The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

Piss off!

``The BOE is either going to stay on hold or raise rates, but it's definitely not going to cut,''
Read full article here


FTSE 100   to plunge another 10%   as year-long bear market looms
Read full article here


Record numbers face debt meltdown
Read full article here


Markets fear there is more to come
Read full article here


"...it would be naive to think the worst is behind us."
Read full article here


Hedge funds braced for more pain
Read full article here


History says bear market may have begun.
Read full article here



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The last time the FTSE100 reached the heady heights of 2006 was in 2000.
The chart below shows what happened then. It took the best part of 3 years before it finally hit rock bottom.
From this, you may well deduce that this months downturn could well be the beginnings of something that will last a while yet.
My own feeling is that the FTSE100 won't begin to recover again until it has first breached 4800 - sometime next year.

DOW futures currently -32.
Pre-bank holiday sell-off on the cards???
Am tempted to take all profit & see what september brings.

Looks like worse is still not over.


US futures weaken - MoneyAM
US stock futures were weaker amid expectations data will show more trouble in the housing market.

S&P 500 futures fell 5.3 points at 1,461.10 and Nasdaq 100 futures fell 6.75 points at 1,932.75. Dow industrial futures fell 41 points.

U.S. stocks finished Thursday broadly flat after recession warnings from executives at Countrywide Financial and Thornburg Mortgage. The Dow industrials finished a quarter-point weaker, the S&P 500 fell over a point and the Nasdaq Composite shed 11 points.

Friday marks the first release of important economic data since the uproar in financial markets begun.

Sales of new homes are expected to drop about 2% to a seven-year low of 820,000 annualized units in July from 834,000 in June, according to economists.

"Although the monthly changes in homes sales data resemble the path of a yo-yo, the 6-month moving average of the level of sales points out perfectly why homebuilders' sentiment recently hit a 16-year low," said economists at ING, who expect a 4% downturn.

Even a surprise rise in home sales wouldn't likely spur sentiment changes because home prices have dropped as well.

Wouldn't hold things at the moment,.. never mind over the Weekend HC )-:

anyone with Wall street prices?

http://business.scotsman.com/index.cfm?id=1352142007

The Scotsman Sat 25 Aug 2007

Just ignore the fog and read the signposts - ALAN STEEL

A COUPLE of times over the last year I've invited readers to re-examine their financial affairs by examining what's believed to be true that's actually false. Because once the wrong beliefs become ingrained in your financial thinking, they can lead to disastrous consequences - think pensions and with profits for starters. So, given I'm writing this in Nova Scotia and what's been going on in the world stock markets, I thought it would be useful to link the two by posing the question again. What's false you believe to be true?

For the past two and a half weeks, I've been in our holiday home in Chester, Nova Scotia. "What? Why would you want to buy a home away up there?" That's the typical response of lots of otherwise intelligent people. Away up there? Don't think so. Check it out. We're on the same line of latitude as Toulouse and Turin. It's down not up! The summers are pretty good too on average. But you do get the odd fog when you can hardly see your gin and tonic. In fact, Nova Scotia has two downsides - fog and signposts. Fog means you can't see your way. Poor signposts often lead you down the wrong road. Often where you are trying to get to doesn't appear on the signposts. That's not good for the nerves. And a lack of perspective doesn't help the inexperienced traveller. You forget Nova Scotia is the size of England. So the poor signposts and the lack of perspective means you don't know how long the journey will take, or if you'll even get there. And that's on a clear day.

So what do you believe is going to happen next to the world economy and stock markets in the wake of economists' latest bogeyman, the US subprime problem? Is it still too foggy to tell? What signposts are you reading? Which map should you be studying? Let's understand something. Economists and investment gurus do not have a great predictive record. US cynic Ben Stein once said: "Economists were put on the planet to make weather forecasters look good." Some 26 years ago, US investment guru and newsletter writer , Joe Granville, "the man who could move markets" released his "abandon all hope" message, sparking off record selling of US shares with almost 100 million selling instructions. Private investors panicked and as a consequence missed the 1982 bull market, one of the strongest in history.

As I write this, the Dow Jones Index is down 5 per cent, and the NASDAQ down 6 per cent in the last 30 days. However over the last year the Dow is still up 13 per cent and the NASDAQ up 14.5 per cent! What's the most useful signpost? But aren't the falls a concern? Let's try perspective again. If the Dow fell 3,000 points tomorrow that's still a lower percentage fall than the one which occurred on 19 October 1987! Yes, but surely this US subprime "meltdown" is a different kettle of lobster, as they say here.
Check the map. US household assets are estimated at $54 trillion. Of that, over half is in liquid assets (wouldn't mind that in my bank account). US total household debt is $13 trillion. By the way, US liquid net worth has gone up over the year by $700 billion. Right now the entire US subprime market is only $800bn. Experts reckon half of that could be at risk. But currently only 5 per cent has gone belly up. In terms of the US economy, never mind the world economy, while the numbers look big the problem is miniscule. Let's go back to the big picture. Demographics are positive, corporate earnings are beating estimates, corporate debt is at record low levels, globalisation is continuing unabated, interest and inflation rates are still low, and private investor sentiment indicators are as bearish as they were back in January 2003. These are great signposts. This is a time to buy not sell.

Let's leave the last words to Shakespeare's Othello: "How poor are they that have not patience."

Alan Steel is chairman of Alan Steel Asset Management

From The Times - August 25, 2007


Bank of China admits to $9.6bn in sub-prime risk - Dearbail Jordan

The Bank of China has admitted that it holds $9.6 billion (4.8 billion) of securities backed by American sub-prime mortgages.

The Industrial and Commercial Bank of China, the countrys largest bank, said yesterday that it held $1.2 billion in sub-prime related securities, while Mitsubishi UFJ Financial Group said that it was exposed to the extent of $2.6 billion.

The Bank of China also disclosed that its bad debts topped the equivalent of 6.5 billion during the first six months of the year double the rate notched up by HSBC, the worlds third-largest bank. In the six months to June 30, the Bank of China, the countrys second-largest bank, said that it had reduced its loan impairment or bad-debt charges by 3.8 billion yuan (250 million) to Y99.4 billion, a figure that outstripped its pretax profit, which rose by 51.6 per cent to Y29.5 billion.

In contrast, HSBC reported $6.35 billion in bad debts over the same period on pretax profits up 13 per cent to $14.1 billion.

US could be heading for recession - Last Updated: 12:05am BST 28/08/2007


Ex-Treasury Secretary Summers warns of risks 'greater than any since aftermath of 9/11', reports Ambrose Evans-Pritchard

Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany.

Traders are braced for another week of turmoil after the near breakdown of America's $2,200bn (1,100bn) market for commercial paper.

"It would be far too premature to judge this crisis over," Mr Summers said. "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."

In Germany, it emerged that the state-bank SachsenLB may have accumulated $80bn of exposure to risky assets through a set of Irish funds kept off balance sheet.

The regional government of Saxony agreed yesterday to sell the East German bank - the biggest victim so far of the worldwide credit rout - for a token 300m (204m) to the Landesbank Baden-Wttemberg in Stuttgart (LBBW), ending a three-week saga that has revealed the extent of German involvement in the some of the most treacherous areas of US sub-prime debt.

Georg Milbrandt, prime minister of Saxony, said the sale of state-owned lender was the only viable option.

"Given the market turbulence and the pressures on the bank, it could not have gone on without a partner. We want to get our ship off the high waves and into a safe port," he said.

Sachsen LB, founded in 1992 after the fall of the Berlin Wall, was rescued two weeks ago in a state orchestrated bail-out. A consortium of banks agreed to provide a 17.3bn credit lifeline, but only on the understanding that it agreed to be sold to a stronger player.

It allegedly used no fewer than five Irish 'conduits' (off-balance sheet vehicles) to invest in collateralised debt obligations (CDOs) and other high-risk instruments, according to German newspaper Sdeutsche Zeitung.

The biggest losses stemmed from structured investment vehicles (SIVs) which involve using short-term credit to buy longer-term assets, creating a mismatch in maturities.

The rescue deal comes as investors waited to learn whether the US Federal Reserve would succeed in stabilising the US commercial paper market, the latest - and biggest -domino to fall in the spreading contagion from sub-prime debt. Investors have suddenly lost trust in this form of debt, fearing it may be tainted by exposure to CDOs.

Stock markets rallied strongly late last week on the belief that the Federal Reserve would start to cut its key lending rate in September, and that the European Central Bank would refrain from further tightening. Goldman Sachs said any hint the banks may prove more hawkish could quickly dampen investor spirits again, warning it was too early to give "all clear" on equities.

Federal Reserve data shows that the outstanding stock of US commercial paper has fallen by $255bn over the last three weeks, a sign that borrowers have been unable to roll over huge amounts of debt. The fall is comparable to the sudden shrinkage that occurred at the onset of the dotcom bust, and may have the effect of draining liquidity

wave 5 has commenced , 12k now a possibility

I agree, but think it now inevitable. ;-))

<5800 UKX too. ;-0

Be prepared for a carnage tomorrow in FTSE.

around what time should we expect this? (when the DOW re-opens?) From where I am, looks like the FTSE is fighting back!

Now I have the FTSE in positive territory day on day .... when should we expect to see the carnage?

Perhaps not today - looks like the market is fighting back but don't be taken for a surprise if it drops.

MADDOCTOR,BIG AL, HLYEO98 IS AMERICA GOING INTO RECESSION?

Halifax,did you get back in PET paying higher than you sold for?

halifax , whats the relevance of that question? particularly when you get the mad arses in the US behaving like they did tonight

Link


Prepare for an awesome autumn

Ken Fisher 29.08.07

Ken Fisher is chairman of Fisher Wealth Management, and a long standing Forbes Magazine columnist.

Those blinded by the summer correction into believing bad times and a bear market are ahead will miss this autumn's rally. Don't be among them. The correction could last a bit longer - and many do a W-like-bottom, bringing a whole additional roller-coaster ride before the rally. But there is a good up-move coming.

How do I know? First, corrections start with a bang, bears with a whimper. Corrections are short, sharp shocks, fuelled by a fantastic, scary story later deemed inconsequential or even silly - or maybe a disaster that later seems to have been miraculously and barely averted. That's a lot like now, with disaster seemingly springing from a subprime mortgage-induced credit crunch. Sometimes there is one such story, and another a month or two later - equally as scary. Think 1998, for example. First, the Russian rouble crisis followed by the supposed Long-Term Capital Markets crisis. But three months later, the S&P 500 ended 1998 up 28.6%, all of it in the last quarter of the year, after the correction faded.

Conversely, bull markets have slow, broad, rolling tops, churning in a narrow bandwidth - within 8% or so from the top - for the first six to eight months of the new bear's duration (1987 being the sole exception proving the rule - it came and went too fast to time), marked by effusive euphoria. In 2000, non-tech US stocks were actually positive for the year, and the FTSE 100 was only down 8% - the slow broad roll of a market top. But no euphoria plus a sharp drop, like this summer, equals classic correction.

But how can the credit crunch be inconsequential? Easy - it's a phoney crunch! In my last column, I told you to watch the spreads. The media preaches spreads are wide, but they've got it very wrong. Sure, spreads are wider than June, but only 1.4% from historic lows. (Real credit crisis spread magnitude is maybe three times that) At worst, spreads are "normal" right now. We saw a similar magnitude mini-spike in 2005 coinciding with 2005's market pullback. No one screamed bloody credit murder. Then, a no-show bird flu pandemic was supposed to mangle the market. It didn't happen!

Since July, spreads have actually narrowed a bit. They've narrowed despite long-term government rates dropping globally. Legitimate credit crunches usually see treasuries and gilts rising, not dropping. Had long rates stayed put, we'd see much narrower spreads today. Medium grade long-term corporate rates (BBB) and mortgage rates are actually lower than in June. By definition, cheaper borrowing rates are pretty much the opposite of a credit crunch.



Don't be fooled

Something else real credit crunches don't have - vast amounts of cash on the sidelines. You can see the cash in the recent down-spike in three-month US Treasury bill rates. Normally, T-bills trade just below America's Fed funds rate. (The rate can't be higher or banks would borrow Fed funds endlessly, buy T-bills, and profit on the spread.) Sometimes there's spread volatility, but big spreads, in excess of 1.25%, are rare. When it happens, normally it's because America's central bank raises short-term rates. If temporary, it doesn't mean much. But if the central bank's tightening, and the spread's wide for a longer period, that can be (but doesn't have to be) bearish.

Still, that' s not what's happening this time. The gap got super wide on August 21 - over 2.25%! - because T-bills were falling with the Fed funds rate flat. It takes a tidal wave of cash buying bills to move the spread so far so fast. This is not bear market action. This is panic and classic correction bottoming. I can find this in history in corrections and bear market bottoms, but not a single occurrence of it happening early on in a bear market. Not one. Why is this so bullish? That cash won't sit in low-yielding T-bills for long. As it pours back into shares, the ride will be awesome.

One final way to know the fall rally's on the way? Those dour journalists! (See my earlier column, Sell Journalists, Buy the Market) The media will often make general, Johnny-on-the-Spot decrying corrections - quick to accuse, try, and condemn their scapegoat (subprime today, yen carry trade earlier this year and last, bird flu in 2005, Russian rouble in 1998). But when bull markets peak, they're silent on true economic negatives - too busy filing euphoric stories about new economies and new paradigms. Don't be subprime-blinded and media-mauled and miss the rally. Ride the wave with stocks like these:

Believe it or not, financials should lead the rally - despite the sector's alleged septic subprime infection. Canada's Manulife Financial (MFC), North America's second-largest life insurer, had been lagging all year though progressing as a business. It sells at 10 times my estimate of 2008 earnings, making it a tasty takeover target in a hot sector. Buy it now before the CEO figures it out.

A growing global economy demands energy, making integrated oil companies like Hess (HES) very attractive. They do the whole gamut - from exploration to the petrol pump - and they've got operations in the UK. At 12 times this year's likely earnings, Hess is not too big to be taken over. Buy it first.