Category: Credit Crunch
The analysis published under this category are as follows.
Tuesday, August 28, 2007
USAGOLD's Top 25 Quotes on the Credit Crisis of 2007 / Stock-Markets / Credit Crunch
By: Michael_J_Kosares
The financial market globally is up to its elbows in one of the strangest and most complicated credit crises in history. Events have come in rapid succession with mind-numbing effect. No sooner does the dust settle in one part of the market than it is kicked up in another. Through it all, the reactions on the part of the participants have been the stuff of a good financial thriller. We thought it would be interesting to catalog some of that reaction for you on one web page. So here they are - from the witty and profound to the scary and downright silly - our Top 25 Quotes on the Credit Crisis of '07.Read full article... Read full article...
Tuesday, August 28, 2007
The Ongoing Impact of the US Housing Sector / Interest-Rates / Credit Crunch
By: John_Mauldin
Who should we blame for the problems in the credit markets? This week in Outside the Box my good friend Barry Ritholtz takes on the task of pointing his prodigious finger at the guilty parties. As he notes, there is plenty of guilt to go around. This is a problem that is going to stay with us more than a few weeks. As I wrote last week, it is not a problem of liquidity. It is a problem of credibility. Until investors of all types feel safe getting back into the structured finance market water, US mortgages and all sorts of consumer finance are going to be severely hobbled. There is plenty of money on the sidelines, but it is going to take some work to make investors feel comfortable. Read full article... Read full article...
Friday, August 24, 2007
The 2007 Credit Crunch Liquidity Crisis - Q&A / Stock-Markets / Credit Crunch
By: Andy_Sutton
In lieu of my usual column, I've opted for a co-authored, in-depth analysis of the current liquidity crisis. Despite the fact that the media would prefer to ignore it and focus on the various bailouts being planned or executed, this is a crisis that still poses a very real threat to the economic and banking systems of the world.
Is the current stock market correction a healthy correction, or the start of a bear market?
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Wednesday, August 22, 2007
Financial Markets Discussion and Update of the HUI Gold Bugs Index / Stock-Markets / Credit Crunch
By: David_Petch
The sub prime debt market is huge and the pile or associated derivatives is larger (some 450 trillion), mostly in US Dollar. If cash injection is required to stabilize things, it is likely that the US Dollar(as per the charts) remains buoyant until mid to late 2009 before finally collapsing below 80 in one fowl swoop (pun intended, the USD is a dead duck, just a matter of time). The USD still is the reserve currency of the world and once the USD prints an equivalent amount of paper to reduce the global holdings of banks to 30-40% of the total paper, then it will be dumped.Read full article... Read full article...
Tuesday, August 21, 2007
Stock Market Warning - Time is Short - Credit Crunch Crisis Does Not Abate / Stock-Markets / Credit Crunch
By: Christopher_Laird
I put out an alert to subscribers as to the following. Included are some additional comments.
After the Fed cut the discount rate Friday, and after the initial exuberance Friday and Monday in Asian and EU markets, the dust settles a bit. Then people look if they can see anything through the fog.
I am not surprised the US markets are flat, and certainly, this is not a confirmation of returning confidence, particularly after the Asian markets rallied 2 - 3% Monday (Sunday night here). They are rallying again Tuesday 2%. This is not convincing to me.
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Tuesday, August 21, 2007
Fingers of Financial Markets Instability Continues - Part Two / Stock-Markets / Credit Crunch
By: Ty_Andros
In This Issue – 3 Fingers
1. Water, Water Everywhere, But Not a Drop To Drink!
2. Keys to the House
3. Redemption Day
1. Water, Water Everywhere, But Not a Drop To Drink!
Do not think that because the credit markets are seizing up that there is no money in the financial system, there is. Bank and Corporate balance sheets are strong. Money market funds are in excess of 2.6 trillion dollars. There is plenty money looking for places to find short term yield, they just want to know they will “get it back”. The money can't move as the ability to trust the collateral of the counterparties is in question. The Federal Reserve began to blink Friday morning by lowering the discount rate 50 basis points from 6.25% to 5.75%. It was a clever move and shows that the Federal Reserve under Bernanke is a wily group that is going to fully try and tackle the problems inherent in the Greenspan put. It's going to be Good cop versus bad cop in the open market committee, as Bill Poole scares the devil out of us and the rest of them make sure the baby IS NOT thrown out with the bathwater.
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Monday, August 20, 2007
Glossary of Credit Crunch Gloom / Stock-Markets / Credit Crunch
By: Paul_Petillo
In the last several weeks, the questions about Wall Street and the stock markets have become much more declarative. No longer are they phrased as if those who ask want answers yet, when spoken, the statements often implore the listener to offer something, some comfort, sympathy, empathy, anything.Read full article... Read full article...
Monday, August 20, 2007
NOLTE NOTES - Stock Market to Revisit Lows during September / Stock-Markets / Credit Crunch
By: Paul_J_Nolte
Good time to take a vacation and clear the mind and body of all things Wall Street. However, upon return the markets are acting as though the financial world is ending. While we have been concerned about the markets for much of this year (our beginning year prediction was for a flat return at best), the near seizing up of portions of the credit markets was alleviated by the Fed cutting the discount rate by a half of one percent on Friday before the market open. The Fed has been involved in providing liquidity to the markets over the past few weeks, however the cut was a more formal statement that they stand at the ready to provide the “grease” to keep the economic wheels moving.Read full article... Read full article...
Monday, August 20, 2007
US Interest Rate Cut - Bernanke Blinks First / Interest-Rates / Credit Crunch
By: Andy_Sutton
Occasionally, on dark, secluded back streets, adolescents and other not so tightly wrapped folks engage in a classic American rite of passage known as 'Chicken'. The idea behind the game is for two cars to drive directly towards each other at a high rate of speed and see who swerves first. That person is dubbed the chicken. Obviously, it is easy to envision what happens if neither driver blinks.
For approximately the past two weeks financial commentators and observers have been watching a variant of this classic game. The markets, roiled in certainly the biggest blow-off since the end of the tech bubble, and perhaps of all time were screaming madly for the Fed to step in and open the discount window. CNBC host and industry shill Jim Cramer almost brought on a stroke screaming that Bernanke "doesn't know how bad it is out there!" On the other side was the Fed, stalwart, poised and resolute. Something had to give...
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Monday, August 20, 2007
Massive Credit Crunch Striking Now! / Stock-Markets / Credit Crunch
By: Money_and_Markets
Martin Weiss writes: A massive credit crunch is striking, and you sit at a critical juncture like none other in history.
Never before have you seen so much wealth at stake. Never before have you seen such massive threats to that wealth. And, fortunately, never before have investors had such powerful tools to protect themselves from these threats!
In just the last few days, the U.S. Federal Reserve has desperately tried to rescue the nation's gigantic $10 trillion mortgage market …
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Sunday, August 19, 2007
Credit Crunch Special / News_Letter / Credit Crunch
By: Nadeem_Walayat
Last week saw extreme volatility on the markets as the central banks fought to stave off a collapse in the financial markets in response to the ongoing credit crunch.
On Friday the battle was temporarily won by the Central Banks with the US Feds decision to effectively cut interest rates by 0.5% on the discount rate, which included the unprecedented step of changing the financing terms from overnight to 30 days.
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Friday, August 17, 2007
Lenders take the Jab, Borrowers take the Knockout / Stock-Markets / Credit Crunch
By: Peter_Schiff
The current weakness in domestic markets has recently been magnified overseas as panic spread to foreign investors with exposure to U.S. asset backed debt. Some commentators point to this reaction in an attempt to disprove the belief that foreign assets offer protection from falling U.S. stocks. I believe such conclusions are premature. Global stock markets will soon decouple from ours, and strong returns overseas will occur even as U.S. stocks slump.Read full article... Read full article...
Wednesday, August 15, 2007
Fresh Stock Market Losses Outpace Gold; Bond Yields Slide / Stock-Markets / Credit Crunch
By: Adrian_Ash
SPOT GOLD PRICES slipped $5 per ounce to $664 by lunchtime in London on Wednesday, losing 0.7% from Tuesday's US close. Global stock markets, meantime, fell a further 0.9% according to the MSCI index.
"Gold holds its own in credit crunch," reports today's Fortis Metals Monthly report. Looking ahead, and "given the background noise of rising central bank sales the metal did well to stay above $650/oz [but] it might have trouble staying there as gold mining companies. dehedging slows for the remainder of the year."
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Wednesday, August 15, 2007
Short Selling The Road To Redemptions / Stock-Markets / Credit Crunch
By: Brady_Willett
With the financial markets doing their best impression of a tinderbox waiting for a spark, it is not easy to use the word ‘oversold' without cracking a smile. After all, if the S&P 500 - which closed less than 1-point below its 200 DMA yesterday - was really ‘oversold' it would not normally be trading only 6.4% off of its recent highs (market corrections are generally -10% and bear markets are -20%).
Needless to say, this is not a normal stock market, and these are hardly normal times. Rather, the largely secretive dealings of hedge funds control the tape, and unpredictable capital flows from central bankers and foreign investors can swing asset prices wildly about. Talk all you want about corporate America's attractive balance sheet, or those beautiful trailing P/Es, this market is controlled by unknown and volatile forces.
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Wednesday, August 15, 2007
Emerging Markets, Commodities and the US Dollar - Deleveraging / Stock-Markets / Credit Crunch
By: Christopher_Laird
I just heard a Bloomberg interview with Dr. Marc Faber about the deleveraging in world markets. One of his main points was that, since 2003 about, many US investors moved significant percentages of their money into emerging markets and commodities. As the US economy sinks into recession, and deleveraging causes stock declines, there will be a lot of US money repatriated.
The implications of this are:
- A strengthening USD (or a force for that)
- Emerging market stocks will decline faster than US stocks (Faber)
- General deleveraging by hedge funds will cause overall stock declines
Tuesday, August 14, 2007
Bernanke Grounded-- for Now / Interest-Rates / Credit Crunch
By: Michael_Pento
The head of the Federal Reserve has so far not lived up to his moniker of “Helicopter Ben.” Unlike what his label suggests, Mr. Bernanke has only addressed the current liquidity crisis with system repurchases—which add temporary cash into the system—instead of coupon passes, which are a more permanent infusion of cash. By leaving the Fed Funds target rate at 5.25%, he has differentiated himself from Alan Greenspan, whose playbook response to a crisis was to devalue the currency without hesitation.Read full article... Read full article...
Tuesday, August 14, 2007
What the Fed Did in 1998 and What is Different Now / Stock-Markets / Credit Crunch
By: John_Mauldin
This week in Outside the Box we take look at the how the Fed acted in the last debt crisis of 1998 and what they are likely to do this time. How will the Fed address the looming liquidity crisis stemming from the subprime debacle primarily, and from the abused Yen carry-trade, lax lending practices, and excess liquidity, generally? Asha Bangalore, Vice President and Economist at the Northern Trust Company, believes that given the actions taken by the European and Japanese banks in response to credit and liquidity concerns in the markets by an infusion of €200 Billion, and ¥600 Billion, respectively, the Fed will also take the customary action of cutting interest rates to assuage the market at the October 30-31 Fed meeting.Read full article... Read full article...
Tuesday, August 14, 2007
Financial Market Reactions to Central Bank Liquidity Injections / Stock-Markets / Credit Crunch
By: David_Shvartsman
We spent much of last week talking about liquidity, attempting to define or clarify the term by differentiating "market liquidity" and "money liquidity" .
From there, we went on to question how investment markets are impacted by the liquidity created by central banks .
Tuesday, August 14, 2007
Liquidity Problems and the Stock Market / Stock-Markets / Credit Crunch
By: Hans_Wagner
In the last weeks we have seen problems in the mortgage market spill over and negatively affect commercial and investment banks. Volatility in the stock market has increased with the U.S. markets experiencing dramatic swings in price, especially in the last hour. So what can investors do to deal with this situation?
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Monday, August 13, 2007
Stock Market Brushfire; Will there be a run on the Banks? / Stock-Markets / Credit Crunch
By: Mike_Whitney
On Friday, the Dow Jone's clawed its way back from a 200 point deficit to a mere 31 point loss after the Federal Reserve injected $38 billion into the banking system. The Fed had already pumped $24 billion into the system a day earlier after the Dow plummeted 387 points. That brings the Fed's total commitment to a whopping $62 billion.
By some estimates, $326.3 billion has now been added to the G-7 Nations' intra-banking system to prevent a breakdown. That amount will rise considerably in the weeks ahead as the situation continues to deteriorate. Some readers may remember that on Tuesday, August 7, the Fed announced that it was NOT planning to bail out the market.
My, how quickly things change.