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.

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'

At the moment what we need is for the fuel cell companies to really help to develop very quickly a means of transport because this oil price could be going all the way to $150 or even $200 a barrel....it really is urgent...the more oil goes up the more money oil companies will make but the rest of the world will suffer and as far as the rest of the stockmarket...forget it...the only performing sectors will be oil and gas, mines and a splattering of alternative energy stocks.....the rest of the market will do nothing....and THIS IS CRISIS TIME....Gordon brown saying how the producing countries should produce more is not the solution ! they are already doing all they can and if there are hurricanes this season coupled with a few other disasters here and there and the american driving season almost upon us ...well..!!!!.The solution is fuel cells and hydrogen, solar and wind.....nobody in this country can seem to see where we are heading !

US companies now in trouble.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/12/ccambrose112.xml

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

UK companies now in trouble.

http://www.thisisexeter.co.uk/displayNode.jsp?nodeId=136993&command=displayContent&sourceNode=231418&home=yes&more_nodeId1=137002&contentPK=20559665

Crude ceased to be a friend of equities when it reached around $110 a barrel. At last week's close of $126, it became an outright threat. The Bush rescue package - $800 in rebate cheques per household - has been rendered null and void by the latest spike. The average US home is now spending over 8pc of income on energy or fuel.

OPEC is playing with fire by refusing to pump more oil to offset rebel attacks in Nigeria. The cartel's output drop of 350,000 barrels a day in April is a hostile act at this point.

But there again, why should Middle Eastern states help America as long as the White House keeps filling the US petroleum reserve to prepare for war with Iran? Bush is playing with fire, too.

The oil spike will burn itself out. China has hit the buffers. With inflation at 8.5pc, it risks political turmoil. Moreover, it has repeated Japan's mistakes in the 1980s, building too many factories shipping too many goods at slender margins into a crumbling export market.

Lehman Brothers' Sun Mingchun says China will tip over in the second half of this year. "With so much latent overcapacity, an export-led slowdown could trigger a chain reaction which, in the worst case, could threaten the stability of [its] financial and economic system," he said.

Britain, Europe, Japan, and China will go down before America comes back up. This is turning into a synchronised bust, after all. The Global Slump of 2008-09 is under way.

http://news.bbc.co.uk/1/hi/business/7397850.stm

Roll on Wednesday - lets see what they say.




UK inflation jumps to 3% in April

Many shoppers are already feeling the effect of higher food prices

UK consumer inflation reached its highest level in 13 months driven by high food and fuel costs, according to the Office for National Statistics.

The Consumer Prices Index (CPI) hit 3% on a yearly basis in April, up from 2.5% in March. The monthly rate was 0.8%, the biggest leap since May 2001.

According to the figures, the Retail Prices Index rose to 4.2% from 3.8%.

The inflation data would probably stop the Bank of England cutting interest rates in the near term, analysts said.

Analysts had expected CPI to reach 2.6%.

"It was a pretty horrific headline number," said Lee Hardman, an economist at BTM-UFJ.

"It limits the scope for monetary easing from the Bank, it will be hard for them to cut in June."

Budget changes

However, some analysts added that the main drivers of price growth were fuel and food costs, which higher interest rates did little to control or rein in.

In the current climate of slowing economic growth and a weakening housing market it was unlikely that the Bank would hike interest rates as price pressures were not being caused by an overheating economy, the analysts said.

The CPI figure is above the 2% target set by the government, and increases the chances that Mervyn King, the Bank's governor, will be forced to write to the Chancellor to explain the accelerating rate of inflation.

He has to write a letter to the Chancellor if the rate of inflation tops 3%.

Of the 12 types of goods measured by the CPI, seven categories saw prices rise in April compared with the previous month. Alcohol and tobacco were amongst the gainers after tax increases set out in the last government Budget.

Another significant reason for the higher inflation data was a sharp increase in electricity and gas bills after the six leading suppliers raised prices.

Higher power and gas costs contributed 0.2% to the increase in the CPI figure, the ONS said.

Consumers and companies are already feeling the effect of higher costs.

On Monday, data showed that manufacturing output dropped by its biggest margin in 6 months during April, with firms hit hard by rising raw material costs.

The Bank is due to release its economic forecasts on Wednesday.

http://everythingwarrenbuffett.blogspot.com/2008/05/citywirecouk-you-aint-seen-nothing-yet.html

Tuesday, May 20, 2008

CITYWIRE.CO.UK: You ain't seen nothing yet, warns Buffett

By Tony Bonsignore | 10:33:06 | 20 May 2008 Citywire.co.uk

Todays Financial Times headline - Four-Month Peaks Defy Gloomy Comments - says it all. On the one the hand veteran investors and esteemed bankers are lining up to warn that the worst of the financial crisis may be yet to come; on the other equity markets are hitting highs not seen since early January. One side has surely got it badly wrong.

The most notable bear is investment guru Warren Buffett, who yesterday warned that as far as the wider global economy is concerned the credit crunch is far from over. The Berkshire Hathaway chief executive predicts there are second and tertiary effects still to be felt', declaring: I dont think we are half way or even a quarter of the way through the impact on the general economy.

The Wall Street banking crisis was probably mostly over, he said, although he conceded that even this prediction might yet prove optimistic.

Perhaps most perceptive was Buffetts observation that the crisis was now hitting those who did sound things, rather than just the silliest folk. Ordinary homeowners facing a crippling increase in monthly repayments will know exactly what he means; meanwhile City bankers continue to live in luxury on the bonuses paid out in the years of plenty. Somewhere along the line the world got turned upside down.

Another veteran investor predicting tougher times to come is George Soros. Soross new book aims to dismantle the classic economists belief in the tendency of markets to move towards equilibrium. In contrast, Soros argues that markets tend towards massive boom and bust cycles, and that we are currently at the end of a 25 super boom.

What does this mean in practice? Soros warns that the recession in the US is likely to be longer and deeper than most currently predict. Perhaps even more chilling is Soross assessment that the UK is in an even worse mess than the US, given our dependency on an inflated housing market and our reliance on financial services.

One can only hope that Soros is wrong but it is difficult to disagree with his logic; if the US is being hit so hard, why shouldnt the UK follow? Isnt that the lesson of our economic history? Answers on a postcard, please.

The final bear worth a mention is ECB president Jean-Claude Trichet. In a carefully worded warning designed to temper optimism that the worst is behind us, Trichet says that growth in the Eurozone is likely to slow markedly over the rest of the year as the credit crisis spreads to the real economy.

Crucially, Trichet warns that the ECB will persist in its battle against inflation, and therefore keep interest rates at levels that may dismay business and certain member governments. The ECB cannot let the wage-price spiral out of the bottle, Trichet prosaically warned.

Perhaps most enigmatic, though, was Trichets warning that we are still in the middle of a very serious market correction. Given that equity markets have enjoyed a phenomenal rally in recent weeks and that the Dow and FTSE100 have climbed through the 13,000 and 6,300 barriers respectively in recent days, this is a difficult comment to interpret.

Is Trichet warning that this is a classic bear market rally and that we should expect things to come crashing to the ground sooner or later? That seems to be the implication. Perhaps the bulls should keep the champagne on ice, for the time being at least.

I suspect there's plenty of surprises out there still left to find. If another big storm hits then maybe more will come to the surface. Oil and commodities I think will drive the next big collapse, probably caused by a sudden slowdown in China late 08/early 09. Only time will tell though. Of course the world economy may well have cracked before then, especially if oil reaches the $200 mark. Interesting times.

In my opinion.

Strawbs.

http://money.cnn.com/2008/05/21/news/economy/fed_minutes/index.htm?postversion=2008052115

Fed sees economy getting worse

Ben Bernanke & Co. lower 2008 economic growth forecast and raise their projections for inflation and unemployment; says last rate cut was a "close call."

By Chris Isidore, CNNMoney.com senior writer
Last Updated: May 21, 2008: 3:37 PM EDT


NEW YORK (CNNMoney.com) -- The Federal Reserve sees worse economic problems ahead, according to new forecasts from the central bank released Wednesday.

The Fed lowered its economic growth forecast for the year. At the same time, it raised its projections for inflation and unemployment. This created a difficult economic combination that made the Fed's latest decision to cut rates a "close call" according to the minutes from last month's Fed meeting.

Stocks, which were trading a bit lower before the release of the minutes, fell even further after the new forecast was revealed.

The central bank said it now believes full-year economic growth will be between 0.3% and 1.2% this year, significantly below its previous forecast of 1.3% to 2% growth in January.

The Fed said in its minutes that members now expect the economy to shrink in the first half of the year -- the clearest signal yet that policymakers believe the economy is in a recession.

The Fed also raised its unemployment forecast for the year to between 5.5% and 5.7%, up from its earlier estimate of 5.2% to 5.5%. The unemployment rate was 5% in April.

In addition, the Fed boosted its projection for inflation. It said it now expects personal consumption expenditures to rise between 3.1% and 3.4% in 2008, a full percentage point more than its earlier expectation.

Even when soaring food and energy prices are stripped out, the Fed expects steeper "core" inflation than its previous estimate.

The Fed cut its federal funds rate, a key short-term rate, by a quarter- percentage point at the end of its last meeting on April 30. According to the minutes, that decision was viewed as a "close call" partly because of rising inflation pressures.

"I think they are stating more clearly that we are in a recession, but the main thing to take away from this is that they're not going to cut any further," said Gus Faucher, director of macroeconomics for Moody's Economy.com.

The Fed' indicated it is expecting a pickup in economic growth in the second half of this year, as the effect of its previous rate cuts and tax rebates to consumers start to impact the economy.

But while it said it expects the economy to recover a bit next year -- forecasts call for growth of 2% to 2.8% in 2009 -- the Fed still sees some weakness lingering into next year.

The central bank now thinks the unemployment rate in 2009 will be between 5.2% and 5.7%, up from an earlier projection of 5% to 5.3%. The Fed said it expects to see "noticeable slack" in the economy next year.

"They're not looking for a deep recession. But they're not expecting a heck of a lot of rebound," said David Wyss, chief economist with Standard & Poor's.

He added that the latest forecast is simply catching up with the consensus view among economists that the nation has already fallen into recession. He warned that the Fed's outlook may deteriorate even further in light of the spike in oil prices in just the past few days.

"Remember, this is their thinking of three weeks ago," Wyss said. "They might have even a different view on inflation and GDP today."

Keith Hembre, chief economist at First American Funds, said that it makes sense that the Fed is now paying more attention to inflation pressures.

Some believe the Fed's seven rate cuts since last September helped fuel inflation, especially the sharp run-up in oil prices, because the rate cuts have led to a weakening of the dollar.

So Hembre thinks the Fed wants to send the clear signal that it is on hold on interest rates for the foreseeable future.

"They don't want to exacerbate it by the expectation of further rate cuts," he said.

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=305368&re=3173&ea=166581

Innocent bystanders will suffer as credit binge ends, Mervyn King warns

By Iain Martin | 13:53:35 | 10 June 2008

The governor of the Bank of England has warned that some innocent bystanders may lose their homes altogether in a speech in which he compared the banks to party goers and the central bank as the chaperone that would take the punch bowl away just as the party is getting going.

In a much-anticipated speech at the British Bankers' Association's annual conference, Mervyn King questioned who would get home safely when the party ends, warning of the damage that investment banks, monoline insurers, and even hedge funds, could do in the event of their demise in the credit crunch.

King said that the Bank of England and the government needs to create a system to protect financial stability similar to its structure to manage inflation.

These reforms would be set out in the Bank of England's Red Book to be published later this year, said King at the conference.

'We need to develop a equally strong framework for financial stability,' said King in relation to the work of the monetary policy committee.

Pricing and the stigma of borrowing from central banks was crucial to the success of these institutions' attempts to bring liquidity back to the market, said King.

King also said it was important to find a way for banks to fail in a orderly way.

Pre-funding, though it was unpopular with banks, was vital to limit risks to the wider financial system, said King.

'A degree of pre-funding is sure to be unpopular before the fact but it lessens the burden on the system in times of crisis,' he said.

'Stability in the market is important to the whole UK economy,' said Alan Knowles, banking partner at Scottish law firm Brodies.

Having been through a period of relative calm (the eye)......are we now about to hit the other side of the credit storm? High inflation, high oil prices and massive asset depreciation....

Personally I think a crash in equities, followed by a collapse in oil and other commodities can't be too far away. High prices and no money must surely give way to a collapse in demand at some point.

In my bearish opinion... ;-)

Strawbs.

I agree, Strawbs, oil price can't go up forever. Economy will collapse globally and demand soon declines.

Yep. I think oil is probably a good long term play (because we'll run out of it one day), but I suspect it won't be long before these high prices really hurt the world economy. A serious slowdown in China and the rest of the world is getting ever closer, and that should reverse the oil price direction for a while. You only have to look back in history to see that every peak is followed by a slide, house prices, equity prices, oil prices, they all collapse eventually. Maybe one further big spike during the hurricane/driving season will be enough to tip the balance....

In my opinion...

Strawbs.