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I think he acts. This market is shaping up as a disaster and confidence consumer and otherwise is in the toilet. Two wees ago i didnt see a recession. One week ago i saw a mild one. I think things are cascading out of control here. IF the investor class gets annihilated now after real estate after consumer after iraq etc. spiral out of control comes to mind. I think he needs to nip that in the bud. We need rate cut and clear statement that inflation numbers are rear view mirror and that the health of the US and world economy takes precedence at this time. He could go 1/2 and 1/2, maybe 3/4 and intention of going back to 1/4 cuts.
was trader talk---i added the monday because whats the sense of waiting and waiting while markets tank.
1/31 is the meeting and monday is 14th. They need to go early next week at latest i think
IF they move 1/2 point intermeet they can do another 1/2 on the 31st. That would be dramatic.
What worries me is that i see little panic out there. Today was the first day i thought of how i felt back in 01 and 02
Markets now looking for intermeeting cut (santelli on cnbc) which should come by monday if at all.
Talking to a bright guy in the hedge fund business this morning. We talked about banks and semis and i thought i would post results here.
His thinking is that guys like Thain et al are going to bite the bullet and value sub prime at zero rather than continue to play the fruitless game of figuring out how much they are worth. All bad numbers will be seen in next earning releases. AFter that earnings start to improve quarter over quarter and yoy. Upside surprises will start to kick in as fair valuation begins to be determined for those non-performing assets. Regarding stock prices, he thinks the way analysts do their work, buy recommendations will begin to occur frequently as soon as this trend is seen. We should get 3 or 4 quarters of upward earning comparisons and earnings suprises from subprime assets that come back on books.
For semis he sees no such earnings action in recessioary environment in 08 to justify stock movement. He sees chips as value play for 09 and beyond but not just yet, although he thinks stocks should start to reflect 09 by mid 08.. Thats why the pounding they are taking now in his opinion.
Anyone care to comment on this.
if sovereign funds, b of a, arabs, chinese, buffet, wilbur ross, etc are buying XLF companies shouldnt we be doing the same?
do you have an explanation for this, r u saying we should be buying xlf becaue of this?
that was buffets choice but a requiremnt to do so is not the way the game is played, i think. So what you are asking is on oil for them to change the rules in the middle of the game. Fairness of doing that aside, it would hurt the commodity markets structurally and this could cause some unintended consequences. The more realistic thing to do is to release oil from the reserves. That will calm the oil based inflation fears at the same time the feds are lowering rates and sending out $400 rebate checks. You think those jerks can get the checks out faster than the 11 months it took to temporarily fix the AMT?
i would love to see it but what you are really talking about is jawboning price down like kennedy with steel. Sorry i dont get the actual mechanics of changing the way futures markets have behaved in the past. Am i wrong in thinking you are proposing something here with oil thats never been used before in the commodities markets.
i understand your point but i dont think its ever been done before and i am not sure its ethical. I dont think even a more non oil admin would consider it.
How about just releasing oil from the strategic reserve as a starter. By the way oil is sinking today and i think we will get the correction in oil that you are looking for. Problem is second half of year as recession or recession fear wane. Thats when the big push thru 100 perhaps will begin.
you ignored points 2-6. Thats where the fear is now. Subprime is pretty well baked in already---its what being speculating on that matter. I agree--a full point is needed now quickly to prevent for point #1 metastiszing into 2-6 and/or 2-6 getting worse than it will be.
4400 on naz this year sounds crazy. And though its very marginal at this stage i think i am in the process of cutting spending. Americans are being hit in many ways. Here is a short list. Doesnt mean you and i are affected but if enough are we got problems.
1. subprime borrowers dead
2. folks even who are prime borrowers have real estate underwater even if they put down deposits on homes. They cant sell their house or move for job opps without abandoning their homes.
3. Autos might be next default category
4. general credit credit card debt may be going in that direction too.
5. food and energy prices up and that kills low and middle earners
6. Stock market sucks a lot worse for the average guy than the average i think and this affects psychology and not only in the investment category--if you feel poorer you act poorer.
Isnt oil currently being treated as any other commodity on the future market? I dont understand your point about taking delivery. Is there any other situation where delivery is required in the same way you are suggesting for oil. If not, you are screwing with the futures markets and would be wiping out a group of folks you/we dont like. It would set a bad precedent imo.
Putting only 5% more oil onto the world markets
are you talking about using the reserve? If so interesting tack to take. Not supposed to be for prices but if you view high oil as a catalyst for a more severe recession, i would do it.
a double this year to 4400. is that what you mean happens if we get to 2200. I cant imagine that could happen. Did i misunderstand.
GS sr. economist Jan Hatzius says 2.5% by the fall on fed funds. There is no way to get there without 1/2 pointers. He also says recession quarters 2 and 3 i believe. IF we are going to 2.5% anyway and recession might last a year assuming we are in one now, why not a little shock and awe? How about 1 point down like on 9/11 in an intermeeting move if the bleeding doesnt stop. The financial crunch and housing is taking us down here. Radical surgery needed.
if i were bb, the falling stock market will only exacerbate the slowdown that has begun. Its like that snowball coming down the mountain. IF they are going to intervene here they should go 1/2 point and note that language about equal weighting of inflation and recession is out the window. That might give the market back its sea legs. Get ready for a $400 check going out to all taxpayers on Jan 1. oops feb 1. Bush and congress dems might be working on that right now. helps both is demand side and non-ideological.
thats what he meant.
Don Kohn indicated the other day that the fed would do what it has to to stop recession from getting out of hand. Maybe an intermeeting 1/2 point and then a pause. Markets are beginning to freak out here.
i think fear just starting up wahz. Very worrysome. Dennis gartman is calling this a bear. Man i hope you are right.
i have always said folks are wrong more than they are right about numerous things. But you judge folks by degree of difficuly of correct decisions. As in rbis and power numbers in bb.
hall of fame at 300, no?
any economists here? i remember from earlier employment data that folks kept expecting unemp rate to tick up but it never did. No one comments on that. Now it ticks up 3/10th of one percent and market seems to go crazy because of this one component of yesterdays data. Anyone quite understand this? And if it was such a shocking number, would you expect the fed to act now and not wait 25 more days until next meeting. Those are a lot of days to lose.
all things being equal and with the losses today being the worst in all the declines, monday will get some panic selling early in the day. Usually that takes a few days to occur before serious buying comes in on hopefully tuesday.
how do you get to the 2430 number?
1/2 point at least is required. What i would like to see is intermeeting cut of a 1/2 point and then another 1/2 1/31.
Don kohn from fed talking at 11am. I think market direction may change based on what he says. Time for a rally.
am thinking there is still more downside in financials. Buffet is nibbling here in mortgage insurance and the sovereigns are buying financial stocks. I think the Merrill buy was very telling. They bought 10% below what ML is right now. If i am right, ML will find a way to make that price the new low before the entire sector moves back up. That would knock citibank down 10% to along with many others. BTW, GS predicts that citi will lower dividend by 40%. To justify that cut and the required dividend (to attract new buyers) going forward, citi would drop by about 10% too. I think any nibbling can be done on stocks not really too involved in subprime but i am too dumb to know which is which so i wait for a further 10% drop and buy XLF. Sometime in first quarter of 08 and i think news on group will be at its worst so it will seem like a real dumb buy.
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24164476
thought you might want to see this from dons thread. Everyone pushing tech for next year but its the same narrow group. Is it possible that chips and equips will only run in a value model, not growth?
As for financials, goldman is calling for more shoes to drop early in 08. I would think new lows 10% below current ones are where it will end up before a rebound.
Financial rebound will come at some point because they represent the cash flow of the economy if nothing else.
has cisco become a chip stock? Folks looking for the hot software and applications. What used to be the backbone stocks are being ignored. Chips just off low for year and even mighty cisco is still down 6 points from pre-earnings highs. This trend is not our friend.
PS i looked at crm the stock after it was mentioned. Multiple is 700. Maybe we are in 1998 and should be playing the market that way thru hot hands stocks and nothing else.
bet you a beer it goes up if i dont buy and it goes down if i do.
tx
tonite is rimm earnings. Anyone have a handle on this one?
Mark Benioff is former oracle guy and i believe ellison owns a lot of crm stock personally.
fyi crm just won citibank business for 30K seats on top of last years 25k merril win. They have over a million users at present. Ellison may want to own this one but may be too rich at current prices.
financials still cant seem to get a bid here. How about tax loss selling to offset gains and to clean up holdings for mutual funds as a reason for failure to put in a bottom or get anything more than a dead rat bounce?
January usually sees fresh money coming to the market. Maybe thats when a more meaningful bounce occurs and a meaniful bottom is in. Joke is the new money coming in is often the same money that got out for tax or sprucing up portfolio reasons.
Could the selling in chips and equips be a part of that process also of getting out of the dogs? I see a number of our stocks failing to get traction even when market rallys. In tech its same old same old for market leaders.
euros may have juiced markets this morning by adding all that liquidity. First results of what fed did last week will hit the markets tomorrow at 10am. If perceived as good news, we might get a good two days here and maybe that santa claus rally.
"I sure wish 3 folks would tell me today they sold everything in a panic"
but no one did, did they. Orderly decline, correct??
Everyones worried to death but no one has really changed behavior whether in their christmas shopping or their investing. Was it Cool Hand Luke who said, "what we have here is a failure to communicate." I am thinking thats whats going on here. Yes its just like 2000 but this time the crash starts from PE levels that are typical at the end of a recession, not at the beginning. There is so much going on all at once that no one including our govt and the fed know what to do or not do. Perhaps thats why the rapid declines and the rangebound market. We didnt get to 14,3 again on the upside and perhaps we dont have to make new lows before a reversal??
from what you just said and from the bits and pieces i heard from that guy on cnbc, a violent explosive rally might actually happen. Can you imagine a guy predicting 14,5 as dow is closing in on 13 and headed down. 9 trading days left in the year.
An analyst was on cnbc earlier and he claimed that folks are confusing consumer sentiment (negative) with consumer spending (positive). I have seen this with my own eyes. Out with a group of friends saturday and everyone was complaining away about the economy, bush, oil etc. But all admitted that they and their families were spending like crazy as always.
Now back to the analyst. He says he is very csutious about markets long term but said markets would rally now into end of year and finish at 14,3 on the dow and that within the next 12 months it will explode to anywhere between 16k and 20k on dow. And this guy is cautious. One of his preferred groups is tech. I hear these things while i am working so i didnt get the name
with jfk we will never know, will we?
If you are talking about bobby, i worked for him and he was very special. If he had won the presidency in 68, the world would be a better place today. I believed this in 68 and its one of the few things i believe today that i believed then.