Analysis Topic: Stock & Financial Markets
The analysis published under this topic are as follows.
Saturday, August 18, 2007
The Financial Markets Panic of 2007 / Stock-Markets / Financial Crash
By: John_Mauldin
In this issue:
Muddle Through or End of the World?
An Alphabet Soup of Credit
Turning Nuclear Waste Into Gold (and Back Again!)
Mrs. Watanabe and the Hedge Fund Connection
The Rating Agency Blame Game
Where Do We Go From Here?
Hedge Funds to the Rescue!
Warren Buffett Needs to Take Over Moody's
Will a Fed Rate Cut Make a Difference?
Vacation, Europe, and Reading
End of the World or Muddle Through? This week I try to explain in simple terms the very complicated story of how we went from some bad mortgage loan practices in the US to the point of world credit markets freezing up. There is a connection between the retirement plans of Mr. and Mrs. Watanabe in Japan and the subprime problems of Mr. and Mrs. Smith in California. We find the relationship between European banks and problematic hedge funds. And finally, we try and see how we get out of this mess. Oddly, I think it is hedge funds (and maybe Warren Buffett) to the rescue, but not in the way you would think. It is a lot to cover, so let's jump right in. (And there are a lot of charts, so while this will print out long, it is only a little longer than the usual in word length.)
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Saturday, August 18, 2007
Refueling Psychotic-Optimism As Fed Saves Stock and Financial Markets From Near-Meltdown / Stock-Markets / Financial Crash
By: Joseph_Russo
In light of the Feds clandestine shattering of the discount window in the wee-hours of Friday morning, we really do not have much to add to last weeks rant about Ponzi-Regimes coming to the rescue of grossly mismanaged markets.
Down how much? – And already requiring immediate emergency rescue measures?
Last Thursday, stock markets were off their historic highs by around 10%, and most major metropolitan housing-markets are down anywhere from 5% - 10% at best. Certain regions like Manhattan , have experience little if any downward adjustment to their mega-bloated values - some 200% - 300% above their former 1998 values.
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Saturday, August 18, 2007
Expect More Stock and Financial Markets Tension, But Don't Panic! / Stock-Markets / Financial Markets
By: Anthony_Cherniawski
LONDON : “Economists said yesterday that turmoil on global stock markets was likely to persist but ruled out a catastrophic crash in share prices that would hit consumers and their pension funds.” This missive came from London by way of Saudi Arabia .
The Asian Times headline reads, “ Panic Attack: Asian markets take a tumble .” Who do you believe? The “don't panic” people or the “panic attack” crowd? Thursday, the Dow Jones Industrials dropped 340 points by mid-day, then rallied to close down only 15 points. Not a bad rescue, eh? Even with the final hour rescue, the Dow is still down nearly 3% this week.
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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...
Friday, August 17, 2007
Importance of Long Stock Market Earnings Valuation Waves / Stock-Markets / Stock Market Valuations
By: Zeal_LLC
Just one month after the US stock markets achieved new all-time highs, today's fear-stricken equity landscape looks radically different. Investors and speculators alike are frantically dumping everything with reckless abandon, regardless of fundamental merit. The resulting carnage is impressive to behold.
Such episodes of wanton fear, though painful, are very healthy for the markets. They are necessary from time to time. In fundamentally-weak sectors, they force leveraged speculators to rein in their leverage and reduce their risk. In fundamentally-strong sectors, they shake out the weak hands who lack the courage to ignore their emotions and lack the faith to ride secular bulls through turbulent spells.
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Friday, August 17, 2007
Financial crisis! What to do ... / Stock-Markets / Financial Crash
By: Money_and_Markets
Mike Larson writes: We are in the midst of a financial crisis . Not a downturn. Not a slump. Not a blip. This is a full-blown meltdown. The causes?
Too much housing speculation: The Federal Reserve pumped the economy full of easy money after the tech bubble burst. That money found its way into the housing market, fueling a speculative bubble like no other in modern U.S. history. Now that bubble is popping, too … and the fallout is spreading throughout the financial markets.
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Thursday, August 16, 2007
Panic Selling As Stock Markets Crash Towards Bull Market Support Levels / Stock-Markets / Financial Crash
By: Marty_Chenard
Noon Time Update: We will look at seven charts this Noon time, based on where a number of indexes were at the close yesterday and what the VIX was telling us (last chart).
This first chart is of the DJI and its 200 day moving average. At the close yesterday, it was holding above it, but today it dropped below that support. The DJI is the index that should be the strongest in this down turn, but this morning it dropped below the 200 day moving average. Panic selling levels are high now, and the panic has its own momentum. It will be important to hold the 200 day moving average in the next few days.
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Thursday, August 16, 2007
2007 Stock Market Crash Update II / Stock-Markets / Financial Crash
By: Greg_Silberman
In late July we published a piece called 2007 crash market stock update wherein we described the inter-market picture as shaping up to be eerily similar to that of the 1987 stock market crash.
In summary: We noted that the stock market had been ignoring a falling bond market for much of 2007 in much the same way as the stock market ignored a falling bond market back in 1987. We further explained that it was not until the Bond market broke below its May lows in September 1987 that all hell broke loose in the stock market and ended up in Black Monday, a one day drop of 22% in the S&P500.
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Thursday, August 16, 2007
Stock Market Panic In Progress / Stock-Markets / Financial Crash
By: Captain_Hook
The market is telling officialdom, and specifically Bernanke, that like in the lead up to the 1929 stock market crash (which was 90%), the true health of the economy is not being interpreted correctly, and that official policy is not sufficiently accommodative. As alluded to during the course of the week, this misread and mishandling of the situation has a great deal to do with the stubborn resilience of Chinese stocks , commodities , and freight rates , which are all barometers of the ‘global economy'.This is why the Fed is now suggesting that only a ‘ calamity ' will cause them to soften official policy, because they must get prices under control soon if traditional Presidential Cycle policy considerations are to be managed successfully. What's more, like Greenspan, Bernanke is a gradualist, but he is a rearview mirror gradualist, meaning he actually manages official policy based on history. Again, like the '29 experience, this is causing a misread of measures currently needed to stave off a real deflation risk, which is why prices are falling in spite of supportive price constraints . In a nutshell, people are panicking, and for this reason Monday could be very interesting.Read full article... Read full article...
Thursday, August 16, 2007
Stock Market Investments - Take More Profits Now! / Stock-Markets / Global Financial System
By: Money_and_Markets
Larry Edelson writes: I'm just back from Asia with visits to Thailand, Singapore, Manila and Sydney. And I'll get right to the bottom line: I have no doubt in my mind whatsoever that overseas economies will continue to explode higher.
However, my on-the-ground experience from this trip also tells me that even Asian economies could hit some headwinds over the next few months.
I attribute this to three forces …
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Wednesday, August 15, 2007
Fingers of Global Financial Markets Instability Returns! / Stock-Markets / Liquidity Bubble
By: Ty_Andros
Fingers of Instability – Series Introduction - FIRE!
This marks the return of the “Fingers of Instability” series begun in February of this year, as we look to see these emerging regularly over the coming weeks until they are priced into the market. First let's look at the “shortened” description of what they are from that issue of Tedbits:
This is a metaphor for the present structure of the Global financial systems as practiced by the G7 Central banks and Government Financial officials around the world. I read a missive from a prominent newsletter writer sometime in the last 6 to 12 months and he described a computer study of Sand piles. In this study they piled on grains of sand on a pile one by one. It went on to describe how the mound could grow one grain at a time, and was stable and that as it grew areas of instability emerged and that once it got to critical mass as little as 1 grain of sand could spark a complete collapse of either the whole pile, a major portion of the sandpile, or just a small part of the pile.
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Wednesday, August 15, 2007
MPTrader - Nasdaq (Q's) Need to Hold Support / Stock-Markets / Tech Stocks
By: Mike_Paulenoff
We can see from the big picture of the Q's (NASDAQ: QQQQ) that the price structure has just about completely traversed its 13-month price channel -- from its July 19th high at 50.66 into today's low at 46.53. The ability of the Q's to hold the 46.30 area (should the price structure press to new lows) is imperative if the lower channel support line is to maintain its integrity. Otherwise, the Q's will be heading for a confrontation with its sharply rising 200 DMA, now at 45.35.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
Investing in the Melting Tundra / Stock-Markets / Metals & Mining
By: Money_and_Markets
Sean Brodrick writes: On Sunday, I arrived in Yellowknife — a town steeped in rich gold mining history. I had a lot of time to reflect on that history as I took a long walk through town.
Why was I out in the brisk, sub-arctic August weather? Because my cab driver brought me to the wrong hotel from the airport. I didn't discover this until after he had driven off. I tipped him well, too!
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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
Chinese IPOs Soaring in the U.S.! / Stock-Markets / Chinese Stock Market
By: Money_and_Markets
Tony Sagami writes: If you're worried that last week's sell off could continue, or even accelerate, you're not alone. Fortunately, there are plenty of things you can do about it.
I've already instructed my Asia Stock Alert subscribers to take profits on eight stocks, so they should be sitting on a pretty tall pile of defensive cash right now.
Better yet, many of their Asian holdings have been plowing higher despite what is happening to the U.S. stock market. Even during the Dow's painful 387-point one-day drop last week, half of the Asia Stock Alert portfolio positions posted gains.
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Tuesday, August 14, 2007
S&P 500 Index Developing a Topping Pattern Over the Coming Months / Stock-Markets / US Stock Markets
By: David_Petch
G'day all. Well, the S&P bottomed around the 1440 level and is set to continue putting in a topping pattern over the next 2-3 months. The analysis today should illustrate the outcome that is somewhat different than the bulls and the bears, Chimeric market behaviour if you will.
The hedge funds (rampant speculation) and financial/mortgage related stocks (from the housing bubble in the US ) are going to cause a significant loss of money that really did not exist. Many hedge funds had pooled capital that resulted in losses 10-15 fold above the entry point. Those with invested capital have nothing, making the losses real. Most hedge funds are locking out clients from being able to liquidate the funds in fear it would cause a financial cascade to the downside. Attempts such as this is like trying to stop flooding by sticking fingers in a dike…… a person only has so many fingers.
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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
Diverse Asset Class Correlation and Leverage / Stock-Markets / Derivatives
By: Paul_L_Kasriel
Fund managers and investors have been puzzled why prices across a wide spectrum of assets moved together last week - namely, down. I think it has everything to do with delevering. What is bringing about delevering? When a fund owns assets that are going down in value for some fundamental reason, say mortgage-backed securities whose underlying collateral are defaulting subprime mortgages, and the fund is levered, its creditors start to make margin calls.
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