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.

However, it does now seem to be forming a sharp downwards trend if you work from mid 2007 to now...........potential top and bottom points of the trend lines forming.

Worth a read :

http://www.marketwatch.com/news/story/great-unwind-has-started-avoid/story.aspx?guid=%7B1DC25DFD%2D3543%2D4CF4%2DBE26%2D74EA4B9C9330%7D&dist=TNMostRead

Very worrying. Do you get the feeling this is all being engineered, the HBOS scare thing being enigneering so that such measures as below can be passed through without causing too much panic, cause its all cause we want to stop these nasty traders and their rumours.........nothing to do with financial chaos thats getting out of control......... :


http://news.bbc.co.uk/1/hi/business/7306058.stm


...............The banks want to be able to use a wider range of collateral, including mortgages, for Bank of England loans.

Mr King had been reluctant to allow that so he would not be seen as bailing out banks that had behaved foolishly................


............. "Although the Governor of the Bank, Mervyn King, asked them not to divulge what they discussed, I have learned he signalled - for the first time - that he was sympathetic to their request that in an emergency they should be able to swap a wider range of assets, including their mortgages, for loans from the Bank of England," the BBC's business editor said. ............

From Telegraph...
Still, investors are clearly nervous. The euphoria which greeted the smaller than expected cut in the US base rate has given way to more sombre analysis, as investors have found themselves tripping over rumours of more and more banks in trouble. Those who have a more fatalistic outlook might be reminded of the old Jewish joke about a rabbi who falls out of a 20th-storey window and, as he passes each floor, mutters to himself: "So far, so good.

Good debate guys...(like reading your comments)...hope we can guess where the bottom is....could be some increases in the run up to Christmas...those that can short at the moment might make some money (I'm no good at cfd's and spreadbets) ...hopefully the markets will turn around soon !

I know I have of late been on about a late summer respite (US elections) before big problems in 2009.

Perhaps these quoted snippets might suggest that what happened before, might be happening all over again..........

If the signs are in the tea leaves, it might be wise to have no stock holdings before April 2009...........


QUOTE

"....this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and in capital goods. By the time the Fed belatedly tightened in 1928, it was far too late....".

"...government efforts to prop up the economy after the crash of 1929 only made things worse."

"...the Federal Reserve purchased $1.1 billion of government securities from February to July 1932 which raised its total holding to $1.8 billion."

"The solution was the government must pump money into consumers' pockets. That is, it must redistribute purchasing power, maintain the industrial base, but re-inflate prices and wages to force as much of the inflationary increase in purchasing power into consumer spending."

"There was a brief recovery in the market into April 1930, but prices then started falling steadily again from there, not reaching a final bottom until July 1932."

"...the nominal interest rate is close or equal to zero, and the monetary
authority is unable to stimulate the economy with traditional monetary policy tools."

"...that a liquidity trap might have contributed to bank failures."


Source(s):
http://www.mises.org/Books/historyofmoney.pdf
http://www.greatdepressionsbook.com/
http://www.gusmorino.com/pag3/greatdepression/

UNQUOTE

Lots of media articles now suggesting "time to buy" and historically at least this may be correct. Tax year end selling is nearly over, and so, as this hits of lots shares, shares are usually cheap now, which gives a rally in April, before the "Sell in May" happens and then the markets go into their summer state of depression.

So yes, perhaps there could be 4 to 6 weeks of respite ahead and cheerier markets, but will it all end in tears again in May/June ?

The question this year will no doubt be more focussed on the "Sell in May" and how many will utilise any April rally to bail out. There must be some serious margin pressure around with the falls of late.

Attached is the AIM chart for 07 to 08. The AIM index is presently at the bottom of the trend line imv, so its time to bounce up for a while at least, and looking at last year April was good, so again it would suggest that potential for a few weeks it might turn bullish, before the summer selling strikes come May.



At a guess, good time to buy for a short term rally, but beware as it is very likely to turn down again before too long. Of course, any bad news from the US or Europe could smack any rally down at any stage. Also, how much are insitutions still looking for cash and will sell into any rally, which in effect will mute its power ?

Lots of questions, and a multitude of potenial opinions, in general means volatility.

Sadly the FED hid the M3 figures from mid 2006 onwards, they say it was not important, however its more likely that it was showing in advance that everything was going to go very very bad. So, the data was hidden.

This is the chart up to mid 2006, and it shows where the "house price boom" came from.

I just wonder what the chart looks like from mid 2006 to today...........





.

As to the markets going forward, I would suggest keeping an eye on US inflation figures in the next couple of quarters. If they do not start to dip back down, then the FED will have to forget about recession and change direction to counter inflation. This will mean interest rates start going back up and fast. Recession is not nice, but its generally over quickly, inflation can be with you for years , many years and is a bigger problem.

If the markets get a sniff that inflationary pressure is not subsiding, I think there will be a strong sell off in the markets as they anticipate rising interest rates on the horizon.

Interesting chart posted by "mdtrader" over at sharecrazy.com

Whilst people will always say that valuations have not gone to 2000 levels, they seem to think bubbles and falls are caused by one reason, obviously they are not. The Depression of the 30's was not caused by high PE's, it was caused by "imaginary money"......yes, lots of credit and nothing behind it. As is now, property valuations have been "hyped" up on lots of credit and nothing behind it, and as the imaginery money must be turned into real money, well you know what happens ahead. Things are sold off to raise money to back up the imaginary. Certainly worth keeping an eye on the charts to see if history does repeat itself with the credit crises.




.

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3666670.ece


From Times Online

April 2, 2008

Mortgage brokers braced for Halifax to pull dealsRebecca O'Connor
Halifax, the UK's biggest mortgage lender, is expected to pull its current home loan deals.....................

When people were spouting "credit crisis over" were they simply saying that the Fed was printing money like nobodies business, and so credit was there to be had. Does not really solve the underlying problems does it, and not very surprising to see the amount being borrowed rising, not falling.

I think the printing press answer to money problems was recently demonstrated in Zimbabwe..............

Is it any wonder the FED starting hiding the M3 figures............


http://money.cnn.com/2008/04/03/news/economy/fed_credit_crisis.ap/index.htm


Investment firms tap Fed for billions

Wall Street banks take advantage of Fed's emergency loan program, borrowing an average of $38.1 billion a day last week.

Last Updated: April 3, 2008: 6:26 PM EDT

WASHINGTON (AP) -- Big Wall Street investment companies are stepping up their borrowing a bit from the Federal Reserve's unprecedented emergency lending program.

The Federal Reserve reported Thursday that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.

The program, which began on March..............

The latest M3 stats are starting to looking scary, very scary.


http://www.nowandfutures.com/key_stats.html





M3 Green Line is where the FED reported it, they decided to stop (guess why) and the M3b black line is the continuation by others reporting what the FED decided to stop reporting...... ;)

And "something for the weekend sir" ?

If you have the spare time at some time, I would recommend watching, if you have not seen it before, the BBC 4 part series "The Century of Self".

Its free to watch on Google, links below :

Part 1 http://video.google.com/videoplay?docid=8953172273825999151&q=%22The+Century+of+the+Self%22&total=488&start=0&num=10&so=0&type=search&plindex=0

Part 2 http://video.google.com/videoplay?docid=-678466363224520614&q=%22The+Century+of+the+Self%22&total=488&start=0&num=10&so=0&type=search&plindex=1

Part 3 http://video.google.com/videoplay?docid=-6111922724894802811&q=%22The+Century+of+the+Self%22&total=488&start=0&num=10&so=0&type=search&plindex=4

Part 4 http://video.google.com/videoplay?docid=1122532358497501036&q=%22The+Century+of+the+Self%22&total=488&start=0&num=10&so=0&type=search&plindex=2


.

Worth a read of this thread, and listen to Bert ....


http://boards.fool.co.uk/Message.asp?mid=11010684&sort=whole



Author: BertEEE Number: 107772 of 107804

QUOTEBert are credit markets continuing to improve? UNQUOTE

Hi, sorry I can barely use TMF at the moment as I get loads of error and security alerts and can't access my favourates list. God knows what they're doing.

Spreads have widened again marginally but lots of new deals, some of which are being upsized due to demand - thats so important, if we can keep this up then the liquidity crisis will be over. But we then move onto the developing economic crisis, I would imagine that GE's earnings cut is just the start basically.

****************************************************

Author: BertEEE Number: 107791 of 107804

QUOTEWhile I'm on my high horse - I'm sick of everyone making such a fuss about the US. Yep, they are a big part of the global economy. In the 87 Crash they the phrase 'when America sneezes the rest of the world catches a cold' was batted about and it was true. But have you seen how much the rest of the world has grown up since? The US was about 40% of the global economy then. The rest of the world has torn them apart for growth in that time and the US Dollar has fallen by over 50% or more since then too. The US is now about 15% of global GDP in $ terms compared to then. Decadence eventually gets to all great empires - look at Britain the Romans use to be - I think we have to live with the US decline or reduced growth and look to the rest of the world myself. Was nice knowing you Uncle Sam.

China, India nd Russia together have the same GDP as the US. They are growing at about 8% across the board and more than offsetting any decline of 0-1% in the US.UNQUOTE

Total tosh I'm afraid, together they are just a fraction of the US. You're looking at it on a PPP basis. So purchasing power parity. Totally meaningless figure really.

The US, Europe and Japan make up around 70% of global GDP. Frankly all three economies currently look shite. If you honestly believe that China can continue to grow strongly when their central bank is doing everything it can to moderate domestic demand to contain inflation and exports growth is likely to slow significantly (if not actually decline) then good luck to you. The UK especially would very much struggle to cope with a US decline. Fortunately the current decline is likely to be short lived, unfortunately we're currently in the stage where people haven't twigged that economies work with lags and so whats happening in the US is now washing out to the rest of the world but simply isn't so apparant yet.

The US was first in and is also likely to be first out.

B


.

If we accept that global recession is now a certainty (and surely we do), the game now becomes one of finding value.
Normally, one would see a flight to defensive stocks, but in the UK at least, I doubt this is worthwhile. Firstly, much of the recession proof industries are struggling through other causes. Gambling is now online and spread around, Bingo and boozing are hard hit by the smoking ban, banking is shocking. Secondly, the rise in short selling as a fashionable way to invest for the smaller players, through CFD's and spread betting, makes even the most defensive play vulnerable.
For me the search becomes one for stocks with greater exposure to geographical markets that are most likely to weather the storm with least damage and emerge first from the tempest.
This seems to point to emerging economies, but I doubt that, as they are not mature enough to cope with rocketing energy and commodity prices. Instead, I think the best placed may be the high tax, high public spend economies that are a little more mature.
The reason? They have a key weapon in their arsenal that is unavailable to UK, USA and much of the EU. They can either lower taxes significantly to increase consumer spending, or they have the option of ploughing money into public spending to promote demand.
Either way, they can increase liquidity without any dubious measures of bailing out banks.
All IMHO of course.
Alan

http://money.cnn.com/2008/04/14/news/economy/how_bad/index.htm?postversion=2008041415

Fears of long recession rising

Growing number of economists worry that second-half recovery is out of reach and that recession will be longer and more painful than current forecasts.

Last Updated: April 14, 2008: 3:57 PM EDT

NEW YORK (CNNMoney.com) -- There is little debate about whether the U.S. economy is in a recession. The question is how painful and long the downturn will be.

There is a growing fear among some economists that the recession will be particularly bad.

"We just can't believe it's going to be short. The question is how bad can it get? The situation is moving more towards severe than towards mild," said Allen Sinai, chief global economist for Decision Economics.

According to the National Bureau of Economic Research, the firm that officially determines when recessions begin and end, the last two recessions (2001 and 1990-1991) each lasted 8 months.

But Sinai and other economists cited numerous economic headwinds, including tight credit, falling home prices and mounting losses for banks, as reasons why this downturn could..............





........................

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/14/bcngold114.xml

Goldman Sachs and Wells Fargo warn 'delusional' investors on stocks

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 1:58am BST 15/04/2008


Wall Street faces the growing risk of an equities bloodbath in coming months as the credit crunch spreads to the wider economy and earnings crumble, according to a pair of grim reports issued by Goldman Sachs and Wells Fargo.


Goldman Sachs said the key for equities will be the full-year guidance offered by companies


David Kostin, the chief US investment guru for Goldman Sachs, expects the S&P 500 index of Wall Street equities to plummet a further 15pc over the "near term" as companies scramble to lower their outlook for this year.

"Although only a few firms have reported first quarter results, early signs are awful. We expect a swath of lowered profit guidance," he said in a research note published today, entitled 'Fasten Seatbelts'.

Mr Kostin, who replaced the ever-bullish Abby Cohen as chief strategist in December, expects the S&P index to reach 1,160, which would amount to a fall of 27pc from the bull market peak of 1,576 in September and enter the annals as a relatively severe bear market.

Goldman Sachs was the only major investment bank on Wall Street to turn a profit from the credit crunch, taking out huge "short" positions on sub-prime mortgage bonds before they went into a tailspin.

The firm's daily trading notes are one of the most closely watched sources in global finance.

Scott Anderson, chief economist at Wells Fargo, is equally pessimistic, describing the bullish views of some market players as "bordering on delusional".

"The equity markets have not yet priced in a prolonged downturn in economic growth in my opinion. We are still in the early stages of the credit crunch. Earnings estimates for the second half of the year are likely still far too high," he said.

Mr Anderson said investors should pay attention when the International Monetary Fund cuts its global growth forecast for 2008 three times in less than five months. The Fund has put the odds of a world recession at 25pc and predicted $945bn in losses from the credit debacle spread across banks, hedge funds, pension funds, and insurers.

"Even more alarming, the IMF estimates that only a quarter of these potential losses have been recognized," he said.

"Rarely do we ever see such uncertainty surrounding the economic and financial outlook. The forecasts for GDP growth in the second quarter of 2008 are currently all over the map. If you feel you must wade into equities at the present time, I would suggest spreading your bets widely," he said.

Goldman Sachs said the key for equities will be the full-year guidance offered by companies rather than first quarter profits. It cited the example of Bed Bath & Beyond, where the stock fell sharply last week after the firm said the earnings prospects for 2008 would be around 16pc below consensus estimates.

Mr Kostin said investors often "look through" downturns, preparing for the sunny uplands that lie on the other side as the cycle recovers. But the pattern in this bear market has been a series of earnings shocks precipitating sudden share price falls.

The implication is that investment funds have been caught badly off guard by the severity of the economic slump and are scrambling to catch up with reality.

Former Fed Chairman Paul Volker called the current problems "the mother of all crisis" in a speech last week. He made the comment that before he became Fed Chairman there hadn't been a financial crisis in over 40 years. Since the 1970's though he counts 20 of them. He claims this one though is going to be the worst of them all and that the US is in the early stage of a dollar crisis.

My thinking is simple. The last bear market lasted almost three years in duration. It came as the result of the unwinding of the tech bubble in the late 1990's. This bear market isn't going to end just six months after it started and those that think it is over now are nuts. This bear market is the unwinding of the real estate and credit bubble and that has much bigger consequences for the economy than the tech bubble did.

This week Citigroup and Merrill Lynch are expected to announce write-downs of over $15 billion for worthless "level three" mortgage debt. The worlds biggest banks have so far written down over $250 billion in debt in the past year. The IMF claims that the size of the losses is likely to top $945 billion. So far the banks have been revealing losses piecemeal every quarter in fear that if they reveal the true extent of them they'll cause a Bear Stearns style run on their reserves. The government has turned a blind eye to their accounting games so far, but the bear market will not come to an end until the size of the losses are finally revealed.

At this weekend G-7 summit there was talk of forcing banks to reveal their losses over the next 100 days.

You know there is an old saying 'self-fullfilling prophecy'.

Nobody can be objective. Which means that any analyst statement is clouded by their own motives and greed. The City is the worst for this.

We all know times are bad and there is a severe lack of liquidity. I for one though think there are far too many people trying to drag the world into a severe recession and a dramatic fall in sp for their own commercial gain.

One of the reasons sp haven't risen as much today as was possible is because of the Goldman Sachs article. Thus the cycle continues.

It would be an interesting experiment, if everybody shut their mouths, what would happen to confidence and therefore sp. I may be wrong but I suspect they would rise and the cycle broken.

'The pen is mightier than the sword'