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Genesis Posts: 71435 Incept: 2007-06-26 
KD^2 
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http://market-ticker.denninger.net/2007/....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2007-07-12 16:34:45 by genesis
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Lionzzzz Posts: 1012 Incept: 2007-06-27 
Columbus OH
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Could it be possible that the powers to be are taking the stock prices up so that when a correction does occur, it will be mitigated. Sort of raising your price before you have a sale so the net effect is minimal? If AAPL corrects 20%, it is still over a $100 per share. Same with so many companies. Is this what they mean when the market needs to climb a wall of worry? Is that what it is doing? Anecdotally, I have been involved in the markets since I was a kid with DPL stock over 30 years ago. I have never seen so many stocks trade near or above $100 per share. I know that is not scientific, and I also know that stock splits are not the mania they were in the tech boom, but what is up with that? And what is up with yahoo deleting some of your posts? Should I be concerned when they try to silence someone? Are you ****ing people off? Should you be concerned?
2007-07-12 17:08:43
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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I'm not concerned. I've been ****ing people off for my entire professional and post-professional life. If I had a nickel for everyone I ****ed off, I would own Tattoosh. This was mostly short-covering - 2/3rds of it anyway. Look at the FUTURES. They were spiked into the close as traders SAW the fade towards the end. They couldn't have that, so they spiked them in the last minute to get a high-of-day close. That's all been given back within 15 minutes of the close - that trade was taken back off. Why? Why do you take that trade off in the futures unless you don't believe this will continue? We shall see in the morning. I took my long CALLs on the DIA off this afternoon 15 minutes before the close when I saw the hook. I knew what they were going to do but I didn't want to risk not being able to get a fill in the last couple of minutes and having my ass hanging out there over the cliff overnight. No thank you. If the run continues in the morning I'll put it back on; yeah, I gotta pay the commissions, but the overhang in the credit markets is severe and when that comes home to roost it will happen with zero warning. You will wake up to a limit down futures market. I don't know when you will, but I know it will happen. I see absolutely no way to bail out the credit market implosion. No way at all, despite the desire to do so. Look at Bernacke. He said that housing would recover in early '07. So did Paulson. Were either of them right? No. Now were they simply wrong, or were they lying? ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 17:25:50
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Ilikethehype Posts: 573 Incept: 2007-06-26
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It looks like they aren't going to bail out the credit markets, just ignore them. Let's see how that works... I'm still trying to figure out what exactly spawned this rally. I received an email from the WSJ about modest retail numbers and when I came back from buying tires, boom, 200 points and climbing. ---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 17:42:13
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Hitchhiker1977 Posts: 11 Incept: 2007-06-26
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I still think we have not seen that explosive move in the markets which would make the retail shorts cover and go long because they think they are going to miss the boat. That fear is just not there, too many people sitting on the sidelines. No one questions when I try to sell them a case for bear market. Until we see that unbridled euphoria, I do not see the crash happening. I loved the move today, it had me questioning my convictions and it has plenty of people re-thinking their strategy. The day I hear one of my "retail investor" friends call for a 16K Dow, I will know its time to short:)
2007-07-12 17:42:41
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Rmonical Posts: 2155 Incept: 2007-07-04 
Omaha
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Who knows? My one source says that there are huge short positions by the "dumbest of the dumb money" (is he talking about us?). Also said that the "smart money" is slowly unwinding their longs. So, triggering a short squeeze is a good way to help that process along. As Karl says, if we are not going to be squashed, we need to be nimble. I'll try to find time to list my trades. My longs/calls did great and my puts were not off badly. ---------- The truth is out there
2007-07-12 17:55:31
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Eleua Posts: 9907 Incept: 2007-07-05
N 47.72/ W 122.55
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I think Paulson and B-52 Ben are too smart to have misstepped on their housing prediction. That leaves one possibility. 
---------- http://clearcutbainbridge.blogspot.com/
2007-07-12 18:07:15
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Zzt Posts: 983 Incept: 2007-06-26
Glendale az
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Question about marking to market. There have been comments about entities having a certain amount of time to mark their ****paper to market. A. What is that length of time? B. What is the event that forces them to? Downgrades of specific tranches or any 'like' tranches downgraded? I seem to remember that one comment mentioned Monday as a deadline for the Bear hedge fund(s) to revalue. True?
2007-07-12 18:17:52
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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Asset sales mark to market, so do downgrades. You're allowed a "ministerial" amount of time (basically to allow for clerical processing) but that's basically it. Intentionally mispricing "assets" can get you in a LOT of trouble, as violating securities laws (when it comes to things like margin requirements) is pretty serious and can, in some cases, get you a date with Bubba in the Graybar Motel. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 18:19:56
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Bestscore Posts: 18 Incept: 2007-07-11 Dallas, Tx
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Genesis - A what level does the dip in the dollar become a threat to the economy- And what's your best guess for what reactions and results we might see first, before "A Dollar" catastrophe? And while you're at it...If you don't mind, please explain at what level does the CDO/Sub-Prime issue become intolerant to equities - In other words: What cataclysmic matrix, gauge or level must be reached for there to be an absolute breakdown in the financial markets?
2007-07-12 18:31:32
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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80 on the DX is the trigger as it will set off stops all over the place in the FX markets. Exactly how far it collapses from there is unknown, but its not good. The results? Catastrophic. Huge import price increases on anything that comes inbound. China probably ditches their reserves, but even if they don't, others will. Yields will yawn wide, possibly as high as 10% or more on the TNX. On the CDO issue, the bomb is going off now. Spreads are parabolic and not letting up a bit. I can't predict exactly when this gets recognized, but when it does, the **** will hit the fan instantly. My guess is that an LBO deal blowing up will do it, but since I just made that guess, I'll be wrong - these sorts of credit events are usually NOT what you expect, but they bite you in the ass anyway. The cycle, once it gets going, cannot he halted except by assumption of a couple of trillion worth of these CDOs by the US Government. THAT, however, will destroy the dollar, as that's a HUGE percentage of our GDP. So they are likely to resist for a long time, and that will cause the cycle of markdown/forced sale/margin call/bankruptcy to go a few times before they step in. Baiscally, equities are ****ed. So why don't they know it? Because the systemic hit hasn't shown up where people see it yet. But it will - I believe it is in fact inevitable as the housing market is at this point destined to plumb lows in sales not seen since the depression in terms of YOY losses, and the subprime market, which was 30% of the sales last year, was skewered by S&Ps ratings model changes. ITs done - put a fork in it. So whatever estimates you see from NAR or whatever, take 30% off, because that's about right. You may not see it for a couple more months due to reporting and issuer pipeline delays, but I just don't see how we escape this. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 18:38:47
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Ilikethehype Posts: 573 Incept: 2007-06-26
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Quote:Intentionally mispricing "assets" can get you in a LOT of trouble, as violating securities laws (when it comes to things like margin requirements) is pretty serious and can, in some cases, get you a date with Bubba in the Graybar Motel. Okay, but... Arthur Levett was on Bloomberg this morning and spoke of the situation of the same CDO(?) was priced at .91 at one house and .62 at Merril Lynch. I may not have the exact pricing he stated but it was an approx. 50% discrepancy. Since they refuse to use the TRACE system, how are they going to crack down on this and prevent the "pick the number you like" method? ---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 18:41:33
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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They will be eventually forced to use TRACE or something like it. The nasty part is that when the redemption requests come in suddenly you have to turn that trash into MONEY. That becomes a problem because that forces you to sell it, and THAT marks (at least that one) to the market. This is the cycle that blows it up, but exactly WHEN the cascade gets going is tough to predict. What I do know is that this is essentially impossible to prevent at this point, because the ****storm is just too big and there is a critical point where redemptions and margin calls beget more of them. When it happens, it probably will happen overnight when there is nothing you can do about it before the open the next day. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 18:46:03
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Bubblesee Posts: 3768 Incept: 2007-06-27
nyc
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todays action doesnt bode well for the guy who made the friday the 13th bet on CFC (w/ 13,000 puts). However i've noticed that after these rally's take the markets to higher highs, my shorts sink to lower lows. This divergencie seems to be creating the beginnings of a topping scenario that will continue to play out until the market leaders ( aaple, rimm, amzn, crox, wim-bill-dan foods, goog, etc ) roll over over. The only former leaders so far that have joined the other side (laggards such as homebuilders, lenders, etc.) are some of the brokerages. It will ultimately take some of these other leaders to slice key moving averages in heavy volume for the rally to finaly TOP-ple over and head downward in earnest. Today certainly seemed like overkill from the bulls........."the bulls have spoken!".............lets see what the bears have to say in return. ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out)
2007-07-12 18:49:18
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Ilikethehype Posts: 573 Incept: 2007-06-26
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Right, selling for redemptions will monetize the loss. It still amazes me the press talks about those two funds at Bear Stearns almost blew up. BS, Bear Stearns didn't blow up, but those funds did. They reinflated one with $1.6 b and ignored the other one. So much for the "let's get to the truth press"! ---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 18:51:52
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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Consider this: Let's say you took a stone to skip it on a pond. You threw it. Instead of arcing to the pond and skipping, it instead took off skyward! Would you suddenly be fearful that SOMETHING - possibly something NASTY - was about to happen? So what do you think your response should be when you get a near-300 point blowoff in a market that gets a report of WEAK retail sales in what is supposed to be the second-strongest month of the year, on the back of bad earnings reports from the consumer sector thus far and month-after-month bad housing numbers? Hmmmmm...... ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 18:52:46
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Ilikethehype Posts: 573 Incept: 2007-06-26
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Quote:However i've noticed that after these rally's take the markets to higher highs, my shorts sink to lower lows. I think it is a situation of those falling behind will be left behind. And, IMO, those that power ahead in this market are part of the blow off. ---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 18:54:19
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Ilikethehype Posts: 573 Incept: 2007-06-26
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Quote:Consider this: Well, as long as the rocks weren't falling back on my head, I'm ashame to say I'd probably start throwing larger rocks... ---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 18:57:29
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Ilikethehype Posts: 573 Incept: 2007-06-26
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Then later, when the little rocks started falling back to Earth, I'd know to run!!!
---------- Bernanke himself revealed the various policy measures the Fed might take in response to a crisis: buying government bonds, providing overdrafts and other short-term credits to banks, currency swaps (to boost the dollar), and "securities lending," that is, lending money to institutions to buy stocks. URL htt
2007-07-12 18:59:05
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Av8rphil Posts: 1817 Incept: 2007-06-26
Platte City, MO
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Well I think I would throw a few more just to prove it to myself. Then, assuming someone found a way to manipulate gravity and not wanting to end up high in the sky without a plane around me, I would get the hell out of there.
---------- "Two things in life are infinite: the universe and human stupidity; and i'm not sure about the universe" -Einstein
2007-07-12 19:18:49
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Sg Posts: 132 Incept: 2007-06-29
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Looks like GE is also involved in the subprime mess. Another HR Block in the making? http://www.bloomberg.com/apps/news?pid=20601087&sid=a6HGTx3_EgOs&refer=home
2007-07-12 19:47:42
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Genesis Posts: 71435 Incept: 2007-06-26
KD^2
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GE is involved in it but the percentage of their business that is impacted by this will be miniscule. GE's big risk is that they are really a finance outfit disguised as a big industrial multinational, as they underwrite the purchase of anything that a buyer wants and often keep it in house. This is how they get the sorts of returns they do. This, however, means that in a REALLY BAD economic environment where their customers get trashed they can get pounded. While they are likely better-managed than Lucent (which was almost literally destroyed by this) that doesn't mean they won't get hurt. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 19:49:45
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Bubblesee Posts: 3768 Incept: 2007-06-27
nyc
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Quote: I think it is a situation of those falling behind will be left behind. And, IMO, those that power ahead in this market are part of the blow off. You are making a good case for what the next group of stocks to short may very well be. When i first started taking short positions about a year and a half ago it was in the homebuilders. Then last december i shorted a lender (a bit prematurally - though in this instance "better premature than never" LOL!) lately i have taken short positions in stocks "related" to the housing and lending industries. If (or more precisely "when") the general market itself rolls over the stocks that may show the most spectacular declines may very well be the "blow off" stocks of this current time period. Climax runs showing up in the charts of some of the current market leaders could signify the END is very near. If a currently leading stock goes into such a "climax run" pattern (does anyone identify one yet?) i think that would be a great stock to take a short position in when the market turns........ ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out)
2007-07-12 23:29:54
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