling?
sk, I don't bet and neither does Conjure, but does Rochester ring a bell?
mp
A fellow campanologist ?! Nope, I didn't get that far up north in my childhood - all the sports team fixtures were with schools along the coast - the Cinque ports and more - as ancient as Rochester but different.
Or did you mean nobody rings a bell at the top of the market ?
No worries. We'll see.
Meantime, here is a link to abstruse dorky stuff -
Change ringing - Wikipedia, the free encyclopedia
Cinque Ports - Wikipedia, the free encyclopedia
-K
Welcome to a market dynamic that will continue to slaughter longs: if you want your failing company to stay afloat, you have to take on expensive debt (harming future profits) or sell off equity (diluting existing equity). Either way, its bad for existing shareholders (and shares). MBIA and Ambac are learning that, as are holders of Citigroup, and as did holders of Countrywide, ad infinitum. It's not enough to be "bailed out" in this market; the piper must be paid, and he will be paid not only in bankruptcy but also more widely in share value. So needless to say, we expect continuing pain for financials (and much of the consumer-exposed market) for quite some time.
Ouch!
Yearning to Learn.
My play was the same. I was playing long in the emerging markets for month end. I was expecting at least a 75% basis cut but had to cut my losses by going into short term government bonds. I think that it will be interesting in near term. The FED may cut early but it is a risk that they may not. I had to pull out because I was tired of 2% losses here and there. Hopefully, this will give me a chance (timing) to get back in when oil hits 60. Either way, I think that we are all in interesting times where you need to play for return of capital rather than return on capital.
An experienced European banker told EIR this morning that "the problems of 2008 are of a completely different order of magnitude than those we saw in 2007."
We have entered a period now, he explained, in which large banks and financial firms are opening their books to external auditors, after having announced losses for the fourth quarter of 2007 according to their own internal surveys. But these external audits are now finding different values than those previously announced. (Surprise, surprise!ed.) Thus, said the banker, we might expect a whole series of aggravated balance sheets, including legal bankruptcies of banks and financial companies.
Whereas the losses officially calculated by central banks are already tremendous, in the order of hundreds of billions of dollars, the real write-off concerns some $3 trillion, the source said. That is what is starting to emerge now.
Take this as the real context for the reports and rumors of $40 billion or so in "new" losses, swirling in recent days around just two financial firms, Citigroup and Merrill Lynch.
Interesting!
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
dennisdman
Is a Spamming ....shit for brains!
"Yeah, CERA just came out today and said production from existing fields is falling 4.5 % per year, but don't worry, we can increase production 8 %/ year. And I'm the tooth fairy..."
It drives me nuts when CERA makes claims about increased production. They NEVER show exactly which fields will provide those increases. It's always an assumption based summary extrapolating history models. Doesn't work that way, but Daniel Yergin has influential friends and gets alot of press time. Matthew Simmons puts CERA to shame.
Daniel Yergin has influential friends and gets alot of press time.
He's been riding on the reputation of The Prize for 17 years now. Good book, but CERA's recent forcasting has either been lousy or hacktacular, depending on your level of cynicism.
Thanks Owner Earnings- Fortunately, I don't have any of my 401K in Fidelity Bond funds. I am planning to move all of my Fidelity stock funds to Money Market for now. I will get advice from Fidelity tomorrow maybe she will suggest a safer stock fund...
i'm inclined to think that the derivative index on these securities is skewed reflecting hedging and other activities not so much the underlying asset.
CR,
I don't know the attach/detach points of the underlying bonds well enough to know what these indexes mean.
What are the ABX indexes saying about the severity of foreclosures and recoveries? It seems to me that at 65 they are suggesting that almost half of all subprime mortgages will go bust.
I think bubble overstates it, more like over extended and due for a sharp and very tradable correction in a long term up trend. For the first time in history most chinese are able to actually have some pork in their pork fried rice, and it takes many pounds of grain to make one pound of pork (appologies to the beloved mortgage pig). It takes a lot of copper to wire all the houses in China and India. Yeah China will probably going to have to spend some of their reserves to keep up consumption of pork and metals. However, with the recession in the U.S. Chinese growth will slow sharply. I doubt they go all the way to recession, but maybe a few years of 5% growth rather than 10%+. However, I could easilly be wrong on that. For a longer version, check out my recent post on Zacks.com