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Quote of the day;
All truth passes through 3 stages.
First it is ridiculed.
Second it is violently opposed.
Third it accepted as being self evident.
(Arthur Schopenhauer-1788-1860}
Story of the day on bloomberg;
It is dangerous to plug a constipated elephant (Marc Faber}
Donald Trump-"Even if the Fed cuts interest rate we are heading for a recession.If it does not it could be worse "
Companies will good earnings will ride it out! Sentiment driven scenarios are always preludes to a good rally. After a big downpour, the sun will always be out. I am going to wait patiently for the sun now and read " How to make more money from herds" in these few rainly days. Shall we have a consensus, who is bullish and whose not? It's time sub-prime monkeys tame the Bear-monkey into cutting rates. Donald trump suggested 100 basis pts cut i think. We shall see..
The same goes to our local securities trading houses, putting credit tighting policy on certain over specualative stocks thus un turn effected STI penny stocks, the same goes to putting at brake on over certain policy on property development, thus in turn effected property stocks. The same goes to US mortgagers...in all it is going to be credit tighting issue from lenders to borrowers. CBs releasing more $$$ to bank, is just a temporary issue that can not solve this Sub-prime over night, until dust is settle, Cash maybe prefer for over the past week then day.
newmoon,
again you got your facts wrong. Central Banks CBs don't print money to put into the system. That's a monetary policy tool. What the CBs are doing is performing their role as a lender of the last result when markets become inperfect like now. Banks are perfectly capable to using their existing cash reserve ratios as required by law to be maintained to lend & make money out of it. They are not willing as they view certain institutions, clients they lend as a credit risks.
What the CBs are doing is to release liquidity in form of soft loans priced very attractively to the Banks & lending instituions so let's say EU provided US120b worth of liquidity at 4% spread. The banks can then proceed to lend this cheap source of funds (almost like interbank loan but it's from the CB) to the people who need it.... at say the prevailing rates ie 5-6-7% and still make a 1-3% spread at no risk to banks financial positions. The risk is no on the CBs. CBs are always lenders of the last result in these situations
That's how they relieve a credit squeeze that is caused by phychological fear rather than a real contraction of real economy. That is also why BNP stated category that they are perfecly in fine health with no illogical NPLs (Non-perfoming loans) but just stopping people from redeeming or putting in new money in their funds that are exposed to sub-prime as they are unable to price the assets correctly. This precedent may or may not be adopted by other banks for fear of damaging their client reputation or showing to their cients they are not exactly very competent. BNP actually does more damage to themselves from a reputational angle.
CB's are panicky but some people are relaxing.
The expansionary policies of the CBs are the cause of the problem.Printing more money will only aggravate the problem.
Transforming paper into gold is not possible.Clutching at straws does not help a world drowning in paper money.
The masses have been conned for too long and will soon wake up from their hypnotic state to find that the emperor has no clothes.
Soon we will know the result.
Reading this forum, one can't help but wonder why everyone is trying to spread the gloom and doom message. I have always believe in the opportunities that come with turmoil. So to all readers of this forum, don't get suck into the pessimistic hole.
newmoon,
relax....... 30% is a bear reversal. Even the worse crash in 87 wasn't to this degree.
What is magnified is the medial, 24hrs CNN etc putting stories out eveywhere on sub-prime and credit squeeze. A squeeze as it implies is temporary more due to fear (kiasi) rather an a credit crunch (which is kiasu) and very very damaging as it implies the real economy is screwed.
There is so little coverage of the record real growth in wages, employment growth etc. It's just isolated to Singapore but even in good old USA where the job market... real economy is growing well regardless of what is happening with sub-prime which affects the poor and those with poor credit history & lower end housing (below $500,000) the above $500,000 jumbo loans are for those with good credit history. The issues is equivalent to poorer blue collar workers who bought high in the early 2000s & paying up to 10% interest rates. The middle class & the rich on the other hand.... buy above $500,000, qualify for jumbo loans and pay just about 5-6% interest rates. See the irony of the system there & in UK. U won't get such things happening here cos we have HDB with fixed controlled pricing & 2% interest rates & little foreclosure while US has to rely on Faddie Mae and other programmes that are extremely private sector driven hence the crap they are going through. From a % standpoint, it's really relaly small... so it'll dent the quarter numbers for a quarter.. then life gets back to normal. No effect whatsoever on the real economy, international trade.
The banks have made their money already long long ago... so it's some payback time now with consolidation of the sub-prime industry.
Strategy is stay at the sidelines, look for good fundamentally sound companies with strong cashflow & with little debt. These will ride out any potential credit crunch if the world's poor cannot pay all their bills & interests hahaha.... maybe the HDB decides to go priviate & heartlanders may have our own subprime problem........ then we seriously have to start looking at keeping cash. hahaha
Marc Faber on Bloomberg news;
30 % correction coming no matter what the central banks do
Read the salient points on blogpulse .com
Coming week trading on STI, very volatile, will be on credit tighting issue., it mean near future will be hit by more bad new. The day of easy credit seem over for US housing mortgage loading default where those hundred US$ billion load out to more risky moatgagers. Another word more banks and Institutional and hedge funds will have more reporting to bear with till it dust it settle..
Sell the rallies if there are any.
Consumer spending based on debt will end in tears.
If Europe and USA have no spending power who will buy china and indian goods.
The other shoe that will drop is the ridiculous china and indian markets( although shielded by an indian carpet and a bamboo curtain )
the dow closed pretty good (from a low of negative 212 to negative 30).....maybe european bourses have oversold eh? central banks readily come to the rescue. small picture is sub-prime mortgages doing really really bad....causing me and you to panic sell....maybe not all of you. but BIG picture is singapore is doing well. Companies doing well. in fact things should go smoothly to at least 2008 but it ain't. with a one year outlook...and if more panic selling happens or doesn't happen.... our banks are looking DARN CHEAP now. they pay good divvies too!!! who are we selling to? the BBs? then 2 weeks later.....make another story.....or the true story that.....yes subprime problem but hey it's a SMALL problem. bourses oversold blah blah blah....then ramp it up again.
NOT vested....just my thoughts.
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WAVE OF DEATH COMING.......GET OUT BEFORE THE BB DO.......NUMBERS DON'T LIE ...................
At this stage of the bear market (as can be seen from the clear long downtrends in many, many stocks' charts, though not obvious in the STI), there are still many 'boiled frogs'...
Not dead frogs, but they are still enthusiastic buyers...
The right time to buy is when all the same 'boiled frogs' are scared and refuse to buy anything more...
Looks like the Fed and Euro Central Bank pumping ice water into the boiling water to save some frogs....;)
Frogs will be boiled if they anyhow buy or/and anyhow dump. I believe there are alos smart frog with lots of energy to jump out of the pan into fresh water.
Mani...my pal....;) ...I think u have not answered this question which I posed to u earlier....;)
Such wisdom...no wonder we always like to ganbei...;)
Boiled frogs mean dead frogs? Shall prepare for a mass funeral or have a feast of tien ji...heehee....;)
So u are also one of those who believe that this time is "No different" and ie. Not "This time is Different"...Am I right my dear pal....?
Wah shiok man. This morning bought cheaply from shortists and panic-sellers. Afternoon sold off with gain of close to $15k. Hoping to repeat this again on Monday. Hope forumers can help to spread the panic message!
The ones hurt most are of course the "boiled frogs".
They are the ones who have been averaging down since the falls began..
by continuing to buy cheap and buy cheap (ie. cheaper than last week/month).
Since they are boiled to be so bullish, how can they ever conceive of a downtrend?
They only remember the Feb/Mar correction and treat this time as a 'correction' also.
But a bull market correction is different from a bear market...
and a bear market is not a bull market correction.
Must be utterly confusing to some...
Actually, if we analyse the current "meltdown" objectively, much of the losses were driven by sentiments. A lot of self-talking down, which the market vultures are fueling. Once, people start to panic, they fan such negative sentiments themselves. This will naturally lead to waves after waves of bad news, even if they are not that serious being compounded many times over. Spreading negative sentiments is like lighting a wildfire. Once set ablaze, people will be hurt and start to run wild sensely, trampling each other to get out of the burning fire. Most seasoned investors know this phenomenon, called THE HERD or HURT INSTINCT.
