STOCK MARKET WATCH, Thursday August 9

[ozymandius]

Source: DU

Thursday August 9, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 532 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2407 DAYS
WHERE'S OSAMA BIN-LADEN? 2119 DAYS
DAYS SINCE ENRON COLLAPSE = 2080
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON August 8, 2007

Dow... 13,657.86 +153.56 (+1.14%)
Nasdaq... 2,612.98 +51.38 (+2.01%)
S&P 500... 1,497.49 +20.78 (+1.41%)
Gold future... 686.30 +4.00 (+0.58%)
30-Year Bond 5.02% +0.12 (+2.45%)
10-Yr Bond... 4.86% +0.12 (+2.47%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: DU

[ozymandius]

1. Sucker rally gets paid today, n/t

[ozymandius]

2. Market WrapUp

Fragile, Handle With Care
BY CHRIS PUPLAVA

This was the title for the U.S. Macro Outlook from Mark Zandi, Chief Economist and co-founder of Moody’s Economy.com, Inc. released today which seems quite appropriate. Just when everything looks like clear skies ahead with the Dow Jones Industrial Average pushing through the 14,000 milestone, things turn on a dime and volatility and uncertainty predominate as risk is re-priced. Excerpts from Mr. Zandi’s U.S. Macro Outlook are provided below:

The catalyst for the global financial turmoil is investors coming to terms with the reality of the massive losses on their housing and mortgage-related investments. Of the approximately $2.5 trillion in subprime, Alt-A, and jumbo IO and option ARMs outstanding—equal to almost one-fourth of all mortgage debt outstanding—some $1.3 trillion is at serious risk of default (see chart). These at-risk loans were originated between late 2004 and early this year with less than 10% equity at time of origination. House prices are expected to decline 10% from their late 2005 peak to their nadir later next year. Of those at-risk loans, nearly $425 billion worth will actually default, ultimately resulting in losses to investors who purchased securities backed by those mortgages of well over $100 billion.

Mr. Zandi goes on to mention the fragility of the markets where it may only take one more financial mishap to lead to a credit crunch. One suggestion for what the next shoe that drops may be is the commercial banks. Commercial bank exposure to residential real estate surged in 2002 as did the share of residential real estate assets to total assets.

-cut-

Despite the presence of a vast array of negative developments from a housing recession, subprime debacle, hedge fund blowups, and tightening credit, there are still “goldilocks” preachers. These preachers are sighting low inflation and world economic growth that continues to benefit many Dow Jones Industrial Average companies due to foreign sales exposure. Thus, we have a tug-of-war between the permabears and the permabulls, hence the fragile state of the markets.

We may have reached a bottom of temporary or significant importance as signaled by Westpac Strategy Group’s economic surprise index, which is designed to track the evolution of economic data surprises over time. The Westpac Positive Surprise Index measures the percentage of releases beating Bloomberg consensus estimates in the previous eight weeks, presented as a percentage and is bounded by 0% and 100%, and shows a clear positive correlation to the S&P 500.

http://www.financialsense.com/Market/wrapup.htm

[ozymandius]

3. Today's Report

8:30 AM Initial Claims 08/04
Briefing Forecast 310K
Market Expects 310K
Prior 307K

http://biz.yahoo.com/c/e.html

[UpInArms]

23. Initial Claims @ 316,000

01. U.S. 4-wk. avg. continuing jobless claims rise to 2.54 mln
8:30 AM ET, Aug 09, 2007 - 38 seconds ago

02. U.S. continuing jobless claims rise 39,000 to 2.55 mln
8:30 AM ET, Aug 09, 2007 - 38 seconds ago

03. U.S. 4-wk. avg. jobless claims rise 1,750 to 307,750
8:30 AM ET, Aug 09, 2007 - 38 seconds ago

04. U.S. weekly initial jobless claims rise 7,000 to 316,000
8:30 AM ET, Aug 09, 2007 - 38 seconds ago

[ozymandius]

4. Oil prices remain near $72 a barrel

Oil prices held near $72 a barrel Thursday despite a U.S. government report showing big declines in crude and gasoline stocks and an unexpected drop in refinery activity.

Light, sweet crude for September delivery was down 16 cents to $71.99 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract moved between $71.66 and $72.40 during early trading.

Oil and gasoline futures in the previous session jumped higher immediately after the report's release, too, but settled lower after a day of up-and-down trade. The contract fell 27 cents to settle at $72.15 a barrel Wednesday.

The mixed response to the report may signify that the overall bullish sentiment is turning. Last week, the September crude contract rose to its highest intraday level ever after the U.S. Energy Department's Energy Information Administration reported an unexpected draw in the crude oil stocks.

http://news.yahoo.com/s/ap/oil_prices

[UpInArms]

45. Oil drops over $1, subprime worries rattle markets

http://www.reuters.com/article/hotStocksNews/idUSLAU46967120070809

LONDON (Reuters) - U.S. oil fell more than $1 to around $71 a barrel on Thursday as further trouble in the U.S. subprime mortgage sector sent world stock markets tumbling and spilled over into oil and other commodities.

U.S. crude was $1.11 down at $71.04 by 1341 GMT (9:41 a.m. EDT), about 10 percent off its all-time high of $78.77 hit on August 1. London Brent crude was $1.34 down at $69.65.

Other commodities took a dive. Metals futures, often considered among the riskier securities, were down, with lead losing 5 percent and copper hitting its lowest since late June. Gold fell to a 1-week low.

"The liquidity crises may be bigger than any realize," said Nauman Barakat, senior vice president at Macquarie Futures USA. "Also, the dollar strengthening and gold collapsing are negative signs for energy markets overall."

...more...

[ozymandius]

5. 255,000 Chinese-made tires recalled

NEWARK, N.J. - A tire importer said Thursday it would recall 255,000 Chinese-made tires it claims were defective because they lack a safety feature that prevents tread separation.

The recall involves half the number of tires that the importer, Foreign Tire Sales Inc., had identified in June as possibly posing a risk.

The models involved are steel-belted radial replacement tires for pickups, vans and sport utility vehicles that consumers bought from early 2004 through mid-2006, Foreign Tire Sales said.

The small company, based in Union, was ordered by the National Highway Traffic Safety Administration in June to recall as many as 450,000 tires that it bought from Hangzhou Zhongce Rubber Co. since 2002.

-cut-

NHTSA ordered the recall after Foreign Tire Sales told the agency that some of Hangzhou Zhongce's tires were made without a safety feature, called a gum strip, that helps bind the belts of a tire to each other. Some of the tires had a gum strip about half the width of the 0.6 millimeter gum strip Foreign Tire Sales expected, the importer said.

http://news.yahoo.com/s/ap/20070809/ap_on_re_us/tire_problems

[UpInArms]

12. Mattel names Chinese plant in toy recall: report

http://news.yahoo.com/s/nm/20070808/bs_nm/mattel_china_dc

NEW YORK (Reuters) - Mattel Inc. (MAT.N) has named the Chinese factory involved in the company's recall of 1.5 million toys that contained lead paint, The Wall Street Journal reported on its Web site Tuesday evening.

The plant is Lee Der Industrial Co. Ltd. in China's Guangdong province, the Journal reported Mattel as saying.

The identification comes after some critics complained about Mattel's unwillingness to name the plant, the Journal reported. Mattel is no longer receiving shipments from the factory, the paper said.

Under U.S. law, companies bargaining with the government before agreeing to a voluntary recall, do not have to name the manufacturers involved, the Journal said.

...more...

[Gregorian]

77. Oh, man.

I'm sitting here with my jaw agape.

I thought tires were the one thing that would always be made here. This is really telling.


And by the way, let's just start considering what shipping materials back and forth around the world is doing for not only global warming, but price. This is going to bite us like a steel belted shark once oil prices really do take off. They aren't done climbing. In fact, they've only started.

[UpInArms]

6. dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 80.560 Change +0.219 (+0.27%)

Blame Dollar Weakness on the Fed, Bush and China

http://www.dailyfx.com/story/bio1/Blame_Dollar_Weakness_on_the_1186608623447.html

Volatility continues to rule the financial markets with the Dow rallying, retracing and then rallying once again. The yen crosses followed suit but the pullbacks were less severe. This type of volatility in the markets represents significant two way action and a great deal of uncertainty on behalf of traders and investors. The biggest news in the financial markets today was China’s threat to dump US Treasuries and US dollars. Both the US dollar and bond prices have sold off drastically on the news even though we expect this to be nothing more than empty threats (See our Special Report for more details) since China and the US are interdependent. Treasury Secretary Paulson made a special appearance on CNBC to refute fears that China has the power to rattle the US markets. President Bush did the same on Fox News, indicating either how serious the government is taking the potential threat or their concern about the stability of the financial markets. This caused the reversal of stock market gains, but stocks regained their momentum after Bush reassured the markets that the US economy can deal with market volatility and therefore they did not feel that Fannie Mae needed to be bailed out at this point. The dollar is stronger today against the Japanese Yen, but weaker against every other major currency. In fact, the dollar is slipping back towards its record lows against the Euro. Part of the reason for the dollar’s weakness today was due to China’s announcement, but the other contributing factor is the commitment by other central banks to continue raising interest rates. This morning, hawkish comments by Bank of England Governor King pretty much guaranteed 6 percent rates by the end of the year. The Reserve Bank of Australia raised interest rates last night and left the possibility of another hike by Christmas. Last week the ECB held a special press conference just to tell the world that despite the recent fluctuation in the markets, they still plan on raising rates next month. In contrast, in the US, it is not just a matter of if, but a matter of when the Federal Reserve will announce its plans to cut interest rates. The clear divergence between what the Fed and every other central bank is doing is a big reason why the dollar not only weakened today, but could continue to weaken in the days to come. Meanwhile there was good news on the data front. Wholesale inventories, wholesale sales and mortgage applications all increased more than expected. The big rise in wholesale sales suggests that we could see an upward revision to second quarter GDP.

...more...

Is China Playing Puppet Master to the Global Markets?

http://www.dailyfx.com/story/topheadline/Is_China_Playing_Puppet_Master_1186590573131.html

This morning, the UK Telegraph published an article titled “China Threatens ‘nuclear option’ of dollar sales. This has received more than the usual press because shifts in Chinese Policy are typically announced through government sponsored think tanks or academics. This time however, the warning was given by two government officials which is a reflection of how serious this threat is. With $1.3 trillion in foreign reserves, most of which are held in US dollars, China has what it takes to cripple the US economy.

Selling US treasuries would mean selling US dollars, which may not so bad, but falling bond prices also leads to rising bond yields. At a time when the stability of US economy is hanging by a thread, any further shocks could have widespread consequences – and China knows this. Bond prices and the US dollar have already sold off on the back of the warning. The dollar is trading less than 50 pips away from its record lows against the Euro at the time of publication.

<snip>

The Power to set off a Dollar Collapse

China has the power to cause the dollar collapse from two angles. The first is an outright sale of US treasuries and correspondingly, the US dollar. The second is to cause the dollar to fall as a result of weakening US economic fundamentals. Right now, the US economy is extremely vulnerable. Defaults are rising in sub-prime and Alt-A loans. Mortgage lenders and hedge funds are blowing up left and right. Even though the Federal Reserve seemed to be not all that concerned, the heavy schedule of first time adjustable rate mortgage resets over the next few months could mean more defaults to come. The peak in mortgage resets will not be until October and after that, we will still be averaging $30 billion a month in resets going into September 2008. For the average American, this means that interest payments on both mortgages and credit cards will rise sharply. Given that American Express has already reported an increase in late payments, we believe that a continued rise in interest rates could be too much for the average consumer to handle.

...more...

[UpInArms]

21. US, euro money mkt rates surge on liquidity fears

http://www.reuters.com/article/bondsNews/idUSL0982572720070809?sp=true

LONDON, Aug 9 (Reuters) - U.S. and euro zone short term money market borrowing rates soared on Thursday as banks scrambled for cash amid deepening concern about credit market losses, forcing the European Central Bank to inject extra funds into the system in a quick overnight tender.

The twin dislocation fueled speculation there will be some communication later in the day between the ECB and Federal Reserve, traders said.

Markets started gyrating in early European trading after France's biggest listed bank, BNP Paribas (BNPP.PA: Quote, Profile, Research), said it froze 1.6 billion euros in three of its funds, citing U.S. subprime mortgage sector problems.

This deepened concerns that the U.S. subprime problems could hurt European banks and financial institutions, resulting in a broader drying up of financial market liquidity.

"There appears to be a dash for cash both in dollars and in euros," said Nick Parsons, head of market strategy at nabCapital in London.

"Because liquidity in the market is drying up and because financing is also becoming more difficult, it seems that investors who need to finance their holdings of securities are not being able to draw on credit facilities and instead are having to finance in the cash market. That's putting up rates on cash."

...more...

[ozymandius]

7. Nasdaq says Chinese listings growing

BEIJING - China could soon become Nasdaq's biggest source of non-U.S. listings, and companies considering joining the market appear undeterred by unease over U.S. subprime mortgage woes, its vice chairman said Thursday.

Eleven Chinese companies have debuted on Nasdaq so far this year, more than in all of 2006, said Michael Oxley, a former U.S. lawmaker known as a force behind corporate reform. He joined Nasdaq Stock Market Inc. in March.

"What I've found here is very strong interest in Nasdaq across a wide range of companies," said Oxley, who was wrapping up a four-day visit to meet Chinese executives.

If the trend continues, China could overtake Israel and Canada as Nasdaq's biggest source of non-U.S. listings, Oxley said. Israel has 69 companies on Nasdaq. Canada has 56 and China 40.

http://news.yahoo.com/s/ap/20070809/ap_on_bi_ge/china_nasdaq

[ozymandius]

8. U.S. stocks head for sharply lower open

NEW YORK - U.S. stocks headed for a sharply lower open Thursday after a French bank said it would stop calculating net asset valuations for three of its hedge funds that have had struggled to find liquidity in the U.S. subprime mortgage market.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.80 percent from 4.89 percent late Wednesday.

The announcement by BNP Paribas sent European stock markets lower and stirred concerns that problems among subprime borrowers, those with weak credit, would further roil Wall Street, which has managed a rally this week. Investors have seen wide swings in stocks as investors have worried about not only subprime markets but also about the tightening of credit.

Dow Jones industrial average futures expiring in September fell 93, or 0.68 percent, to 13,613. Standard & Poor's 500 futures fell 13.70, or 0.91 percent, to 1,490.50. Nasdaq 100 futures fell 9.00, or 0.45 percent, to 1,990.25.

http://news.yahoo.com/s/ap/20070809/ap_on_bi_st_ma_re/wall_street

[ozymandius]

10. current and futures numbers

FTSEDAX...7492.04...-113.90...-1.5%.

06:19 ET
S&P futures vs fair value: -13.3. Nasdaq futures vs fair value: -6.5.

06:19 ET
Nikkei...17170.60...+141.32...+0.8%. Hang Seng...22439.36...-97.31...-0.4%.

[UpInArms]

26. Slippery slope for stocks

http://money.cnn.com/2007/08/09/markets/stockswatch/index.htm

NEW YORK (CNNMoney.com) -- U.S. stocks look set for a rough open Thursday after posting three straight sessions of gains.

At 7:11 a.m. ET, Nasdaq and S&P futures were lower, with a comparison to fair value pointing to losses at the market open.

The pullback comes on the heels of a dramatic day on Wall Street. Stocks plunged in the last hour of trading Wednesday but rallied in the final minutes of the session to end sharply higher.

<snip>

"We are probably headed for another roller-coaster ride. The news that BNP froze the $2.2 billion worth of funds over subprime concerns rekindles the fears that had been in the market place over the past couple of weeks," Peter Cardillo, chief market economist at Avalon Partners, told Reuters. "The question is what does this all really mean in terms of corporate profits."

...more...

And who will care about corporate profits when the Ponzi scheme of all the US multinationals has been exposed?

[UpInArms]

9. French bank suspends funds exposed to US mortgages

http://news.yahoo.com/s/afp/20070809/bs_afp/franceusbankingeconomypropertycompanybnp

PARIS (AFP) - French banking giant BNP Paribas on Thursday suspended three of its funds exposed to US high-risk property loans, sparking further turmoil in world stock markets.

BNP Paribas Investment Partners, a unit of the French bank, said the funds -- Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia -- will accept no redemptions or subscriptions until further notice, the bank said.

The announcement sent shares tumbling in Asian markets that were still open when the news broke, as well as in London, Paris and Frankfurt, dealers said.

A Paris-based dealer said the news had shaken the market, reversing opinion on financials which rallied strongly Wednesday thanks to reassuring comments on exposure to the US subprime market, where mortgages are provided to people with poor credit histories.

"Basically, BNP is now saying it's got major problems with the credit market," he said.

<snip>

According to BNP Paribas Investment Partners, the resulting "evaporation of liquidity" means it can no longer calculate the fair value of the underlying ABS in the three funds in question, making it impossible to calculate their net asset value reliably.

...more...

[UpInArms]

11. Yen rallies after BNP warning

Yen rallies after BNP warning

The yen spiked higher on Thursday as BNP Paribas became the latest bank to warn of problems related to the US subprime mortgage market.

The French bank said it had decided to suspend redemptions from three of its funds because of what it called a "complete evaporation of liquidity" in certain market segments of the US securitisation market.

The new sent shockwaves through the markets, sending equities lower and prompting investors to pare back carry trades in which low-yielding currencies such as the yen are sold to fund the purchase of riskier, higher-yielding currencies elsewhere.

The yen, which had weakened in the last two days as a semblance of stability returned to global equity markets, rose 0.6 per cent to Y118.90 against the dollar, 1 per cent to Y163.35 against the euro and 1 per cent to Y241.25 against the pound.

...more...

[UpInArms]

20. Subprime loss hits Dutch bank NIBC, drops IPO plan

http://www.reuters.com/article/bondsNews/idUSL0975342220070809

AMSTERDAM, Aug 9 (Reuters) - Dutch merchant bank NIBC disclosed on Wednesday 137 million euros ($188.6 million) of losses on U.S. asset-backed securities in the first half, and has indefinitely shelved plans for an initial public offering.

NIBC, which had already postponed a planned IPO in March due to volatile market conditions, added that it expected further losses from its asset-backed securities holdings.

In response, Standard & Poor's Ratings Services put NIBC's 'A-' long-term counterparty-credit rating on negative credit watch.

"The CreditWatch placement reflects Standard & Poor's concerns about NIBC's U.S. structured credit portfolio, which is considered likely to result in poor overall financial performance in financial year 2007," said Standard & Poor's credit analyst Claire Curtin in a statement.

<snip>

NIBC blamed the investment loss on asset-backed securities on "severe instability in the U.S. credit fixed income markets and continuous credit spread widening".

...more...

[ozymandius]

13. Campbell Soup eyes Godiva options

NEW YORK (Reuters) -- Campbell Soup Co. said Thursday that it is exploring strategic alternatives for Godiva Chocolatier, including a possible sale of the luxury chocolate business.

A Campbell spokesman said the move was in order to focus on its core baked snacks and soup business.

http://money.cnn.com/2007/08/09/news/companies/bc.campbell.alternatives.reut/index.htm?postversion=2007080907

[ozymandius]

14. Blackstone raises record $21.7B fund

LONDON (CNNMoney.com) -- Blackstone Group has raised the largest private equity fund ever, despite a chill in the debt markets that has cast uncertainty over the buyout industry's rapid growth.

Blackstone said Wednesday it raised $21.7 billion for its latest fund, Blackstone Capital Partners V. That surpasses the $20 billion fund Goldman Sachs (Charts, Fortune 500) raised earlier this year.

Shares of Blackstone (Charts) gained about 3 percent in morning trading.

The announcement comes as faltering debt markets have put the brakes on the buyout boom and raised worries over whether take-private deals will dry up further down the road.

http://money.cnn.com/2007/08/08/markets/blackstone_fund/index.htm?postversion=2007080810

[UpInArms]

15. Federal Home Loan Banks of Chicago, Dallas talk merger

http://news.yahoo.com/s/nm/20070808/bs_nm/usa_agencies_homeloanbanks_dc

WASHINGTON (Reuters) - The Federal Home Loan Banks of Chicago and Dallas announced on Wednesday that they have begun preliminary talks about a possible merger as both banks face challenges turning a profit.

"Our focus is on identifying whether and how a combination would produce advantageous results and improved value for members of both organizations and the affordable housing needs of their communities," said Terry Smith, president and CEO of Dallas, and Mike Thomas, president and CEO of Chicago.

The Federal Home Loan banks are government-sponsored enterprises that use private capital to finance U.S. housing and community development. The regional banks are held cooperatively by more than 8,000 lending institutions and enjoy a favored position in the capital markets because of their implied government backing.

In recent years, increased regulatory scrutiny and consolidation has squeezed Home Loan bank profits. In May 2006, for instance, the Dallas bank faced the loss of its largest member to a merger with Wachovia. The Chicago bank was forced to take costly remediation steps recently after a failed home loan program.

...more...

[UpInArms]

16. Subprime sector looks to Washington

http://news.yahoo.com/s/ft/20070808/bs_ft/fto080820071548478206

As the ominous drumbeat of bad news in the US subprime mortgage market continues, investors and politicians this week pinned hopes on government-sponsored mortgage groups Fannie Mae (NYSE:FNM) and Freddie Mac to come to the market's rescue.

Word that the US housing agencies had asked their regulator to raise caps currently in place on the size of their mortgage portfolios helped lift bond and equity markets on Monday as investors bet that the agencies could provide relief.

But some analysts question the extent of that relief in spite of political support for action.

On Tuesday, two Democratic senators joined in petitioning for an easing of portfolio limits to inject liquidity into the troubled mortgage market.

Senator Christopher Dodd, chairman of the Senate Banking Committee, noted that Fannie Mae and Freddie Mac "were established by Congress, in part, to make mortgage credit more readily available to middle- and lower-income Americans".

...more...

[UpInArms]

19. US seeks culprits for subprime

http://www.ft.com/cms/s/8922f3e2-45dc-11dc-b359-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F8922f3e2-45dc-11dc-b359-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus%2F

At the height of the US subprime lending boom, taking out a mortgage could not have been easier. Low credit score and history of bankruptcy? No problem. Income too low to qualify for a mortgage? Inflate what you earn on a “stated income” loan. Nervous that your lender might check up on your “stated income”? Visit www.verifyemployment.net.

For a $55 fee, the operators of this small California company will help you get a loan by employing you as an “independent contractor”. They provide payslips as “proof” of income and, for an additional $25, they also man the telephones to give you a glowing reference should your lender need it.

...The rest of this article is for FT.com subscribers only...

[UpInArms]

17. Agency says Asia's rich-poor gap growing

http://news.yahoo.com/s/ap/20070809/ap_on_bi_ge/asia_economy

BEIJING - The gap between rich and poor in China and other Asian countries is growing, possibly fueling unrest, the Asian Development Bank said in a report Wednesday.

China has had Asia's second-biggest and second-fastest-growing wealth gap since the 1990s, exceeded only by war-wracked Nepal on both counts, the bank said in an annual survey.

China has seen thousands of protests in recent years, some of them violent, over land seizures and other economic grievances blamed on the growing gap. The communist government has made improving incomes for the poor a priority, warning last year that inequality has reached "alarming and unacceptable" levels.

"High inequality, particularly high absolute levels of inequality, leads to a disruption in social cohesion. You could have street demonstrations which could lead to violent civil wars," Ifzal Ali, the bank's chief economist, said at a news conference.

Ali said it was inappropriate to speculate when asked whether China should expect worse unrest. But he cited the experience of Nepal, where he said a recently ended, decade-long civil war was most intense in areas with highest inequality.

...more...

[ozymandius]

18. Bonddad on China dropping the dollar:

http://bonddad.blogspot.com/2007/08/lets-nip-this-in-bud.html

Let's Nip This In the Bud

From the Telegraph:

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

Before this comes even close to out of hand... there is no way this is going to happen.

Let's play this out.

China dumps dollars.

Dollar drops hard

US economy enters recession

China's biggest foreign market stops buying Chinese goods.

The US and China have a symbiotic relationship -- we need each other. They supply us with credit, we provide a $9.7 trillion dollar consumer market. While the overall relationship can't last forever, there is no reason to destroy it either.

If our growth rate drops, so does theirs. And the last thing the Chinese government wants is a slowing economy that contains 1 billion people who may start protesting for democratic reforms.

It's important to remember the Chinese play a very complicated foreign policy game. I would suggest reading Henry Kissinger's White House Years to get an idea for the levels of complexity involved. Bobby Fisher's chess strategies are simpler.

[UpInArms]

22. Mortgage delinquencies spreading -- AIG

http://www.reuters.com/article/bondsNews/idUSN0835672120070809

W YORK, Aug 9 (Reuters) - Residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime, American International Group (AIG.N: Quote, Profile, Research) said on Thursday.

In a presentation on its subprime exposure, AIG, the world's largest insurer and one of the biggest mortgage lenders, said total delinquencies in its $25.9 billion real estate portfolio were 2.5 percent.

It said 10.8 percent of its subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.

...very short blurb...

[ozymandius]

24. Great Market Quotes

In light of the recent market action, this collection of market quotes is quite apropos:

"Markets can remain irrational longer than you can remain solvent."
— John Maynard Keynes

"The only thing that can console one for being poor is extravagance."
— Oscar Wilde

"It is pretty hard to tell what does bring happiness; poverty and wealth have both failed."
— Kin Hubbard

"The key to making money in stocks is not to get scared out of them."
— Peter Lynch

"If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."
— JP Getty

more...

http://bigpicture.typepad.com/comments/2007/08/great-market-qu.html

[Kolesar]

74. Love the JP Getty quote!

Or as my coworker the banker's son described it, "good money follows bad".

[UpInArms]

25. What's a risky loan? No one knows: James Saft

http://www.reuters.com/article/bondsNews/idUSL0983289820070809?sp=true

LONDON (Reuters) - The stable door is slamming shut on loans for riskier U.S. house buyers, as it already has for aggressive merger finance while even banks fret about lending each other money overnight.

All of this is fine and well, a needed tonic after a long period when many loans ranged between "optimistic" and "silly".

Trouble is, the definition of what is risky is broadening in key ways and no one knows how far it will go or how long it will last.

A confidence crisis emerged in short term money markets overnight, showing that even highly rated banks were worried about the risks of lending money to one another for very short periods despite posting highly rated collateral.

This is as unusual as it is disturbing.

...more...

[ozymandius]

28. I wonder how many banks are teetering on the brink of insolvency?

Just as I wonder how many insurance companies are the same.

[AnneD]

111. When Ins. companies lose money on the stock market....

they just raise the premiums.

[ozymandius]

27. pre-open numbers and blather

08:32 ET
S&P futures vs fair value: -15.1. Nasdaq futures vs fair value: -12.8. As evidenced by the flight-to-quality bid in bonds and further unwinding in the yen carry trade, fears of a liquidity crunch continue to weigh on early sentiment. Meanwhile, today's only scheduled economic report just hit the wires. Initial claims rose 7K to 316K (consensus 310K), which is still reflective of healthy labor conditions; but the relatively stable data of late can't hold a candle to the lingering worries that subprime woes and tightening credit conditions will lead to slower economic growth.

08:00 ET
S&P futures vs fair value: -14.4. Nasdaq futures vs fair value: -14.8. After three consecutive sessions of gains that lifted the major indices more than 4.0% on average, renewed concerns about liquidity/credit risks suggest stocks will be subjected to a day of extensive profit taking. The latest shoe to drop has come from France's biggest bank, BNP Paribas.

It has suspended withdrawals from three of its funds valued at around $2.1 bln due to an inability to fairly value their holdings on account of the turmoil in the U.S. credit market. Even though BNP's exposure (which is less than 1.0% of total assets) seems relatively small, the announcement serves as a clear reminder that the headline risk remains real and that the volatility in trading conditions will persist.

[Connie_Corleone]

29. It's going to be an ugly morning.

[Zynx]

39. Mmm, another $2.8 billion hedge fund bankruptcy will do that.

[spotbird]

30. -183 Dow

45 Min into trading.

[spotbird]

31. -241 Dow nt

[UpInArms]

32. 9:40 EST some recovery in progress

Dow 13,473.74 184.12 (1.35%)
Nasdaq 2,579.05 33.93 (1.30%)
S&P 500 1,472.42 25.07 (1.67%)
10-Yr Bond 4.754% 0.106

NYSE Volume 211,140,000
Nasdaq Volume 159,964,000

09:15 am : S&P futures vs fair value: -26.5. Nasdaq futures vs fair value: -29.0.

09:00 am : S&P futures vs fair value: -22.6. Nasdaq futures vs fair value: -26.0. Early sentiment continues to deteriorate heading into the opening bell as the bears uncover more catalysts to take stocks lower.

The underlying credit concerns now have the fed funds futures pricing in a 100% chance of rate cut at the next FOMC meeting (Sep. 18) while the ECB has reportedly injected nearly 95 bln euros into money markets to help ease the worst of credit jitters.

American International Group (AIG) saying residential mortgage delinquencies/defaults are spreading, fellow Dow component Home Depot (HD) saying current conditions may force it to reduce the pending $10.3 bln purchase price of its supply business, and a batch of weaker than expected July same-stores sales figures are also contributing to a spike in the futures market to morning lows.

[spotbird]

34. Pie hole alert

Bush is going to speak shortly. CNN just reported that the podium Tony Snow uses during press conferences in the new press room has been replaced with a special Presidential podium.

Oh yeah, Bush is going to tell the nation the economy is strong.

Bush really thinks he's king.

-182 Dow

[UpInArms]

37. ...

[UpInArms]

46. "you have a U.S. economy that's pretty fragile"

http://www.reuters.com/article/hotStocksNews/idUSN0326786220070809

NEW YORK (Reuters) - U.S. stocks tumbled on Thursday as renewed concerns about losses in the U.S. subprime mortgage sector sparked a sell-off, causing investors to seek shelter in government bonds as the appetite for riskier assets ebbed.

Financial shares led the slide after France's biggest listed bank, BNP Paribas (BNPP.PA: Quote, Profile, Research), froze 1.6 billion euros ($2.2 billion) worth of funds, citing fallout from the U.S. subprime sector.

"We are back to reality again," said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. "Credit issues are spilling over into different areas of the world and it's freezing up credit even more dramatically at a time when you have a U.S. economy that's pretty fragile as evidenced by today's retail sales."

A spate of disappointing monthly sales reports by retailers on Thursday pointed to sluggish consumer demand.

...more...

[ozymandius]

58. The world envies our fragility.

Apparently facts have not penetrated Bush's bubble -yet- again.

[UpInArms]

47. yesterday's lies: Bush doesn't mention subprime volatility

http://www.marketwatch.com/news/story/bush-doesnt-mention-subprime-turmoil/story.aspx?guid=%7B87C23AE0%2D1C30%2D4DD9%2DA8A0%2D535EF998C398%7D

excerpt:

He said his first-term tax cuts have kept the economy growing. He criticized Congressional Democrats for failing to extend these cuts before they expire in 2010.

"If the majority of Congress gets its way, American families and small businesses will face a massive tax hike," Bush said.

His comments came in a statement after a luncheon with his top economic advisers at the Treasury Department.

Congressional Democrats have been focusing on the issue of tax fairness. At the top of the agenda is a proposal to end what critics see as special tax treatment of hedge funds and private equity managers on their share of profits from successful investments. But this proposal is controversial among some members of the party.

...more...

[UpInArms]

51. PIEHOLE OPEN: Bush says U.S. economy is 'envy of world'

02. Bush says U.S. economy is 'envy of world'
10:35 AM ET, Aug 09, 2007 - 2 minutes ago

03. Bush says inflation and unemployment are low
10:35 AM ET, Aug 09, 2007 - 2 minutes ago

[ozymandius]

57. What's to envy? He's a lying asshole. n/t

[UpInArms]

59. MORE CRAP SPEWITH: Dimson wants bridges to fail

01. Bush: Congress should overhaul highway funding process
10:42 AM ET, Aug 09, 2007 - 3 minutes ago

02. Bush says not eager to raise taxes to fund bridge repair
10:42 AM ET, Aug 09, 2007 - 3 minutes ago

[Hugin]

68. Their solution will be...

To PRIVATIZE!

I betcha...

[ozymandius]

103. Does anyone think he would be willing to raise taxes to fund his

turd of a war?

[DemReadingDU]

104. Nope. How bout War Bonds?

http://en.wikipedia.org/wiki/War_bonds

[DemReadingDU]

61. WTF!

:puke:

[UpInArms]

64. GETTING DEEPER: Bush says fundamentals of the U.S. economy are strong

01. Bush: Facts point to soft landing in U.S. housing market
10:56 AM ET, Aug 09, 2007 - 3 minutes ago

02. Bush: There is enough liquidity in financial system
10:54 AM ET, Aug 09, 2007 - 5 minutes ago

03. Bush calls for more transparency in financial documents
10:54 AM ET, Aug 09, 2007 - 5 minutes ago

04. Bush says fundamentals of the U.S. economy are strong
10:53 AM ET, Aug 09, 2007 - 6 minutes ago

[UpInArms]

65. DICKTATOR doesn't understand Constitution

(Congress has tax authority - not Executive)

01. Bush: Not decided on sending Congress corporate tax bill
11:11 AM ET, Aug 09, 2007 - 3 minutes ago

02. Bush: Does not support proposal to alter hedge fund taxes
11:10 AM ET, Aug 09, 2007 - 4 minutes ago

03. Bush: Corporate tax reform proposals are in 'early stages'
11:08 AM ET, Aug 09, 2007 - 6 minutes ago

[DemReadingDU]

36. Yikes!

[UpInArms]

33. Printing Presses Running: Fed adds $12 bln in temp reserves via 14-day repos

http://www.reuters.com/article/bondsNews/idUSN0944279520070809

NEW YORK, Aug 9 (Reuters) - The U.S. Federal Reserve on Thursday said it added $12 billion of temporary reserves to the banking system through 14-day repurchase agreements.

The amount was more than double the $5 billion of temporary reserves added via 14-day repos last Thursday.

[UpInArms]

35. European Central Bank injected 94.841 billion euros into euro-zone money markets

http://www.reuters.com/article/bondsNews/idUSN0930653720070809?sp=true

NEW YORK, Aug 9 (Reuters) - A safety bid drove U.S. government securities prices sharply higher on Thursday after French bank BNP Paribas froze funds with links to the U.S. subprime market and the European Central Bank was forced to inject extra funds into the system.

France's biggest listed bank, BNP Paribas (BNPP.PA: Quote, Profile, Research), said it froze 1.6 billion euros ($2.2 billion) in three of its funds, citing U.S. subprime mortgage sector problems that have rattled financial markets worldwide.

<snip>

The European Central Bank injected 94.841 billion euros into euro-zone money markets on Thursday to help calm to jittery markets roiled by credit problems.

"This liquidity-providing fine-tuning operation aims to assure orderly conditions in the euro money market," the ECB said when it called for bids.

...more...

[roamer65]

63. Now we're seeing exactly why the FRB discontinued the M3.

The present 13 percent growth rate in M3 is gonna look like "chump change" very soon. Who knows? Helicopter Ben may even offer to debt monetize the Chinese holdings just to be able to inject 900+ billion in cash into the system.

[UpInArms]

38. July was hot, but not for retailers

http://www.marketwatch.com/news/story/july-hot-not-retailers/story.aspx?guid=%7BBFA3093C%2DED74%2D4641%2D9410%2D0B2FB0E75EA5%7D

CHICAGO (MarketWatch) -- Retailers struggled to sell shirts, shorts and shoes in July as shoppers spent less while they grappled with economic anxieties and the volatility that has rocked the stock market.

With nearly half of the nation's major retailers reporting sales results to Thomson Financial, 75% have missed Wall Street's expectations. Analysts had been expecting that sales at stores open longer than a year, the industry's most important measure, would be weak, particularly among teen and women's-wear retailers.

But the early results suggest that consumers across the board are far more concerned about credit and financing woes sparked by the slowdown in the housing market and the collapse of the subprime mortgage business.

Talbots Inc. (TLB :24.15, -0.82, -3.3% ) , for example, said its second-quarter will end in a deep loss compared with forecasts for a small profit. The retailer, which markets its classic Talbots apparel and accessories brand and its more casual J. Jill brands to older, affluent women, said that internal issues combined with economic woes plagued the company.

"In light of the much-publicized uncertainty in the macro environment, the company believes that its customers have become increasingly more discriminating regarding their discretionary spending," Talbots said.

...more...

[CountAllVotes]

72. no joke

I receive email from a place I buy things like clothing, etc. from a couple of times a week. Last week they offered free shipping. A couple of days ago it was a 1/2 price shoe sale.

I searched around on the web and found a 20% off coupon. Yesterday, I bought 4 pairs of shoes that normally cost $110 a pair for just over $40.00 a pair and they are imported from Germany.

I figured I wouldn't get a "we've shipped you order" letter for a few days figuring that everyone was on to the sale at this place and that they are very busy (as is normally the case during/after a sale).

In fact, I received an email THREE hours later saying my order has shipped out. :wow:

They have never done this before, ever.

After this occurred yesterday, I knew that things were really a mess for our economy no doubt. Normally, those shoes would have never sold for the price I got them for and certainly, you'd never get an "order shipped" reply within just a few hours after placing the order. Yikes is all I can say ...

:kick:

[UpInArms]

40. Home Depot shares dive; lead sector meltdown

http://www.marketwatch.com/news/story/home-depot-shares-dive-lead/story.aspx?guid=%7B4FDCCC4A%2D5225%2D4234%2D9274%2D5061BFEEC623%7D&dist=hplatest

CHICAGO (MarketWatch) -- Shares of Home Depot Inc. led the sharp march south among the retail sector's components in early trading Thursday. The S&P Retail Index ($RLX :477.59, -10.33, -2.1% ) dropped 2.1% at the open to 477.85, pulled down primarily by weak sales numbers in July and an overall market flight to quality. Shares of Home Depot (HD :35.88, -1.92, -5.1% ) sunk 6% to $35.54 after the home-improvement giant said it was likely that the sale price of HD Supply would be lower than initially announced.

[DemReadingDU]

41. Mike Larson: French bank gets fried by mortgage meltdown

More evidence the mortgage meltdown is anything but contained is coming from overseas this morning. BNP Paribas, the largest bank in France, has frozen three funds that invest in asset-backed securities, or ABS. BNP will not allow investors to pull money out. It will not allow investors to put new money in. In fact, it won't even provide a value for the funds -- Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. These aren't tiny funds. They're funds with $2.76 billion in assets.

BNP's reason for the freeze: "The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating." In other words, the subprime mortgage meltdown is causing pricing for all kinds of structured bonds to go haywire.

Here's the big-picture problem: We've been led to believe that the explosion of investment in all these newfangled investments (CDOs, CDO squared, CLOs) ... that the explosion in the securitization of every type of loan under the sun ... that the ballooning exposure to complex, hard-to-value, over-the-counter derivatives ($415 trillion in notional value outstanding as of Dec. 31 2006, more than quadruple the level of six years ago, according to the Bank for International Settlements) ... and that the origination of all kinds of new "creative financing" mortgages in the home loan industry ... was a good thing.

But now the rubber is meeting the road. It turns out that all these stupid mortgages are blowing up in borrowers' and lenders' faces. It turns out that these complex instruments just can't be valued accurately, if at all. It turns out that Wall Street just got too "smart" for its own good. Now, we're trying to sort the mess all out. And unfortunately, the risk of a 1998-style meltdown is very real as a result.

Heck, look at what's going on in the European money market this morning -- the overnight London Interbank Offered Rate, or LIBOR, is surging. It just soared to 5.86% from 5.35, according to the British Bankers Association, putting it at the highest level since the start of 2001. 3-month LIBOR rose to 5.5% from 5.38%. 6-month LIBOR climbed to 5.39% from 5.34%. The European Central Bank has responded by lending the market the euro equivalent of $130 billion.

This is serious stuff. It's a sign that liquidity is seizing up amid fears of subprime mortgage contagion. LIBOR hardly ever moves on credit concerns, only in response to increases in the federal funds rate. And guess what's tied to LIBOR? All kinds of short-term loans, including some Adjustable Rate Mortgages.

Bottom line: Fasten your seat belts.

http://interestrateroundup.blogspot.com/2007/08/french-bank-gets-fried-by-mortgage.html

[Doctor_J]

42. Between this and the Chinese threatening to foreclose on our debt,

even an economoran like me can see problems dead ahead. Where to put my money?

[DemReadingDU]

53. It's a casino out there

Anything's a gamble. Even the U.S. dollar has been falling. I come to this thread for some research and knowledge, but, adding, that I really don't have any advice. :(

[UpInArms]

62. Q: Where to put my money?

A: ziplock baggies in mattress

:hi:

[Demeter]

78. I Have 14 Gallons of Gas in Cans in the Garage

That's MY savings plan!

[roamer65]

92. Sounds just about as good as anything else...

given the markets right now...LOL.

[UpInArms]

44. great post!

:thumbsup:

[UpInArms]

43. 10:02 EST Mop-up in progress

Dow 13,503.57 154.29 (1.13%)
Nasdaq 2,594.89 18.09 (0.69%)
S&P 500 1,477.89 19.60 (1.31%)
10-Yr Bond 4.778% 0.082

NYSE Volume 624,250,000
Nasdaq Volume 393,259,000

updated blather on edit:

10:00 am : Choppy trading and the belief that the broad-based bloodletting at the open was a bit excessive has the indices bouncing off their recent lows. However, the bulls' uphill battle still looks rather steep since the major averages are still sporting hefty losses and virtually every S&P industry group (139 out of 147) is trading lower.

Of the 10 economic sectors, the most heavily weighted of them all -- Financials (-2.5%) -- is pacing the way lower amid new evidence supporting a possible credit crunch. Energy (-2.1%) is a close second as a 1.9% drop in oil prices to below $71/bbl gives investors another reason to consolidate this year's best performer.

The best of the worst is Consumer Staples (-0.6%); but that's somewhat understandable since the group offers more dependable earnings streams in times of volatility such as these. DJ30 -166.49 NASDAQ -22.39 SP500 -21.69 NASDAQ Dec/Adv/Vol 1852/725/248 mln NYSE Dec/Adv/Vol 2223/324/128 mln

09:40 am : As expected, stocks get hammered right out of the gate as renewed fears about credit concerns take a toll on sentiment. Over the previous three sessions, the Dow, S&P 500, and Nasdaq surged 3.6%, 4.5%, and 4.1%, respectively; so seeing a pullback today isn't all that alarming.

What has been a surprise, though, has been discouraging news from across the pond that has piqued concerns about a contagion effect around the globe tied to the U.S. subprime mortgage market.

France's biggest bank, BNP Paribas, has halted withdrawals from three of its funds because current credit conditions make it impossible to value their assets. Dow component American International Group (AIG 64.50 -1.98) recently saying it sees mortgage delinquencies spreading beyond subprime to prime has exacerbated the early knee-jerk reaction in equities and flight to quality into Treasuries as the market gets back to repricing risk. DJ30 -208.98 NASDAQ -37.78 SP500 -25.70 NASDAQ Vol 126 mln NYSE Vol 86 mln

[ozymandius]

48. recovering slightly for now...deep in the red

10:28
Dow 13,519.58 Down 138.28 (1.01%)
Nasdaq 2,607.48 Down 5.50 (0.21%)
S&P 500 1,479.96 Down 17.53 (1.17%)
10-Yr Bond 4.766% Down 0.094
NYSE Volume 1,010,140,000
Nasdaq Volume 639,742,000

[UpInArms]

50. 10:34 EST Nasdaq goes green - dow recovering nicely

Dow 13,563.64 94.22 (0.69%)
Nasdaq 2,615.93 2.95 (0.11%)
S&P 500 1,481.73 15.76 (1.05%)
10-Yr Bond 4.772% 0.088

NYSE Volume 1,088,355,000
Nasdaq Volume 688,686,000

[UpInArms]

52. 10:37 EST PIEHOLE HITS MARKETS

Dow 13,537.30 120.56 (0.88%)
Nasdaq 2,611.23 1.75 (0.07%)
S&P 500 1,485.95 11.54 (0.77%)
10-Yr Bond 4.772% 0.088

NYSE Volume 1,147,744,000
Nasdaq Volume 744,159,000

[UpInArms]

56. blather

10:30 am : The market continues to back off its opening lows, but buyers remain a reluctant bunch. As evidenced by the Nasdaq seeing the biggest improvement among the majors, the Tech sector (-0.2%) inching closer and closer to breakeven is providing some assurance that early weakness was overblown. Cisco Systems (CSCO 32.21 +0.53), which is now the tech-heavy Composite's second most influential name, is enjoying some strong follow-through momentum on the heels of its encouraging guidance. Communication Equipment (+1.2%) now ranks as the day's fourth best performer.

The tech bellwether is tacking a 1.7% advance onto yesterday's 6.7% rally; but unfortunately it's one of only a handful of tech names (e.g. ADBE +1.7%, +1.4%, NTAP +1.0%, SNDK +2.6%, KLAC +2.5%, and JDSU +3.6%) catching a noticeable bid. Notable sector laggards include HPQ -1.9%, TXN -1.2%, GLW -1.2%, EMC -1.9%, AMD -2.1%, which you'll notice are not listed on the Nasdaq. DJ30 -150.55 NASDAQ -5.93 SP500 -17.46 NASDAQ Dec/Adv/Vol 1780/945/534 mln NYSE Dec/Adv/Vol 2463/555/370 mln

[n2doc]

49. It's The End Of The World As We Know It

It's The End Of The World As We Know It
BNP Paribas Suspends Redemptions And Sets Off Panic
By John Carney | 08. 9.07 at 09:02 AM




By now you've heard that BNP Paribas has suspended redemptions on three of its hedge funds, telling investors that problems in the US sub-prime mortgage sector have made it "impossible to value certain assets fairly."

The funds had about 2 billion euros or $2.76 billion of assets. Or, you know, was pretty sure it did. Those assets included something like 700 million euros in securitized debt products rated AA or higher. But now it says that it has no idea what the assets might be worth. And, well, we've all learned that those debt ratings aren't all they're cracked up to be.

To make matters worse, the funds have ridiculous French names like Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. We're thinking of just calling them "Freedom Funds."

"Remember those pictures from the Great Depression? The ones where the banks had to lock their doors because depositors were rioting to withdraw their savings. That's what we've got right now," one particularly morose money manager told DealBreaker.

Another described this morning as a "Rumsfeld moment."

"There are known unknowns and unknown unknowns. And now we're discovering there are a lot more unknown unknowns than anyone thought," the manager said.

The announcement hit the European stock markets hard, and it's putting huge downward pressuring on US equities futures. LIBOR leaped upward. US Treasuries shot up. The European Central Bank has already reacted by injecting Euros into the market and throwing the debt window wide open. The Fed is also throwing out some more money. No doubt central bankers hope that the move will hold off an even broader sell-off. But it may just further obscure asset valuation and create additional capital misallocation.

One factor that hasn't been getting a lot of attention yet is the risk to counterparties. Depending on how much leverage the freedom funds employ, banks that have lent them money may now be facing a "collateral crunch"—a situation where they can't evaluate their own risk because their clients have no idea what their assets are worth. This concern could hit many other hedge funds, as counter-parties attempt to manage their risk by re-evaluating collateral valuations.

http://www.dealbreaker.com/2007/08/its_the_end_of_the_world_as_we.php

[DemReadingDU]

60. a "Rumsfeld moment"

"There are known unknowns and unknown unknowns. And now we're discovering there are a lot more unknown unknowns than anyone thought," the manager said.


:eyes:

[Nimrod2005]

66. ROFL

[UpInArms]

54. Goldman:"business as usual" at shrinking Alpha fund

http://www.reuters.com/article/bondsNews/idUSL0941505620070809?sp=true

NEW YORK/LONDON, Aug 9 (Reuters) - Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) said on Thursday it was "business as usual" at its flagship hedge fund Global Alpha, amid speculation the investment bank was liquidating large parts of its portfolio.

The fund, which lost 6 percent of its value last year, has been the subject of persistent speculation for several days. Goldman on Wednesday denied market talk that it was liquidating the fund and declined further comment on it.

In pre-market trade, Goldman shares fell to $185.36, down 4.1 percent from its Wednesday closing price of $193.30 and nearly 21 percent below its 52-week high.

A few days ago, the fund had about $9 billion in assets under management, according to a person familiar with the situation. The hedge fund, run by Goldman Sachs Asset Management, is down about 16 percent this year after an 8 percent drop last month, the person said.

<snip>

Underperformance at Alpha has already put a dent into Goldman's otherwise stellar performance in recent quarters. In the first quarter, Goldman's incentive fees from asset management fell 78 percent to $23 million from a year earlier, a decline driven by Alpha's weak performance last year.

And in the second quarter, Goldman said incentive fees fell again, by 87 percent. Net inflows of money into alternative investments dropped to nil during the quarter, compared with $6 billion received a year earlier.

...more...

[UpInArms]

84. Second Goldman Sachs fund sells positions-WSJ

http://www.reuters.com/article/bondsNews/idUSN0921443120070809

NEW YORK, Aug 9 (Reuters) - A second hedge fund managed by Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) is suffering from losses and is selling down some of its positions, The Wall Street Journal reported on Thursday.

Through July 27, the North American Equity Opportunities hedge fund was down more than 15 percent this year, including losses of more than 11 percent in July, the newspaper reported, citing investors. The fund had $767 million under management earlier this year, the Journal said.

A source told Reuters earlier on Thursday that another fund, the Global Alpha fund, was down about 16 percent for the year.

...more...

[ozymandius]

55. 10:41

Dow 13,515.11 Down 142.75 (1.05%)
Nasdaq 2,602.97 Down 10.01 (0.38%)
S&P 500 1,480.67 Down 16.82 (1.12%)
10-Yr Bond 4.78% Down 0.08
NYSE Volume 1,196,850,000
Nasdaq Volume 782,427,000

10:30 am : The market continues to back off its opening lows, but buyers remain a reluctant bunch. As evidenced by the Nasdaq seeing the biggest improvement among the majors, the Tech sector (-0.2%) inching closer and closer to breakeven is providing some assurance that early weakness was overblown. Cisco Systems (CSCO 32.21 +0.53), which is now the tech-heavy Composite's second most influential name, is enjoying some strong follow-through momentum on the heels of its encouraging guidance.

The tech bellwether is tacking a 1.7% advance onto yesterday's 6.7% rally; but unfortunately it's one of only a handful of tech names (e.g. ADBE +1.7%, +1.4%, NTAP +1.0%, SNDK +2.6%, KLAC +2.5%, and JDSU +3.6%) catching a noticeable bid. Notable sector laggards include HPQ -1.9%, TXN -1.2%, GLW -1.2%, EMC -1.9%, AMD -2.1%, which you'll notice are not listed on the Nasdaq. DJ30 -150.55 NASDAQ -5.93 SP500 -17.46 NASDAQ Dec/Adv/Vol 1780/945/534 mln NYSE Dec/Adv/Vol 2463/555/370 mln

[UpInArms]

67. SEC Commissioner Campos to leave agency for private sector

background:

http://www.sec.gov/about/commissioner/campos.htm

Commissioner Roel C. Campos was first sworn in as a Commissioner of the United States Securities and Exchange Commission on August 22, 2002. On June 2, 2005, he was nominated by President George W. Bush for a second term, and was confirmed by the Senate on July 29, 2005.

Commissioner Campos has served for four years as the Commission’s liaison to the international regulatory community. He has become an influential voice for the convergence of standards and for rational regulation that promotes cross-border transactions. As the Vice Chair of the Technical Committee of the International Organization of Securities Commissions, he has developed productive relationships with securities regulators in Europe, Asia, Australia, and Latin America. Commissioner Campos also has facilitated the development of international auditing and accounting standards through his work as Chair of the Monitoring Group, which oversees the setting of International Standards of Audit.

Commissioner Campos has presided over hundreds of complex enforcement cases, applying the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. He also has extensively participated in the crafting and adoption of all of the SEC’s major regulatory initiatives, including: the Sarbanes-Oxley Act, mutual fund governance and compliance rules, and the new National Market System. In addition, Commissioner Campos has spoken and published extensively in the areas of the implementation of the Sarbanes-Oxley Act, corporate governance, director liability, corporate penalties, international accounting and auditing standards, Securities Act reform, SRO and market reform, retirement investment protection, research analyst conflicts, and the internationalization of the securities markets.

Prior to being nominated to the Commission, Commissioner Campos was one of two principal owner-executives of El Dorado Communications, a radio broadcasting company, at its headquarters in Houston, Texas. However, he began his career as an officer in the U.S. Air Force. After attending Harvard Law School, he worked in Los Angeles, California for major law firms as a corporate transactions/securities lawyer and litigator. Beginning in 1985, Commissioner Campos served as a federal prosecutor for five years in the U.S. Attorney's Office in Los Angeles. He successfully prosecuted complex and violent narcotics cartels and, in a celebrated trial, convicted defendants for the kidnapping and murder of a DEA Agent. He also investigated and prosecuted major government contractors for fraudulent conduct. He then returned to private law practice for several years before co-founding El Dorado Communications, Inc.

...more...

[radfringe]

69. somebody PLEASE tell me

that CNN had the stockmarket numbers flashing DOWNWARDS while bush had his piehole flapping about how great the economy is doing ...

[Kool Kitty]

71. Because you are supposed to believe Georgie,

not your lyin' eyes or ears.

[UpInArms]

70. Fitch revises NIBC Bank rating outlook to negative

http://www.reuters.com/article/bondsNews/idUSN0946270520070809

NEW YORK, Aug 9 (Reuters) - Fitch Ratings revised NIBC Bank N.V.'s long-term issuer default rating to negative on Thursday, citing the Dutch bank's increased earnings volatility and losses stemming from its U.S. asset-backed securities holdings.

"Negative rating movement could come from continued volatility of earnings, a deterioration of underlying performance or a weakening of NIBC Bank's capital," said Fitch of its outlook revision from stable.

The rating agency noted negative mark-to-market results in NIBC's U.S. ABS investment book which was reported by the bank in its preliminary financial results for first half 2007. Although NIBC Bank intends to wind down this book, further losses should be expected, Fitch said.

NIBC disclosed on Wednesday 137 million euros ($188.6 million) of losses on ABS in the first half, and has indefinitely shelved plans for an initial public offering.

...more...

[mojavekid]

73. The Mogombo Guru: Misdiagnosed Economic Insanity

http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG080807.html

The financial and economic explosions are overwhelming, overwhelming, overwhelming. Perhaps coincidentally, my head is whirling, whirling, whirling and my heart is pounding, pounding, pounding in fear, fear, fear.

I am assuming that my fear and strange new habit of repeating myself, repeating myself, repeating myself is the result of some comical medication administration error, error, error, probably the result of my absent-mindedly taking my medicines willy-nilly by the freaking handful because I am so freaked out by the collapsing economy, or maybe thanks to the alcoholic beverages that I have been taking by the glassful - straight up, no ice, sometimes guzzling it right out of the bottle - also because I am so freaked out by the collapsing economy.

Or my problem may be that it has been raining like hell here for the last week, and I have not been able to play golf or do anything that will get me out of the house and a long way away from the family, who are also marooned here with me, and who are obviously getting on my freaking nerves more than usual, resulting in what mental health professionals assigned to my clinical case call "borderline psychotic and completely dysfunctional".

Then, in the middle of all of this, I saw the video of Jim Cramer (the über-irritating, hyperventilating stock pusher on CNBC) losing his mind, too! Only he was wailing about "Armageddon" because (as I understand it) his buddies in the financial services industry were losing their jobs. Hahaha! And that he was publicly calling on Bernanke, chairman of the Federal Reserve to immediately lower interest rates to save them. And America! Hahaha!

Actually, it may BE economic Armageddon if people don't want to buy that financial-engineering crap anymore, as that is what has provided most of America's GDP and 70% of America's profits during a decade of the biggest explosion of the rampant creation of money, credit and debt in the history of the world, enabling the slimeball banks, hedge funds and financial industry scamsters to leverage their lies into a monstrous, labyrinthine, secretive, off-balance-sheet behemoth of derivatives, totaling as much as $450 trillion, which is nine times the size of global GDP! Or more! Which is now collapsing! Yow! Sounds like Armageddon to me, too!

How big is this thing? Well, Jim Willie CB of the Hat Trick Letter figures that the total cost of the subprime/collateralized debt obligation fiasco "is an initial figure of $2 to 3 trillion in bond losses from CDO plus MBS bonds at a minimum. Match that with $4 to 6 trillion in home equity losses at least. Included in my estimate is the collateral damage of another $1 trillion in losses to high grade mortgage bonds and corporate bonds."

The last thing I remember before blanking out is that this totals to about 80% of GDP! Or more! And even now I still feel kind of woozy about it! Losses suddenly totaling 80% of GDP? Yow!

plenty more...

[JNelson6563]

80. Once again Mogombo sums it all up perfectly!

A splendid way with words! (ASWWW)

Julie

[UpInArms]

75. Market Manipulation Revealed: Major central banks pump cash in to calm markets

http://www.reuters.com/article/bondsNews/idUSL0982572720070809

OTTAWA/FRANKFURT (Reuters) - Major central banks swept in to calm credit markets spooked by mounting losses on Thursday and injected cash to prevent the financial system from seizing up.

The European Central Bank pumped a record 94.8 billion euros ($130.6 billion) into Europe's money markets as banks scrambled for cash after France's biggest listed bank, BNP Paribas (BNPP.PA: Quote, Profile, Research), froze withdrawals from three funds. It cited U.S. subprime mortgage market problems.

Another separate European fund valued at 750 million euros was frozen too, and a Dutch bank pulled its planned new listing after suffering subprime losses.

The Bank of Canada said it was ready to provide funds to support the stability of its financial system, while the U.S. Treasury said it was monitoring markets and "remains vigilant."

U.S. President George W. Bush sought to calm fears that a credit market squeeze would unpick economic growth, telling a news conference both the global and U.S. economy are strong and there is enough liquidity in the system.

...more...

What happened to "let the market decide" and "no governmental interference" - these liars make me puke :puke:

[UpInArms]

76. Bear Stearns sued over hedge fund collapse

http://www.reuters.com/article/bondsNews/idUSN0933046120070809

NEW YORK, Aug 9 (Reuters) - A large investor in one of the two Bear Stearns hedge funds that recently collapse has filed a lawsuit against the investment bank accusing its managers of taking only "meager steps" in the face of crisis.

New York-based investment firm Navigator Capital Partners L.P. filed the lawsuit this week in a New York state court in Manhattan. The complaint names Bear Stearns Cos (BSC.N: Quote, Profile, Research), its asset management division and the High-Grade Structured Credit Strategies hedge fund.

"Defendants failed to disclose to investors the significant challenges facing the partnership, and the meager steps they were taking to face those challenges, while at the same time reaping substantial fees," the lawsuit said.

...more...

[JNelson6563]

79. I note the tone has changed on CNBC

Earlier when the DOW was "only" down around 120 pts. everyone was oh so happy to point out the market's resiliancy in the face of all the disturbing financual news. Here we are a few hours later, DOW in the red some 215+ and falling steadily and I'm not hearing about how "strong" the markets are anymore, focusing elsewhere somewhat now. Still claiming things are "holding up nicely" in light of the numbers at open.

Sigh.

I guess we can always take comfort in the increases in our chocolate rations. ;-)

Nice job on keeping everything up-dated as things develop. You rock Marketeers!

:yourock:

Julie

[Joanne98]

93. Really. "But but the global maket is booming"

The tone has changed but silence would be better. I wish they would just sit there with duck tape over their mouths!

[UpInArms]

81. 1:22 EST numbers and whiny blather

Dow 13,435.77 222.09 (1.63%)
Nasdaq 2,571.68 41.30 (1.58%)
S&P 500 1,466.02 31.47 (2.10%)
10-Yr Bond 4.794% 0.066

NYSE Volume 3,050,336,000
Nasdaq Volume 1,960,851,000

1:00 pm : As if things couldn't get much worse, with the indices were finally showing some semblance of stabilizing over the last two hours, a renewed wave of selling pushes the indices to afternoon lows.

The Financial sector is now down more than 3.0%, Discretionary and Industrials are off more than 2.0%, and the remaining seven economic sectors are down at least 1.0%.

Exacerbating to the market's struggles over the last 30 minutes have been the Dow, S&P 500 and Nasdaq's inability to find support above key technical levels of 13505, 1478, and 2590, respectively. DJ30 -178.02 NASDAQ -33.48 SP500 -27.06 NASDAQ Dec/Adv/Vol 1813/1177/1.72 bln NYSE Dec/Adv/Vol 2302/920/1.24 bln

12:30 pm : The market kicks off the afternoon session in the same manner in which the morning session ended, trading lower across the board. The mass exodus from the Financial sector continues to be a thorn in the market's side. The Technology sector's failure to stay in positive territory about 45 minutes ago is also still fresh on investors' minds and further underscores the anxiety prompting so many to take money off the table.

Above average volume, as reflected in the NYSE already surpassing 1.0 bln shares and the Nasdaq already hitting 1.5 bln shares, is making matters even worse for the bulls. Such extensive participation lends even more conviction on the part of sellers and their belief that stocks have further to fall. DJ30 -128.43 NASDAQ -14.37 SP500 -18.58 NASDAQ Dec/Adv/Vol 1732/1237/1.50 bln NYSE Dec/Adv/Vol 2301/908/1.09 bln

12:00 pm : Stocks are trading sharply lower midday as renewed concerns about liquidity/credit risks usher in a wave of widespread profit taking.

With the Dow, S&P 500, and Nasdaq surging 3.6%, 4.5%, and 4.1%, respectively, over the previous three sessions, there's no denying that the market looked ripe for a pullback. To the extent by which equities plunged right out of the gate, though, was a bit surprising, even amid the extreme volatility seen in recent weeks.

The latest shoe to drop on the subprime front came from BNP Paribas. The French bank halted withdrawals from three of its funds, valued at around $2.1 bln, as a lack of liquidity leaves it unable to fairly value their holdings on account of the turmoil in the U.S. credit market. Even though BNP's exposure (which is less than 1.0% of total assets) seems relatively small, the announcement has served as a clear reminder that the headline risk remains real and that the volatility in trading conditions will persist.

Such concerns knocked the Dow down more than 240 points at the onset of trading and initially pushed the S&P 500 down as much as 1.8% as well. Not surprising, since underlying credit risks remain so difficult to quantify, the broader market's most heavily weighted sector -- Financials (-2.3%) -- is turning in the day's worst performance.

Not even falling bond yields, an injection of liquidity, and an increased likelihood of a Fed easing have been able to save the rate-sensitive sector. Fed funds futures now price in a 100% chance of rate cut at the next FOMC meeting (Sep. 18). Also, the ECB has injected nearly 95 bln euros ($130 bln) into money markets and the Fed has added $24 bln in temporary banking reserves to help ease the worst of credit jitters.

Brokerage stocks have been hit the hardest, losing additional ground after Sanford Bernstein cut their 2007 and 2008 estimates on five investment banks (e.g. GS -3.3%, MS -5.6%, MER -4.2%, LEH -4.0%, and BSC -3.5%).

Insurance stocks have also been a weak spot after Dow component American International Group (AIG 65.41 -1.07) saying it sees mortgage delinquencies spreading beyond subprime to prime trumped a 34% jump in its Q2 earnings.

The remaining nine sectors are also losing ground, with Consumer Staples (-0.6%) sporting the smallest decline of the bunch. That's not too surprising, though, since the group offers more dependable earnings streams in times of volatility and why we maintain an Overweight rating on it and another defensive-oriented sector, Health Care. DJ30 -126.74 NASDAQ -16.46 SP500 -18.88 NASDAQ Dec/Adv/Vol 1748/1189/1.29 bln NYSE Dec/Adv/Vol 2291/886/940 mln

[Xenotime]

82. This is utterly devestating....

I don't want to see life as we know it go away, but I just can't believe this.

[UpInArms]

83. TREASURIES-Long-dated Treasuries shed gains after auction

http://www.reuters.com/article/bondsNews/idUSN0920783420070809

NEW YORK, Aug 9 (Reuters) - Longer-dated U.S. government bond prices shed gains on Thursday after an auction of $9 billion of 30-year bonds <US30YT=RR>_drew lackluster demand.

Thirty-year bonds were trading flat in price for a yield of 5.05 percent, from 5.01 percent just before the auction and 5.05 percent late on Wednesday. The benchmark 10-year note <US10YT=RR> traded higher in price, with a yield of 4.81 percent from 4.80 percent just before the auction and a high yield of 4.86 percent in an auction of new 10-year notes on Wednesday.

02. 30-year Treasury auction has indirect bid 12.1%
1:07 PM ET, Aug 09, 2007 - 17 minutes ago

05. 30-year Treasury auction has 1.57 bid-to-cover ratio
1:03 PM ET, Aug 09, 2007 - 21 minutes ago

06. 30-year Treasury auction produces high yield 5.059%
1:03 PM ET, Aug 09, 2007 - 21 minutes ago

07. 30-year Treasury auction produces media yield 5%
1:03 PM ET, Aug 09, 2007 - 21 minutes ago

[roamer65]

85. US Gov't may be prepping Fannie Mae to step in and monetize mortgage-based securities.

Apparently, Fannie Mae has now requested permission to go beyond their ceiling of 727 billion.

http://www.kitco.com/ind/Willie/aug092007.html


Sounds like Fannie Mae could become the equivalent of the RTC from the S&L bailout. Bernanke needs a conduit to monetize all this bad paper and sounds like he's found it.

I smell helicopter fumes.:evilgrin:

[Neshanic]

87. Poppy to Dimson. "You have your own RTC , I am so proud, just like me!"

Now the fun begins. As homes crater in value, and the banks shove them off on FM, we will have a new RTC sale of the new century. This time it will be mostly houses, not the 15 story office buildings for four million in 1991, now valued at 175 million, or the Western Savings/Keating McCain palatial headquarters going for pennies on the dollar, but the houses. So many houses and the Fanny Mae RTC will gobble them all up like the good sound 11 billion accounting error entity they are and all will be well.

[roamer65]

88. I wondered why Dimwit was at the Treasury the other day.

My guess is he was getting briefed on the bailout by the PPT (Plunge Protection Team).

[DemReadingDU]

102. Picture

President Bush is followed by his senior staff as he walks to the Treasury Department for a meeting with his economic advisors, Wednesday, Aug. 8, 2007, in Washington. (AP Photo/Evan Vucci)

http://news.yahoo.com/photo/070808/480/01beea09b042406ebbbd50a6683ad545

************************
I think Bush needed advice for when China decides they want to call up all that money they lent Bush to finance his Iraq war.

[mojavekid]

86. Bloomberg: Gold, Silver Tumble as Investors Sell to Counter Credit Rout

http://www.bloomberg.com/apps/news?pid=20601012&sid=ajSEk5FMPqqM&refer=commodities

Aug. 9 (Bloomberg) -- Gold and silver tumbled in New York as some investors sold precious metals for cash to cover losses related to the U.S. subprime-mortgage collapse.

European stocks and U.S. equities dropped after France's biggest bank halted withdrawals from three investment funds. The European Central Bank loaned 94.8 billion euros ($130.2 billion) to help ease a credit crunch. Before today, gold had gained 7.6 percent this year.

``It's the fear of the subprime losses and the collapse of the credit market,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``They're selling gold to cover margin calls and to get rid of all risky assets.''

Gold futures for December delivery fell $11.50, or 1.7 percent, to $674.80 an ounce at 10:40 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since June 8.

Silver futures for September delivery plunged 35.5 cents, or 2.7 percent, to $12.815 an ounce. Before today, the metal had climbed 1.8 percent this year.

more...

[UpInArms]

89. 2:36 EST humpty dumpty falling apart - will PPT rescue come in final minutes?

Dow 13,399.36 258.50 (1.89%)
Nasdaq 2,576.38 36.60 (1.40%)
S&P 500 1,463.50 33.99 (2.27%)
10-Yr Bond 4.79% 0.07

NYSE Volume 3,898,597,000
Nasdaq Volume 2,501,610,000

2:30 pm : Surprise, surprise, the buyers' latest attempts to selectively pick up some beaten-down stocks and even several defensive names runs into an even bigger wall of worry. Homebuilding (+1.6%) still ranks among today's best performers; but short covering in this year's biggest laggard (-30%) remains the driving force behind the depressed group's recent outperformance.

Of the 20 components on the PHLX Housing Sector Index, BZH (+12%) and SPF (+10%), both recently crushed by bankruptcy rumors, are its biggest winners. The Consumer Staples segments like Distillers (+2.3%), Household Products (+1.3%), Soft Drinks (+0.6%), and Personal Products (+0.4%), in part for their defensive characteristics, are four more groups ranking among today's top 10. DJ30 -212.57 NASDAQ -32.72 SP500 -27.68 NASDAQ Dec/Adv/Vol 1926/1108/2.33 bln NYSE Dec/Adv/Vol 2485/789/1.71 bln

2:00 pm : The indices are bouncing off their recent lows, but barely enough to make much of an improvement in the standings. The Dow, S&P 500, and Nasdaq are still off more than 1.0%. All 10 sectors trading sharply lower further explains why the S&P 500 continues to pace the way lower among the majors.

Further underscoring today's bearish tone has been a 19% surge on the VIX (CBOE Volatility Index) to its highest level in four years. While the index, known as the "investor fear gauge," is off its highs, the spike higher suggests investors are actively buying put options in anticipation that too much money floating around will lead to more market declines. DJ30 -166.16 NASDAQ -27.76 SP500 -22.27 NASDAQ Dec/Adv/Vol 1909/1112/2.14 bln NYSE Dec/Adv/Vol 2474/795/1.56 bln

[mojavekid]

90. BullnotBull: Cramer Meltdown video,

http://bullnotbull.com/bull/node/21

- I am sure you all have seen this, I was overseas the last two weeks and did not get a chance until this morning.


-mojavekid

[UpInArms]

91. Hedge fund woes can signal bank stress-Fed (they just now noticed???)

http://www.reuters.com/article/bondsNews/idUSN0921238720070809

NEW YORK, Aug 9 (Reuters) - Losses at hedge funds can help investors predict possible troubles at investment banks, New York Federal Reserve economist Tobias Adrian said on Thursday.

In a largely technical speech to securities analysts, Adrian said internal studies at the Fed pointed to an unmistakable link. "There is indeed such a predictive relationship," Adrian said.

However, he cautioned that it was difficult to know whether hedge funds boosted or diminished the likelihood of crisis.

Investors have been increasingly nervous about hedge fund activity after two Bear Stearns funds collapsed due to problems in the subprime mortgage market.

<snipping to the real part - where that monetization thing will happen>

Adrian did acknowledge that the Fed was expected to function as a lender of last resort.

...more at link...

[UpInArms]

94. 3:15 EST Reality Rears Its Head Blather

Dow 13,378.79 279.07 (2.04%)
Nasdaq 2,568.04 44.94 (1.72%)
S&P 500 1,462.58 34.91 (2.33%)
10-Yr Bond 4.794% 0.066

NYSE Volume 146,051,000
Nasdaq Volume 2,857,822,000

3:00 pm : As evidenced the Financial sector (-3.4%) hitting fresh session lows, it remains widely apparent just how disconcerting and far reaching the underlying fears about the subprime mortgage meltdown have become.

Not only did French bank BNP Paribas suspend withdrawals from three of its funds due to subprime woes, but the fact that its CEO reportedly said just last week that the bank's exposure to U.S. subprime was "absolutely negligible" has proven even more unsettling. All three majors are now languishing at their worst levels of the day and selling only appears to be getting worse with only an hour left to go in the session. DJ30 -266.48 NASDAQ -46.00 SP500 -35.34 NASDAQ Dec/Adv/Vol 1977/1076/2.43 bln NYSE Dec/Adv/Vol 2517/777/1.92 bln

[zippy890]

95. Yiikes. Blood and eyeballs on floor, walls and desks

:-(

[UpInArms]

96. 3:58 - just before the close - even worse

Dow 13,316.60 341.26 (2.50%)
Nasdaq 2,562.17 50.81 (1.94%)
S&P 500 1,458.43 39.06 (2.61%)
10-Yr Bond 4.79% 0.07

NYSE Volume 1,009,425,000
Nasdaq Volume 3,440,713,000

3:30 pm : Stocks continue to sell off going into the close, almost as if buyers have simply packed their bags and headed for exits. Roughly 85% of the S&P 500 is now posting losses while the Dow was recently down more than 300 points.

[UpInArms]

97. all over but the blather

Dow 13,270.68 387.18 (2.83%)
Nasdaq 2,556.49 56.49 (2.16%)
S&P 500 1,453.09 44.40 (2.96%)
10-Yr Bond 4.79% 0.07

NYSE Volume 1,486,409,000
Nasdaq Volume 3,593,340,000

[ozymandius]

100. blather crying in its beer

Subprime Jitters Rock Stocks
Dow -387.18 at 13270.68, Nasdaq -56.49 at 2556.49, S&P -44.40 at 1453.09

Stocks got crushed Thursday, plunging right out of the gate; and every attempt to buy on the day's dips was met with even stronger waves of selling pressure.

Renewed fears about credit risk, this time from across the pond, prompted investors to take a deeper look at the severity of the ongoing subprime problem and the difficulties that diminishing liquidity is having on banks and brokers to accurately value assets. Such worries led us to downgrade the Financial sector to Underweight back in mid April.

The latest shoe to drop came from BNP Paribas. The French bank halted withdrawals from three of its funds as a lack of liquidity left it unable to fairly value their holdings on account of the turmoil in the U.S. credit market. Also discouraging was the fact that the company's CEO reportedly said just last week that the bank's exposure to U.S. subprime was "absolutely negligible."

The news out of Europe prompted a 50-basis point jump in Libor (London Interbank Offered Rate) to its highest level in six years and prompted the ECB to inject nearly 95 bln euros ($130 bln) into money markets. The Fed also chimed in by adding $24 bln in banking reserves. Such attempts to temporarily ease the pain of a possible credit crunch, however, were viewed with a glass half empty and merely exacerbated the worst of liquidity fears.

Not surprising, given its substantial exposure to mortgage lending and widening credit spreads, the Financial sector (-3.8%) got hammered, slipped further into negative territory for the year. With the most influential sector also the day's weakest link, it was not surprising to see the S&P 500 outpace the Dow and Nasdaq to the downside.

The broader market posted its worst one-day decline (-3.1%) since March 2003. All 10 economic sectors closed sharply lower, plunging 2.9% on average. Of the 147 S&P industry groups, only 10 posted gains.

Retailers were another blemish and were looking weak before the market even opened, as the bulk of July same-store sales figures missed forecasts.

Home Depot (HD 35.79 -2.01) later saying it may need to reduce the price of the pending $10.3 bln sale of its supply business, and lowering the price of its modified Dutch tender offer, lent further credence to the view that the housing correction and tighter credit conditions are weighing on more than the consumer. The stock's 5.3% drubbing contributed to the Dow's second worst performance (-2.9%) this year.

On the NYSE, where trading curbs went into effect an hour before the close, decliners outpaced advancers by a nearly 4-to-1 margin while above average volume showed added conviction on the part of sellers.

A 22% surge on the VIX (CBOE Volatility Index) to its highest level in four years further underscored the lack of enthusiasm to own equities and the bear's belief that stocks have further to fall.

[Roland99]

110. Ouch!

[ozymandius]

101. It looks as is anybody,

everybody was trying to get some of their money out of stocks. Like a fire sale.

[DemReadingDU]

98. In the Hole to China

8/8/07 Paul Craig Roberts

Early this morning China let the idiots in Washington, and on Wall Street, know that it has them by the short hairs. Two senior spokesmen for the Chinese government observed that China’s considerable holdings of US dollars and Treasury bonds “contributes a great deal to maintaining the position of the dollar as a reserve currency.”

Should the US proceed with sanctions intended to cause the Chinese currency to appreciate, “the Chinese central bank will be forced to sell dollars, which might lead to a mass depreciation of the dollar.”

If Western financial markets are sufficiently intelligent to comprehend the message, US interest rates will rise regardless of any further action by China. At this point, China does not need to sell a single bond. In an instant, China has made it clear that US interest rates depend on China, not on the Federal Reserve.

The precarious position of the US dollar as reserve currency has been thoroughly ignored and denied. The delusion that the US is “the world’s sole superpower,” whose currency is desirable regardless of its excess supply, reflects American hubris, not reality. This hubris is so extreme that only 6 weeks ago McKinsey Global Institute published a study that concluded that even a doubling of the US current account deficit to $1.6 trillion would pose no problem.

Strategic thinkers, if any remain who have not been purged by neocons, will quickly conclude that China’s power over the value of the dollar and US interest rates also gives China power over US foreign policy. The US was able to attack Afghanistan and Iraq only because China provided the largest part of the financing for Bush’s wars.

more...
http://counterpunch.org/roberts08082007.html

[SpiralHawk]

99. Neocon republicon economic philosophy: "Jesus will beat the Chinese for us."

So you little people can just shut up and sit down. It's all over, except for tallying up the Skull & Boner scorecard.

[David Zephyr]

105. Well, I got out completely in May and fretted a lot about it...until today.

I posted here back in May that I'd lost my nerve with the equities market, both domestic and global, and had for the first time in my life put it all into cash/money market.

And for the last several months, I watched from the sidelines wondering if I'd made a mistake. Now, I'm happy I'm out and I'm staying out for the immediate future.

The radical upswings and downswings are increasing in a sine wave pattern with the cycling faster and faster. It's insane to stay in the market if you have any risk aversion or care about asset preservation.

I'm happy I'm out for now.

[DemReadingDU]

106. I did the same thing last October

I have a money market fund, CDs, and a bond index fund. I feel better than being in stocks, but it's still scary with the declining value of the dollar. Like I said up-thread, it's a casino.

[David Zephyr]

107. I hung on until I just couldn't take it anymore.

Fortunately, I'd put almost everything into foreign funds through which I recovered everything I'd lost in the market after 9/11 (a lot) and then some.

By May, I couldn't bear it anymore. I told my family what I'd done and they thought I'd lost my mind. Well, I didn't lose my money although the dollar is a crappy refuge, too.

Congrats for getting out of the casino. You still have your money.

[AnneD]

108. G'day Marketeers....

:toast: Was busy the entire day but :wow: OMG what a day.

David, investors foget that cash ia a position too. If you feel the fundementals look weak to you, nothing wrong with taking a cash position. I think most folks here have been cutting back on their stock exposure. I think we will have wild swings for a while as the market goes downward for a while. I have no idea when we will bottom out but the subprime still has a lot of distance before it hits botttom.

[David Zephyr]

109. Thanks for your sound advice.

Cash is a position, indeed. It's just the dollar is so beaten down and I'm afraid will continue to fall against other currencies. Still my mortgage (fixed) is in dollars right now I have my money, all of it.

I would love to get back in at some point (I've been a strong investor since the early 1980's), but the "wild swings" as you call them tells me that this is too unhealthy for me for now.

Thanks for your words. Today wasn't pretty. I'm wondering what will happen in Asia in a few hours and later in European markets...

[UpInArms]

112. Asian markets are open

HANG SENG	-97.31	-0.43%	22,439.36
	NIKKEI 225	-368.74	-2.15%	16,801.86

[JNelson6563]

113. And futures for our markets are dark!

Very dark indeed! :scared:

[Dogmudgeon]

114. Into the dark night

I'm kicking this puppy. The market tonight is looking like the guy with the scythe has come to town for a little R&R. One guy on GD thinks a stock market crash has started. I disagree, but think tomorrow is going to be a blood-on-the-floor kind of day. Fridays in the summertime are notorious for profit-taking (and declines) so with a 300+ point fall today, tomorrow could be real ugly.

--p!

[kineneb]

115. not a crash, yet, but beginning of slow death spiral?

sort of like a wounded biplane, it won't go down quickly. Folks on the ground get to see lots of smoke and flames, and the plane spiraling down to the ground, but not suddenly falling out of the sky.

Biplanes are relatively easy to repair. After it hits ground, it may take a while to put the pieces back together and get that baby off the ground.

Just my bizarre mental image.

I have been watching the economy for some time; we have been living on borrowed time.