STOCK MARKET WATCH, Friday August 10

[ozymandius]

Source: DU

Friday August 10, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 531 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2408 DAYS
WHERE'S OSAMA BIN-LADEN? 2120 DAYS
DAYS SINCE ENRON COLLAPSE = 2081
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 9, 2007

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%)
Gold future... 672.80 -13.50 (-2.01%)
30-Year Bond 5.03% +0.01 (+0.12%)
10-Yr Bond... 4.79% -0.07 (-1.44%)






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

---

more Radical Fringe here


Read more: DU

[ozymandius]

1. Market WrapUp

Stock Market Corrections Progressively Shorter in Duration
BY MARTIN GOLDBERG, CMT

Since the end of 2003, the S&P 500 has had four corrections ranging in magnitude from 7.5 to 8.3 percent. A 7.5% correction lasted from March 1st to May 10th of 2004. The following spring, a correction of 7.6 percent similarly began in mid March, but it only lasted until April 10th which was less than one month’s duration. In the spring of 2006, an 8% correction again lasted less than a month, from May 8th to June 5th. In 2007 a 6.7% correction began on February 20th and again ended less than a month later on March 12th. If the most recent correction is over, it would have lasted less than 3 weeks.

-cut-

This market behavior tends to suggest that the pressure to not miss a rally is becoming more and more intense among professionals. This trend cannot last forever, and at some point, what appears to be another short and shallow correction will be something more serious and dangerous.

-cut-

Today’s Market

From the market action today, most of the necklines held up. Still on the bullish side, there were many instances where a piece of good news was sufficient to move certain individual stocks upward significantly. Nordstrom was one example, and Panera Bread was another. Still the action in most retailers was quite bearish as stocks such as Aeropostale (ARO) and J.C. Penney (JCP) were hammered.

Today’s action featured a change market in character. That change is a horrible day that followed immediately after several decisively good days. If memory serves me correctly, this has been rare if it has even happened at all over the last 4 years. Usually strong market rallies had to be followed by several neutral days before a significant selloff had occurred. So with regard to today’s action, “this time it is different.”

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

[ozymandius]

2. Today's Reports

8:30 AM Export Prices ex-ag. Jul
Briefing Forecast NA
Market Expects NA
Prior 0.1%

8:30 AM Import Prices ex-oil Jul
Briefing Forecast NA
Market Expects NA
Prior 0.2% -

2:00 PM Treasury Budget Jul
Briefing Forecast -$37.0B
Market Expects -$33.0B
Prior -$33.2B

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

[UpInArms]

32. 8:30 reports - they suck, too

02. U.S. July import prices ex-fuels up 2.2% yr-over-yr
8:30 AM ET, Aug 10, 2007 - 1 minute ago

03. U.S. July non-petroleum import prices rise 0.2%
8:30 AM ET, Aug 10, 2007 - 1 minute ago

04. U.S. July import prices largest gain since March
8:30 AM ET, Aug 10, 2007 - 1 minute ago

05. U.S. July import prices up 1.5% vs rise 1.1% expected
8:30 AM ET, Aug 10, 2007 - 1 minute ago

[UpInArms]

145. Treasury budget deficit for July of $36.3 Billion (just wait for August's deficit!)

01. U.S. runs budget deficit of $36.3 billion in July
2:00 PM ET, Aug 10, 2007 - 6 minutes ago

[ozymandius]

3. Oil steady after moderate fall overnight

SINGAPORE - Oil prices were nearly flat Friday after falling in the previous session on concerns about the U.S. economy.

Light, sweet crude for September delivery lost 12 cents to $71.47 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. The contract fell 56 cents to settle at $71.59 a barrel Thursday.

Reports on Thursday suggesting a sluggish economy and news of spreading problems in the U.S. subprime mortgage sector contributed to the decline. The U.S. Labor Department reported the number of people signing up for jobless benefits grew last week, while many retailers reported disappointing July sales.

-cut-

Nymex crude has fallen by more than $7 a barrel since rallying to a new all-time high of $78.77 a barrel August last week. But some analysts say the decline is not surprising.

September Brent crude fell 35 cents to $69.86 a barrel on the ICE futures exchange in London.

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

[ozymandius]

13. Oil retreats on credit worries

LONDON (Reuters) -- Oil prices slipped below $71 Friday as worries over economic growth from a deepening credit squeeze in global financial markets outweighed forecasts for robust oil demand.

U.S. crude fell 61 cents to $70.98 a barrel, taking losses from last week's record high of $78.77 to more than 9 percent. London Brent crude fell 37 cents to $69.84.

-cut-

Meanwhile the outlook for demand appeared robust, providing a floor to oil prices. The adviser to 26 industrialized countries - the International Energy Agency - said Friday world oil demand will grow at a faster pace in 2008 than this year and repeated its call for more OPEC oil.

-cut-

Analysts said oil prices would also find support from OPEC's reluctance to increase output at its September meeting, fueling concerns of a supply squeeze in the fourth quarter ahead of peak winter fuel demand.

http://money.cnn.com/2007/08/10/markets/bc.markets.oil.update.reut/index.htm?postversion=2007081007

[ozymandius]

4. Asian stocks plummet on credit fears

TOKYO - Asian stocks plunged Friday as fallout spread from global market turmoil set off by concerns about credit weakness in the U.S. The Bank of Japan joined its U.S. and European counterparts in pouring cash into money markets to calm growing jitters.

The Nikkei 225 index dropped 406.51 points, or 2.37 percent, to close at 16,764.09 points on the Tokyo Stock Exchange. The broader Topix index of all shares on the exchange's first section sank 49.88 points, or 2.96 percent, to 1,633.93 points.

The Korea Composite Stock Price Index fell 80.19 points, or 4.2 percent, to 1,828.49, with issues falling across the board, especially financial stocks. The Kospi fell as much as 5 percent in intraday trade.

Asian markets across the region followed the general slump.

http://news.yahoo.com/s/ap/20070810/ap_on_bi_ge/world_markets

[UpInArms]

51. foreign market numbers:

FTSE 100	-195.10	-3.11%	6,076.10
XETRA-DAX	-121.20	-1.63%	7,332.39
CAC 40      	-166.07	-2.95%	5,458.71
HANG SENG	-646.65	-2.88%	21,792.71
NIKKEI 225	-406.51	-2.37%	16,764.09

[UpInArms]

55. FACTBOX-Biggest one-day falls in European shares

http://www.reuters.com/article/bondsNews/idUSL1091865620070810

LONDON, Aug 10 (Reuters) - European shares tumbled 3 percent
by midday on Friday, putting them on track for their biggest
one-day fall in more than four years, as credit market fears
intensified.

The fall is the latest in a series of wobbles in global
equity markets that have punctuated a four-year bull run.

This year, European markets as measured by the FTSEurofirst
300 index (.FTEU3: Quote, Profile, Research) have slipped at different times on the back of growth fears, a rise in bond yields and, most recently, a
credit market crunch.

The latest fall in stocks was prompted by French bank BNP
Paribas (BNPP.PA: Quote, Profile, Research) freezing three funds that invested in U.S. subprime mortgages.

Fears that the U.S. subprime mortgage crisis could spread to
the wider economy have roiled global markets on several
occasions since June.

<snip>

 Date             Percentage    1 week later    1 month later
 Oct 28 1997        -4.9           -1           0.2
 Sept 10 1998       -4.5           -0.6         5.7
 Jan 4 2000         -4.6           -0.7        -0.03
 Sept 11 2001       -6.3           -0.9         1.4
 Sept 14 2001       -5.2           -2.6        -1.9
 July 15 2002       -5.2           -4.8         3.1
 July 19 2002       -4.8            1.1         2.9
 July 22 2002       -4.8            5.9         2.0
 Sept 30 2002       -4.8           -1.4         2.5
 Oct 1 2002         -4.3           -1.6        -1.2
 FTSEurofirst 300's one-day losses of over 2 percent this year
 
 Feb 27 2007        -2.9           -2.5         0.2
 March 14 2007      -2.6            5.8        10.1
 July 26 2007       -2.8           -0.7
 
 Top percentage falls in the Dow Jones industrial average (.DJI: Quote, Profile, Research)
 
 Date             Percentage    1 week later    1 month later
 Oct 19 1987       -22.6           -8.0        -2.3
 Oct 26 1997        -8.0            1.0        -1.9
 Jan 8 1988         -6.9            2.1        -0.8
 April 14 1988      -4.8            0.1         1.9
 Oct 13 1989        -6.9            0.2         0.03
 Oct 27 1997        -7.2            3.1        -1.8
 Aug 31 1998        -6.4            5.0        -2.7
 April 14 2000      -5.7            0.1         1.9
 Sept 17 2001       -7.1            4.5        -1.6
 July 19 2002       -4.6            1.0         2.4
 Top percentage falls in the S&P500 (.SPX: Quote, Profile, Research)
 
 Date             Percentage    1 week later    1 month later
 Sept 11 1986       -4.8            0.3         0.2
 Oct 16 1987        -5.2           -0.01        0.5
 Oct 19 1987       -20.5           -8.3        -2.2
 Oct 26 1987        -8.3            1.5        -1.5
 Jan 8 1988         -6.8           -0.8        -0.8
 Oct 13 1989        -6.1            0.01        0.3
 Oct 27 1997        -6.9            2.7         0.4
 Aug 31 1998        -6.8            5.1        -3.0
 April 14 2000      -5.8           -0.3         2.2
 Sept 17 2001       -4.9            3.9        -1.7

...more at link...

[Buttercup McToots]

58. OMG

:yoiks:

[Ghost Dog]

139. FTSE plummets as sell-off continues amid credit fears

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B40bfcc99%2Da8df%2D495c%2Dbd46%2D8f8513a2d105%7D

Panicked investors sent the FTSE 100 plummeting on Friday after persistent fears over the condition of global credit markets sparked a broad-based sell-off. Britain’s benchmark index closed 3.7 per cent, or 233 points, down at 6,038.3 with losing stocks outnumbering gainers by 96 to 4. The downturn came as central banks around the world tried to calm nerves after pumping $120bn of extra liquidity into the financial system to alleviate concerns about deteriorating credit conditions. Financial stocks once again suffered the heaviest losses as investors steered clear of a sector that has heavy exposure to the US subprime mortgage market through collaterised debt products. Mortgage company Northern Rock was the day’s biggest loser, falling 9.6 per cent to 740p, while Man Group, the world’s largest listed hedge fund, crashed 9.1 per cent to 479p. Miners were also badly hit with Lonmin losing 7.2 per cent at 3039p and BHP Billiton, the world’s biggest mining company, closing 6.7 per cent lower at 1266p.

[Ghost Dog]

140. European equities suffer as credit concerns continue

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B50477dcc%2D544d%2D4fe2%2D90e2%2D4b5122b2ccdd%7D

European equities floundered further on Friday under the wave of credit troubles as the European Central Bank acted for a second day, along with Asian central banks to add liquidity to panicky markets. At the close, the FTSE Eurofirst 300 was down 3 per cent at 1,479.40, the Xetra Dax 30 fell 1.5 per cent to 7,343.26 in Frankfurt and the CAC 40 lost 3.1 per cent at 5,448.63 in Paris. Following its €94.8bn cash injection on Thursday, the ECB said on Friday it would add money to the financial system over the weekend, aiming to ”assure orderly conditions in the euro money market”. Financial stocks bore the brunt of the selling. Dutch takeover target ABN Amro fell 3.5 per cent to €33.85 on concerns that Fortis will struggle to raise the €24bn in order to finance its part of the €71bn deal along with Royal Bank of Scotland and Santander. Shares in Fortis were down 3.4 per cent at €26.82, while RBS fell 3.9 per cent to 579p. BNP Paribas, France’s biggest bank which announced on Thursday the closure of three funds due to a liquidity crisis, continued its decline. Its shares fell 4.4 per cent to €78.97.

[ozymandius]

5. China's July trade surplus $24.4B

BEIJING - China's trade surplus soared 67 percent in July from a year ago to its second-highest monthly level on record, according to data reported Friday, amid mounting pressure by U.S. lawmakers to sanction Beijing over trade and currency disputes.

July's surplus totaled $24.4 billion (17.8 billion euros), the Chinese customs agency reported. That beat every previous month except June's all-time high of $26.9 billion.

Analysts had expected the surplus to ease in July because exporters had rushed shipped goods in earlier months to beat new tax policies meant to narrow China's yawning trade gap.

-cut-

Some U.S. lawmakers are pressing for sanctions on China if it fails to ease controls on its currency, the yuan, which critics say is undervalued and gives Chinese exporters an unfair price advantage.

http://news.yahoo.com/s/ap/20070810/ap_on_bi_ge/china_trade_surplus

[ozymandius]

6. Consumer confidence rebounds in August

Rebound? Wasn't confidence up last month?

WASHINGTON - Consumer confidence rebounded in August, rising to a five-month high as receding gasoline prices and a mostly solid employment climate made people feel better about the economy's prospects and their own financial situations.

The improved attitudes come even as Wall Street has been enduring a turbulent spell, which has sent stocks on wild upward and downward swings. Investors are worried that mounting problems in the housing and home mortgage markets will hurt the broader financial system and short-circuit the economic expansion.

The RBC Cash Index showed that consumer confidence rose to 89.3 in August. That marked a bounceback from July's 76.1, the worst reading in almost a year. The new reading was the best since March. The index is based on the results of the international polling firm Ipsos.

"This indicates that there is a significant disconnect between Wall Street and Main Street," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

http://news.yahoo.com/s/ap/20070810/ap_on_bi_ge/ipsos_consumer_confidence

[ozymandius]

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

NEW YORK - U.S. stocks moved toward another sharply lower open Friday after a sharp sell-off Thursday and as bank regulators in Europe and Asia injected cash into money markets, stoking concerns of a more pronounced liquidity crunch.

In Asia, which had largely missed the worldwide pullback Thursday, stocks fell sharply after regulators including the Bank of Japan added liquidity. The European Central Bank for the second day added currency.

These banks and others around the world haven't worked in tandem to inject liquidity into the markets since the aftermath of the Sept. 11, 2001, attacks. But the moves, which are intended to keep currency markets well-oiled, also seem to confirm investors' fears of a larger problem in the credit markets.

-cut-

Stock markets abroad saw a drubbing Friday amid concerns that access to credit will derail the global economy's strong growth and bring a halt to the corporate dealmaking that has spurred stocks markets in the U.S. and abroad.

http://news.yahoo.com/s/ap/20070810/ap_on_bi_st_ma_re/wall_street

[ozymandius]

8. futures numbers

06:16 ET
S&P futures vs fair value: -10.2. Nasdaq futures vs fair value: -11.5.

[mojavekid]

88. Bloomberg: Gold, Silver Gain as Investors Seek Haven From Subprime Losses

http://www.bloomberg.com/apps/news?pid=20601012&sid=aayPibU3PJPc&refer=commodities

Aug. 10 (Bloomberg) -- Gold and silver rose in New York as investors sought a haven from potential losses tied to the U.S. subprime-mortgage collapse.

Stocks dropped in Europe and Asia after central banks around the world added billions of dollars to the global financial system to help meet demand for cash. Before today, gold had risen 5.5 percent this year after six annual gains.

``People are going to the safest thing they can get,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. ``Gold is a safe haven at this point.''

Gold futures for December delivery rose $3.80, or 0.6 percent, to $676.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange.

Silver futures for September delivery rose 7.5 cents, or 0.6 percent, to $12.78 an ounce. Before today, the metal had fallen 1.8 percent this year.

The European Central Bank loaned 61.05 billion euros ($83.6 billion), adding funds into the banking system for a second day after U.S. subprime-mortgage losses prompted lenders to tighten credit. The Bank of Japan, the Reserve Bank of Australia and central banks in Canada, Norway and Switzerland also injected money into the financial system.

The U.S. Federal Reserve added $24 billion in temporary reserves yesterday, when gold fell the most in two months as investors sold bullion to cover losses in other markets.

more...

[UpInArms]

94. December gold up $11.20, or 1.7%, at $684 an ounce on Nymex

December gold up $11.20, or 1.7%, at $684 an ounce on Nymex
10:55 AM ET, Aug 10, 2007 - 3 minutes ago

[ozymandius]

9. Home Depot Says Sale Price of HD Supply May Be Cut (Update8)

Aug. 9 (Bloomberg) -- Home Depot Inc. may have to accept a lower price for the contractor-supply unit it agreed to sell to buyout firms for $10.3 billion, forcing it to scale back a stock repurchase plan.

Home Depot shares fell 5.3 percent today in New York Stock Exchange composite trading, the most in more than four years.

The world's largest home-improvement retailer is in talks with Bain Capital LLC, Carlyle Group and Clayton Dubilier & Rice about restructuring the sale of HD Supply, which provides tools and lumber to builders and accounts for 13 percent of the retailer's revenue. Financing for the purchase may be at issue as investors hit by losses on subprime mortgages shun riskier debt.

-cut-

Home Depot is facing the same credit crunch that caused debt investors to reject bond and loan packages for buyouts of companies including Alliance Boots Plc and Chrysler LLC. Banks and private-equity firms are seeking to renegotiate terms of the loans and bonds to make them more palatable.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHxj1UC0oddQ&refer=home

[ozymandius]

10. Global Stocks, U.S. Futures Fall; ABN Amro, Countrywide Drop

Aug. 10 (Bloomberg) -- Stocks declined worldwide and U.S. index futures retreated as concern increased that a widening credit crunch may hurt economic growth and earnings.

ABN Amro Holding NV, the target in the world's biggest banking takeover, dropped to a four-month low on speculation Barclays Plc will pull out of the deal. Man Group Plc tumbled after Reuters reported the company will postpone the public offering of a fund. Countrywide Financial Corp., the biggest U.S. mortgage lender, fell in Europe after saying ``unprecedented disruptions'' may crimp profit. Macquarie Bank Ltd., Toyota Motor Corp. and Samsung Electronics Co. paced declines in Asia.

-cut-

The Morgan Stanley Capital International World Index lost 1.2 percent to 1536.47, while Standard & Poor's 500 Index futures expiring in September sank 8.9 to 1449.0 at 11:10 a.m. in London. The MSCI World has dropped 7.2 percent since touching a record on July 19 on concern the rout in U.S. subprime mortgages may spill over into the economy, erode earnings growth and curb takeovers.

Treasuries rallied and credit-default swaps on European corporate bonds increased as the subprime mortgage debacle roiled credit markets.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=azpNCfbcOiPc

[ozymandius]

11. Countrywide Says `Disruptions' May Hurt Profit (Update2)

Aug. 10 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage lender, said it faces ``unprecedented disruptions'' that may crimp profit, suggesting a credit crunch that started with the U.S. subprime market will spread. The shares fell in Europe.

Countrywide won't be able to sell as many of its loans as expected because investor demand has dried up, the Calabasas, California-based company said in a filing with the U.S. Securities and Exchange Commission. It also said it may have difficulty obtaining financing from creditors. Shares of the company fell 15 percent in Germany.

``The secondary market and funding liquidity situation is rapidly evolving, and the potential impact on the company is unknown,'' Countrywide said. ``These conditions may continue or worsen in the future.''

Investors have stopped buying loans made to the riskiest borrowers, leaving hedge funds, banks and securities firms unable to find accurate prices for their holdings. BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds yesterday because it couldn't ``fairly'' assess the value of subprime mortgage holdings. Banks roiled by the crisis are shifting assets into cash, prompting the European Central Bank to loan them an unprecedented 94.8 billion euros ($130 billion) yesterday.

-cut-

Bids for subprime mortgages, rated as the most likely to default, became scarce in March as overdue payments headed for their highest level since 2002. Now buyers are shunning Alt-A loans, an alternative for people with good levels of credit who don't otherwise meet all the standards for prime loans.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=auoR9Txk1r1k

[Roland99]

16. Anyone up for some Steely Dan today? "When Black Friday comes...."

When Black Friday comes
I'll stand down by the door
And catch the grey men when they
Dive from the fourteenth floor
When Black Friday comes
I'll collect everything I'm owed
And before my friends find out
I'll be on the road
When Black Friday falls you know it's got to be
Don't let it fall on me
When Black Friday comes
I'll fly down to Muswellbrook
Gonna strike all the big red words
From my little black book
Gonna do just what I please
Gonna wear no socks and shoes
With nothing to do but feed
All the kangaroos
When Black Friday comes I'll be on that hill
You know I will

When Black Friday comes
I'm gonna dig myself a hole
Gonna lay down in it 'til
I satisfy my soul
Gonna let the world pass by me
The Archbishop's gonna sanctify me
And if he don't come across
I'm gonna let it roll
When Black Friday comes
I'm gonna stake my claim
I'll guess I'll change my name

[ozymandius]

23. Investopedia definitions of Black Friday and "Black"

Black Friday

1. A day of stock market catastrophe. Originally, Sept 24, 1869 was deemed Black Friday. The crash was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The attempt failed and the gold market collapsed, causing the stock market to plummet.

2. The day after Thanksgiving in the United States. Retailers generally see an upward spike in sales and consider this to be the start of the holiday shopping season. It's common for retailers to offer special promotions and to open early to draw in customers.

Investopedia Says... 1. The term "black" has been used to describe other disastrous days in financial markets. For example, on Black Tuesday, Oct 29, 1929, the market fell precipitously signaling the start of the Great Depression. Additionally, the largest one-day drop in stock market history occurred on Black Monday, Oct 19, 1987, when the Dow Jones Industrial Average plummeted more than 22%.

more...

http://www.investopedia.com/terms/b/blackfriday.asp

[Buttercup McToots]

61. You know what...?

I'm kinda scared...

[UpInArms]

66. ..

it's okay BCMcT!

Hopefully, there will be a lot of lessons learned - albeit the hard way - and we can get our country out of the hands of the privateers.

:grouphug:

[AnneD]

165. Morning Marketeers......

:donut: I know I am late in getting here today, but remember Toots, when the ledgers are balanced, what really is important are your family and friends. When the planes were crashing, and the WTC was collapsing, that last call was to family, not to a broker. And, as UIA rightly pointed out, we may have an upside. And as badly as you are hurting, some of these investors will loose everything. Folks here have been trying to provide accurate info for a while now and if you've been paying attention-you should be doing ok, and a damn site better than most folks that remain clueless.

Go out this weekend with some friends and family. Remember the true measure of wealth.

Happy hunting and watch out for the bears.

[UpInArms]

38. Countrywide: Secondary Mortage Market Conditions 'unprecedented'

http://money.cnn.com/news/newsfeeds/articles/djf500/200708100004DOWJONESDJONLINE000009_FORTUNE5.htm

SAN FRANCISCO (Dow Jones) -- Countrywide Financial Corp., the largest U.S. mortgage lender, said Thursday that "unprecedented" poor conditions in the secondary-mortgage market are causing it to retain a greater proportion of mortgage loans than it sells.

In a filing with the Securities and Exchange Commission, Countrywide said that while it plans to retain more loans until investor demand improves, it warned that a prolonged period of poor conditions "could have an adverse impact on our future earnings and financial condition."

The disclosure was made as part of Countrywide's (CFC) regular quarterly financial report with the SEC.

In July, Countrywide indicated that widespread troubles in the sub-prime mortgage market have spread to higher-quality loans, when it announced its second-quarter results.

...more...

[wordpix]

119. "retain more loans"=keep the $ we have & foreclose on those who can't make payments

[UpInArms]

72. Countrywide tumbles on mortgage woes

http://www.reuters.com/article/hotStocksNews/idUSN1038588220070810

NEW YORK (Reuters) - Shares of Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) tumbled before the opening bell on Friday after the largest U.S. mortgage lender said "unprecedented disruptions" stemming from the subprime mortgage fallout could hurt its earnings and financial condition.

Countrywide shares dropped 17 percent to $23.79 in electronic composite trading.

[mojavekid]

87. Jim Willie: MBS Monetization & USDollar

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


Fannie Mae is being groomed to be the central clearing house for mortgages and their bonds, sponsored by the USGovt and the US Federal Reserve. Fannie Mae (FNM) just requested permission to take on much greater volume of mortgages, in order to alleviate the secondary market flow of capital funds. Since the accounting scandal which peaked in September 2004, a limit was imposed on FNM on its holdings at $727 billion. In today’s climate, marred by credit seizure to some degree, FNM is deeply missed in its former prominent centrifuge role. A key question arises on the general inflation impact, if and when FNM expands its role and is the nexus (surely a hidden basement) of grandiose illicit monetization of mortgage bonds. If the banking maestros undertake to put a secretive floor on mortgage backed securities (MBS), a solid bid to prevent further breakdown, then vast amounts of new printing press money will enter the system. The mortgage finance sector desperately needs a bid on subprime MBS bonds so as to clear them upon liquidations. The bank wizards could start monetizing them, and work their way up the quality ladder toward Alt-A loans which are also in trouble.

OVERNIGHT PANIC UPDATE

Overnight, in the US wee hours of Thursday morning, the Europeans suffered a shock wave. The Euro Central Bank added €94.8 billion (US$130.2 billion) into the money market funds as retail depositors forced a run on their banks, in a MILD PANIC. The overnight rates that banks charge each other to lend in dollars jumped to the highest level in six years. The dollar London Interbank Offered (LIBOR) rate rose to 5.86% today from 5.35% and in euros rose to 4.30% from 4.11%. The ECB response to the fastest increase in the dollar bank rate since June 2004 signals that lenders are reducing the supply of money as losses triggered by the US mortgage slump spread worldwide. In addition to BNP Paribas halting withdrawals, and Dutch investment bank NIBC Holdings said it had lost at least €137 million on subprime investments, more evidence that credit markets are not stabilizing. A Commerzbank commercial bond trader summed it up. “Liquidity in the market has completely dried up as investors are not recycling their money back because of subprime concerns. Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.” The ECB provided the largest amount ever in a single fine-tuning operation, exceeding the €69.3 billion provided on 12 Sept 2001, the day after the terror attacks on New York. The US Federal Reserve accepted $12 billion in overnight repurchase agreements overnight simultaneously.

PNB Paribas, the French bank conglomerate closed three funds associated with US subprime toxic mortgages. The company made a bold plainly worded comment, a severe criticism of this fraud-ridden credit sector. “The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating. The situation is such that it is no longer possible to value fairly the underlying US ABS assets in the three above mentioned funds,… therefore unable to calculate a reliable net asset value (NAV) for the funds.” Export of US bond fraud to Europe has led to renewed shock waves.

Back in the Untied States, American International Group (AIG) announced that residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime. AIG, the world’s largest insurer and one of the biggest mortgage lenders, said total delinquencies were 2.5% in its $25.9 billion real estate portfolio. It offered details. They cite 10.8% of its subprime mortgages were 60 days overdue, compared with 4.6% in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading. This no longer just a subprime problem, clearly.

The financial market effects were huge overnight. The USDollar DX index benefited with a 59 basis point rise to 80.81 in the Sept2007 contract. Also in Sept contracts, the euro fell 105 bpt to 137.11, the pound sterling fell 131 bpt to 202.20, the yen rose 89 bpt to 84.86, which at the same time forced gold down 12.7 to 667.2 on the October contract. The indicator on the Fed Funds futures expectations changed dramatically. Up through the last few days, the December contract had priced in roughly a 100% chance of a 25 basis point interest rate cut by the USFed. Last night, the October Fed Funds contract jumped to a similar level, pointing the way to a USFed rate cut of 25 bpts before October. In the first two hours of Thursday New York trading, the Fed Funds indicator has not changed. But the pound sterling gained back half of what it lost in Europe, with the rest of the currencys gaining minimally.

more...

[Demeter]

110. That's All We Need--More Inflation

Talk about your perfect storm. Don't these idiots know anything about feedback?

[Delphinus]

113. I've got my mortgage through Countrywide.

What will this do to me? Anyone know?

Here's something from MarketWatch:
Countrywide's shares head for a tumble
Merrill says firm has resources to weather storm
By Greg Morcroft, MarketWatch
Last Update: 9:29 AM ET Aug 10, 2007
http://www.marketwatch.com/news/story/countrywide-tumbles-mortgage-market-seizing/story.aspx?guid=%7B9319877C%2D545F%2D4151%2D9373%2D9A204F2A3D42%7D

NEW YORK (MarketWatch) -- Shares of Countrywide Financial Corp., , fell more than 15% ahead of Friday's open, retreating after the largest U.S. home lender said problems in the U.S. mortgage market poses a serious threat to its earnings and financial condition.

The company, which makes money providing mortgages and then reselling them to investors, said the markets' reluctance to buy mortgages right now is causing it to retain a greater proportion of mortgage loans than it sells.

In simple terms, this means that investment banks, the firm's traditional customers, are not buying the company's product. That's not good for earnings or revenues.

The Federal Reserve took action Friday confirming to a large degree the difficulty that Calabassas, Calif.-based Countrywide is talking about, saying it pumped $19 billion into the market in an effort to provide liquidity.

{snip}

[Maeve]

153. Probably not an issue (they've got mine, too)

We won't see so many great offers of home equity lines of credit, but as long as we pay on time, I expect we're safe enough.

It's the folks going to them for loans right now that are more likely to hear "We have a problem"...(and the folks who own their stock!)

[Delphinus]

154. Thanks, Maeve.

I knew this was the right place to ask. :hi:

[ozymandius]

12. Bernanke, Paulson Were Wrong: Subprime Contagion Is Spreading

Aug. 10 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke was wrong.

So were U.S. Treasury Secretary Henry Paulson and Merrill Lynch & Co. Chief Executive Officer Stanley O'Neal.

The subprime mortgage industry's problems were contained, they all said. It turns out that the turmoil was contagious.

-cut-

Among the other executives joining the chorus was Bank of America Corp. CEO Kenneth Lewis, who said June 20 that the housing slump was just about over.

``We're seeing the worst of it,'' Lewis said.

`Broader Fallout'

Within the week, he was contradicted by a team of Bank of America analysts, who called losses in the mortgage market the ``tip of the iceberg'' and predicted ``broader fallout'' from adjustable-rate loans resetting at higher interest rates.

David Olson, president of Wholesale Access Mortgage Research & Consulting Inc. in Columbia, Maryland, is blunt about his current outlook. He says a third of the U.S. home-loan industry will disappear.

http://www.bloomberg.com/apps/news?pid=20601084&sid=a.pPEmZeZZCk&refer=stocks

[masmdu]

25. .

.

[UpInArms]

43. Banks are in the dark as debt horror story unfolds

http://business.guardian.co.uk/story/0,,2145760,00.html

A piece of fine-tuning, said the European Central Bank, which may be the first time a sum of €95bn (£64.5bn) has been described that way. More to the point, the amount of cash consumed by European banks yesterday was also outside the $50bn-$100bn (£25bn-£50bn) range that Ben Bernanke, chairman of the US Federal Reserve, had identified as the size of the potential losses from junk lending in the US mortgage market.

Losses and money supply are different things, of course, but the moral is clear: nobody in the markets, including central banks, can say with confidence that they know where this crisis will end. In the thriller called Sub-prime Slime, the numbers seem to get bigger with each new chapter.

<snip>

He could have added that the slime has reached unlikely places. Yesterday Dutch merchant bank NIBC was the latest obscure continental European lender to confess. It has notched up losses of €137m (£93m) on US asset-backed securities and warned the figure would rise.

Why was a mid-sized Dutch bank playing in the US mortgage market in the first place? As with German bank IKB, which was supposed to be lending to local corporations, a picture is emerging of financial naivety. US banks wanted to export their toxic waste, and the Europeans bought the stuff.

How much have they got? There is no way of knowing at the moment. Even IKB hasn't quantified the scale of its crisis, a week after it admitted it had a problem. The vacuum will be filled by rumour, and yesterday's gossip was that a large, frontline European bank has caught a nasty dose of sub-prime.

...more...

[ozymandius]

46. No one will know how much they've got for a long time.

That's because market volatility will defy any attempt to calculate the worth of their holdings.

[wordpix]

120. even a non-professional like me saw this coming---you can't have foreclosure properties

from sub-prime mortgages or any other type flood the real estate market without impacting market prices overall. More housing or commercial bldgs. for sale = more to choose from and eventually, supply exceeds demand and prices fall.

It's about time. I got tired of seeing tiny fixer-uppers for $450,000 in CT. They're now going for $350K and falling.

[ozymandius]

14. ECB to inject more cash, Asia acts

FRANKFURT (Reuters) -- The European Central Bank mounted a second day of action to calm panicky credit markets Friday, after Asia central banks joined a global campaign by monetary authorities to inject extra cash into banking systems.

The ECB said it would add €61.05 billion ($83.61 billion) in a 3-day tender through the weekend to calm markets, saying it "aims to assure orderly conditions in the euro money market." The Swiss central bank also offered money at below-market rates.

-cut-

The news helped steady nervous trading in European money markets, where a record-setting ECB injection of €94.8 billion ($130.6 billion) cash Thursday was due to flow out of markets.

In Asia trading, the Bank of Japan and the Reserve Bank of Australia have added more money than usual to prevent short-term rates from spiking, albeit on a much smaller scale than the ECB's amount.

http://money.cnn.com/2007/08/10/news/international/bc.centralbanks.reut/index.htm

[UpInArms]

17. looks like Australia got in on the pump too!

http://news.yahoo.com/s/ap/20070810/ap_on_bi_ge/japan_central_bank

TOKYO - Japan's central bank injected 1 trillion yen ($8.4 billion) into money markets Friday amid a Tokyo stock plunge and growing global worries about dubious U.S. mortgages.

The Bank of Japan joined similar overnight moves by the U.S. and European counterparts — the first time the central banks took such action together since the Sept. 11, 2001, terrorist attacks. The Australian central bank also followed suit.

<snip>

The Reserve Bank of Australia injected A$4.95 billion ($4.19 billion) into the money market, more than double the daily average.

The central banks in South Korea and Singapore said they were prepared to intervene if needed, although Jang Byung-Wha, director-general in the Bank of Korea's financial markets department, said Korean financial institutions had not invested large amounts in subprime mortgages.

"We will stand ready to inject liquidity," Ong Chong Tee, Deputy Managing Director at the Monetary Authority of Singapore said. "At this stage market conditions remain relatively stable."

Friday, Aozora Bank Ltd. said it had about 21 billion yen ($178.2 million) worth of exposure to debt obligations related to U.S. subprime loans as of the end of June. Aozora wrote off 4.48 billion yen ($38.0 million) of these assets in its earnings for the first quarter ended June.

...more...

hey! and here is where the BOJ did this in June too!

http://news.yahoo.com/s/afp/20070810/bs_afp/usjapaneconomybankproperty

TOKYO (AFP) - The Bank of Japan injected one trillion yen (8.5 billion dollars) into money markets Friday amid fresh credit woes over the US subprime mortgage sector.

"We offered one trillion yen ... as we judged it would be better to offer (ample) funds," a spokesman for the central bank said.

The sum is up from 400 billion yen the bank pumped Thursday and the highest since it offered one trillion yen on June 29.

...more...

[UpInArms]

41. 8:30 a.m.: Federal Reserve injected $19 billion in liquidity into the nation's banking system

http://money.cnn.com/2007/08/10/markets/stockswatch/index.htm

NEW YORK (CNNMoney.com) -- U.S. stocks are likely to take another beating Friday, as the spreading credit crisis roils markets around the world.

At 8:36 a.m. ET, Nasdaq and S&P futures were lower, with a comparison to fair value pointing to heavy losses for stocks at the open. But futures came off their lows around 8:30 a.m. when the Federal Reserve injected $19 billion in liquidity into the nation's banking system.

Treasury prices continued to climb as investors sought shelter in the safe-haven investments, lowering the yield on the benchmark 10-year note to 4.74 percent from 4.77 percent late Thursday. Bond prices and yields move in opposite directions.

Investors are reeling from one of the year's worst days on Wall Street. The Dow Jones industrial average, which tracks 30 large U.S. stocks, suffered its second worst session of the year on Thursday.

Overseas investors followed in step, dumping stocks even as central banks attempted to calm fears. Asian markets sank overnight. European shares plunged, erasing their 2007 gains and turning negative on the year.

The latest bout of turmoil in the stock markets comes amid growing signs that problems in the U.S. mortgage sector are spreading overseas. French bank BNP Paribas said Thursday it was freezing withdrawals from three of its top funds because an evaporation of liquidity made it impossible for it to value their assets.

...more...

[wordpix]

122. save the bankers! the profits are falling and we the people have to prop up the richies!

:puke:

[UpInArms]

70. UPDATE 1-Canada injects C$825 million to lower rates

http://www.reuters.com/article/bondsNews/idUSN1046529520070810

OTTAWA, Aug 10 (Reuters) - The Bank of Canada, which has been acting with other central banks to calm global liquidity fears, injected C$825 million ($786 million) into the markets on Friday to try to lower the overnight rate to its 4.5 percent target.

It added the funds through a routine Special Purchase and Resale Agreement.

The Bank of Canada normally does such transactions at 11:45 a.m. EDT (1545 GMT) but can conduct rounds earlier and later as needed.

On Thursday, when the liquidity concerns emerged, the central bank injected C$1.64 billion in overnight money. This compares with two other times in the past eight days when it offered daily totals of C$663 million and C$410 million.

($1=$1.05 Canadian)

[UpInArms]

15. dollar watch

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

Last trade 80.833 Change +0.054 (+0.07%)

BNP Freeze Causes Carry Trades to Plunge and Central Banks to React in Liquidity Squeeze

http://www.dailyfx.com/story/topheadline/BNP_Freeze_Causes_Carry_Trades_1186672641989.html

There is no denying the fact that the subprime problems have now gone global. This morning, France’s largest bank, BNP Paribas SA announced that they were freezing withdrawals from three of their investments funds following the “complete evaporation of liquidity.” For BNP, this may not be a big deal because the three funds represent only 1.6 billion out of the 356 billion euros that they have under management, but for the rest of the world, this is huge.

The victims of the subprime contagion is no longer limited to just small banks, and mortgage lenders, but is now hitting Tier 1 banks around the world. As a direct result of BNP’s announcement, overnight LIBOR rates skyrocketed to six year highs, stocks plummeted and carry trades sold off across the board. The situation became so severe that for the first time since 2001, the ECB stepped in and injected liquidity into the markets. The latest liquidity squeeze has broad ramifications for the global markets. Flight to safety will become the new trend, especially if we see a sharp increase in margin calls. Traders and investors will be moving back to cash, which in most cases means that they will be parking their money in US dollars. The greenback is already stronger against every major currency with the exception of the Japanese Yen and this is only because USD/JPY is a carry trade currency.

ECB and Federal Reserve Step In

This morning the LIBOR rate rose by the fastest pace since June 2004, triggering a wave of concern amongst central banks. In dollar terms, the overnight lending rate jumped from 5.35 percent to 5.86 percent, a six year high. Euro rates climbed to 4.7 percent, while sterling rates hit 6.16 percent (both are new 6 yr highs). Fears of a credit crunch forced the European Central Bank to step in and inject EUR94.8 billion in emergency funds to calm the markets. The last time that the central bank injected liquidity was right after 9/11, which gives the market a gage of how serious the credit crunch has become. In fact, the amount injected in September 2001 was only EUR69.3 billion, 25 billion less than today. The Federal Reserve followed suit by adding $12 billion in temporary reserves via 14-day repurchase agreements. Unlike the ECB however, the Fed does repurchase operations every week, the only difference is that the repurchases today were more than double the amount done last Thursday. Both central banks are trying desperately to calm the markets. Even the Bank of Canada issued a statement saying that they are ready to add liquidity to the Canadian financial system, if necessary. Conditions must have deteriorated significantly because as recently as two days ago, the FOMC statement indicated that tighter credit conditions were not a threat. The same sentiment was relayed by the ECB last week.

Is this the Beginning of the End?

The age of easy money is over and unfortunately, we expect more problems to come. We will not hit the peak in adjustable rate mortgage resets until October, when $50 billion in mortgages will switch to the current market rate. After that, $30 billion in mortgages will be reset through September 2008, followed by a sharp fall afterwards. This means that the risk of defaults and late payments will only continue to grow. Lenders will retrench further and if the problems exacerbate, it will also raise the risk of a recession. Volatility indices are up across the board indicating that risk aversion is growing. For the financial markets, this has broad ramifications:

...more...

Markets in Turmoil: What Next for the US dollar?

http://www.dailyfx.com/story/bio1/Markets_in_Turmoil__What_Next_1186693899825.html

Markets in Turmoil: What Next for the US dollar?
Today’s turmoil in the financial markets has put traders, analysts, and even central bankers in shock. It seems as if no one expected the carnage that we saw today because as recently as Tuesday, in their FOMC statement, the Federal Reserve downplayed the risk of a major credit or liquidity crisis opting instead to remain hawkish. The Reserve Bank of Australia even went ahead and raised interest rates earlier this week while the European Central Bank held a special press conference last week to tell the world they still plan on raising interest rates in September. These same central bankers will need to reconsider their recent announcements, especially the Federal Reserve. Fed fund futures are now pricing in a 100 percent chance of a 25bp rate cut next month followed by another rate cut before Christmas. To get a gage of how drastic rate expectations have changed, just yesterday, the markets were pricing in only a 20 percent probability of a September cut and 100 percent chance of only one 25bp reduction by the end of the year. If traders are right and the Fed does cut interest rates next month, then they will have to make some sort of announcement expressing their shift in stance between now and then. Meanwhile the stock market is down 2.83 percent, which is the largest percentage drop since April 2003. The evaporation of liquidity in the markets has hit both bonds and stocks (read our special report to find out why this happened) forcing the Federal Reserve and ECB to desperately try to calm the markets. Both injected liquidity in reaction to the spike in LIBOR rates, with the ECB pumping in the largest amount of emergency funds since 9/11. The US dollar has rallied against every major currency with the exception of the Japanese Yen as traders and investors all move back to cash. With the possibility of further losses, increasing liquidity is the most important thing for global investors. Therefore we expect the dollar to continue benefit in the short term thanks to its safe haven status. In the longer term however, if the US is forced to cut interest rates, we could see the greenback under perform. Unfortunately with the peak in adjustable rate mortgages not coming until October, the risk of defaults and late payments will only grow. BNP Paribas only announced that they froze their investment funds today, but in the weeks to come, they and other parties like them will have to begin announcing losses. The only thing that can save the markets at this point would be surprise interest rate cuts from central banks around the world. That would be negative for the US dollar in short term, but positive for the US economy and eventually the dollar over the long term.

Carry Trades In for More Losses
In yesterday’s Daily Fundamentals, we posed the question “Are Carry Trades Back” and our response was unfortunately no, because the age of easy money was over and volatility in the markets has returned. Today, that is even more true not because carry trades collapsed across the board, but because the VIX index, which is the equity market’s measure of risk hit a yearly high. We have often said that carry trades thrive in low volatility and not high volatility environments. The Japanese Yen was the best performing currency pair of the day and Asian traders have yet to get an opportunity to respond to the latest moves. Given the recent losses and the degree of leverage that the market has become accustomed to over the past few years, many speculators are vulnerable to margin calls. The principle of gravity applies well here, that is things fall much faster than they rise. According to one of our previous Carry Trade Special Reports, the maximum drawdown in a basket carry trades over the past decade was 10.5 percent. We have drawn only half that amount at this point which means that there could be more room for losses. Japan has CGPI due for release tonight. The market is looking for stronger inflationary pressures and even though that supports continual carry trade weakness, it should matter little.

...more...

[ozymandius]

19. nowhere to run nowhere to hide

I expect Bush, Paulsen, and Bernanke to become more shrill in their pat declarations of our fiscal integrity.

[UpInArms]

21. I suspect you're right

[Demeter]

81. There's Always Paraguay!

Hope Bush paid cash for the hacienda. Wouldn't it be a scream if he was foreclosed on literally, as well as figuratively?

[UpInArms]

85. don't forget Poland!

[Demeter]

86. Poland Might Be a Good Fit

Some serious fascist tendencies over there, and lots of Bush bootlicking.

[Buttercup McToots]

62. USD $80.62 @ 9:300...going

:thumbsdown:

[UpInArms]

18. SEC combing Wall Street books for subprime losses: report

http://www.reuters.com/article/businessNews/idUSN1028424620070810?feedType=RSS&feedName=businessNews

NEW YORK (Reuters) - U.S. regulators are scrutinizing the books of some top Wall Street brokers and investment banks for subprime-mortgage losses, according to a report in the online version of the Wall Street Journal.

Under review by the U.S. Securities and Exchange Commission is whether the firms are calculating the value of subprime-mortgage assets in a consistent way, as well as customer assets, such as those held for hedge funds, according to the report, which cited people familiar with the inquiry.

The regulatory checks, which are expected to include Wall Street's five biggest investment banks including Goldman Sachs Group <GS.N and Merrill Lynch & Co., while made routinely are sensitive since through the last earnings period few of Wall Street's big firms had disclosed any significant subprime losses even though the meltdown of this risky corner of the mortgage market has caused market turmoil, the Journal said.

Neither Goldman Sachs nor Merrill Lynch could immediately be reached for comment.

The added scrutiny comes amid some subprime-mortgage cracks surfacing at some large investment firms. Swiss bank UBS AG was forced to shut down Dillon Read Capital Management less than two years after its launch following losses on mortgage markets. And Bear Stearns Cos shares, and its reputation, were slammed as two of its mortgage funds suffered losses, outflows and then filed for bankruptcy.

...more...

[UpInArms]

20. Wild Oats second-quarter profit drops 97 percent

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

DENVER - Natural and organic grocer Wild Oats Markets Inc. on Thursday reported a 97 percent drop in second-quarter net income largely due to higher costs and a jump in expenses related to its planned $565 million buyout by rival Whole Foods Inc.

For the quarter ending June 30, net income fell to $127,000, or less than 1 cent per share, from $4.9 million, or 16 cents per share in the second quarter of 2006. Revenue rose 5 percent to $311.8 million from $296.6 million in the year-ago quarter.

Selling, general and administrative expenses totaled $16.4 million, up from $11.4 million, while restructuring and asset impairment charges climbed from $295,000 to $372,000.

<snip>

Wild Oats stock fell 49 cents, or 3.2 percent, to $15.03 Thursday. The price has ranged from $13.88 a share to $18.81 a share in the past year.

Whole Foods of Austin, Texas, announced plans in February to buy Wild Oats for $18.50 a share, which was a 17 percent premium at the time. The Federal Trade Commission is trying to stop the transaction, contending it would lead to higher prices for customers of the organic foods markets.

...more...

[UpInArms]

22. Ruh-Roh - here goes another one: Washington Mutual shares drop

http://www.reuters.com/article/hotStocksNews/idUSN1038800020070810

NEW YORK (Reuters) - Shares of Washington Mutual Inc. (WM.N: Quote, Profile, Research) shares fell before the opening bell on Friday after the No. 1 U.S. savings and loan said its ability to raise liquidity by selling home loans will be "adversely affected" while difficulties in the mortgage market persist.

Washington Mutual shares were down 7.2 percent at $34.10 in electronic composite trading.

[UpInArms]

83. Washington Mutual's shares fall after warning

http://www.marketwatch.com/news/story/wamu-shares-off-about-4/story.aspx?guid=%7B75213603%2DD9AD%2D42C6%2D89E0%2D61E70D58E23F%7D&dist=hplatest

BOSTON (MarketWatch) -- Shares of Washington Mutual Inc. fell nearly 4% in early dealings Friday after the Seattle-based bank said liquidity in the secondary market for home loans and mortgage-backed securities has "diminished significantly."

The company (WM : 35.85, -0.91, -2.5% ) in its quarterly financial report said its liquidity "may be affected by an inability to access the capital markets or by unforeseen demands on cash" such as a general market disruption.

Washington Mutual said "there has been significant volatility in the subprime secondary mortgage market which has spread into markets for all other nonconforming residential mortgages."

The company, which is one of the nation's largest subprime lenders, said although it has been "impacted" by the credit-market woes, it "remains well-capitalized and its capital position is diversified." Mortgage lenders such as Washington Mutual sell debt in the secondary markets to raise money to write more loans.

As long as the turmoil persists in mortgage markets, the company's ability to generate capital through the selling of mortgage loans in the secondary market "will be adversely affected," according to the regulatory filing.

...more...

[UpInArms]

24. This is NOT reassuring: AIG reassures investors about subprime

http://news.yahoo.com/s/ap/20070810/ap_on_bi_ge/aig_subprime_exposure

NEW YORK - American International Group on Thursday told investors the housing market would have to spiral to Depression-era levels before the insurer would be harmed by its exposure to the residential mortgage market.

The world's largest insurer has exposure to subprime loans — those made to people with tainted credit — as a lender, investor in mortgage-backed securities and supplier of mortgage insurance. But AIG characterized its exposure as minimal and said it would take declines of 30 percent to 40 percent in home values to dent the market for mortgages with stronger ratings, where most of its holdings lie.

AIG said delinquencies on first-lien mortgages were on the rise at its mortgage insurance group. But the company also reassured investors that it has ample cash and "doesn't need to liquidate any of its investment securities in a chaotic market."

Cliff Gallant, equity analyst with Keefe, Bruyette & Woods Inc., estimates that of AIG's $1.034 trillion in assets at June 30, it has some $3 billion to $5 billion that could go bad in subprime defaults — a thin slice of the overall pool.

<snip>

"We believe that it would take declines in housing values to reach Depression proportions — along with default frequencies never experienced — before our AAA and AA investments would be impaired," said Chief Risk Officer Bob Lewis, in a conference call with analysts on Thursday. "AAA"- and "AA"-rated investments are considered to be those of highest credit quality.

Home prices would have to slide by more than a third, and defaults among borrowers with strong credit would have to balloon above 45 percent, to begin to affect the AAA and AA bundles of securities, the company said.

...more...

[ozymandius]

29. This is like watching a slow-motion train wreck. n/t

[UpInArms]

26. Goldman pounded by hedge fund losses

http://news.yahoo.com/s/nm/goldman_alphafund_dc

NEW YORK (Reuters) - Goldman Sachs Group shares fell nearly 6 percent on Thursday after another of its hedge funds posted losses and reportedly sold positions.

North American Equity Opportunities, which started the year with about $767 million in assets, was down more than 15 percent this year through July 27, a person familiar with the situation said.

Declines at that fund follow a 12 percent drop in the last two weeks at Global Alpha, Goldman's flagship $9 billion macro hedge fund. That fund is down 16 percent for the year and traders have said the fund is selling parts of its portfolio.

Goldman denied talk on Wednesday it was liquidating the fund and declined further comment. On Thursday, the bank declined to comment on the North American Equity Opportunities fund.

Equity Opportunities is a market neutral stock fund that takes long and short bets. The smaller fund, like Global Alpha, relies on computer-driven "quantitative" trading models.

...more...

I wonder how many of those deals Paulson was in on???

[ozymandius]

33. whistling past the graveyard again - this from yesterday

...please pardon the link...

Goldman Says Business as Usual at Alpha Hedge Fund Amid Liquidation Chatter

NEW YORK — Goldman Sachs Group Inc. (GS) 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 fell by 6 percent last year, has been the subject of persistent market speculation for several days. Goldman on Wednesday denied market talk that it was liquidating the fund and declined further comment on the matter.

As of a few days ago, the fund had $9 billion in assets under management, according to a person familiar with the situation. The fund, run by Goldman Sachs Asset Management, is down about 16 percent this year after a 12 percent drop in the past two weeks, the source said.

http://www.foxnews.com/story/0,2933,292774,00.html

[UpInArms]

47. NIBC (backed by Chris Flowers, the former Goldman Sachs banker) hit by US mortgage crisis

http://news.yahoo.com/s/ft/20070809/bs_ft/fto080920071648368400

NIBC, the unlisted Dutch merchant bank backed by Chris Flowers, the former Goldman Sachs banker, on Thursday joined the ranks of European financial institutions damaged by US mortgage market mayhem when it disclosed substantial first-half losses.

The bank rushed out preliminary results, posting a EU137m ($189m) first-half loss in its US asset-backed securities investment book that it said would reduce net profit to just EU3m for the six-month period. That compared with EU188m in the same period a year earlier.

The development put plans for an initial public offering on hold and triggered negative reactions from rating agencies.

Standard & Poor's and Moody's said they were considering cutting key credit ratings, noting NIBC "expected further mark-to-market losses" on its US ABS investment book.

The losses came in spite of efforts to limit the damage through portfolio hedges. This came after EU29m in investment losses related to US asset-backed securities that resulted in a 58 per cent fall in net profit to EU44m in the first quarter, Moody's noted. NIBC said it was "disappointed" by the rating agencies' reaction to what it considered "an isolated incident". Michael Enthoven, NIBC executive board chairman, said: "We are convinced that NIBC has a sound strategy and business model, which will guide us through these challenging market conditions."

It blamed "severe instability in the US credit fixed income markets and continuous credit spread widening", but added that only part of its US ABS investment book was subprime-related, assessing exposure at EU391m.

...more...

[ozymandius]

27. 8am futures and blather. OMG!!

S&P futures vs fair value: -21.1. Nasdaq futures vs fair value: -25.3. Early indications suggest stocks will pick up where they left off yesterday, trading sharply lower, as fears of a possible credit crunch continue to mount. Instead of soothing a nervous market, the ECB injecting another $83 bln into money markets appears to be confirming the worst, that the European banks' exposure to the subprime debacle is much larger than anticipated. The major European bourses are down 2.6% on average, roughly matching the average pullback on the Dow, S&P 500, and Nasdaq yesterday.

Here in the US, the Fed Funds rate opened at 6.00% in New York, well above the central bank’s 5.25% target, which is likely to result in a similar liquidity infusion from the Fed this morning.

Even the Bank of Japan added liquidity last night, lending further evidence of the contagion effect and marking the first time since the aftermath of the 9/11 terrorist attacks that so many banks around the world have worked in tandem to provide enough liquidity to satisfy demand. Japan's Nikkei 225 fell 2.4%; the Hang Seng plunged 2.9%.

[UpInArms]

34. US STOCKS-Dow index futures tumble 200 points

http://www.reuters.com/article/bondsNews/idUSN1041165520070810

NEW YORK, Aug 10 (Reuters) - Dow index futures (DJU7: Quote, Profile, Research) dropped by as much as 200 points on Friday as concerns about the widening fallout from losses related to U.S. subprime mortgages roiled global equity markets.

[ozymandius]

39. Anything with just a fingernail of exposure will get hammered.

Goldman Sachs, the self-proclaimed owners of Wall Street, will get nailed. They deserve it. Not only have huge investment banks embraced the Greenspan doctrine, they have hustled to profit from Greenspan's disastrous advice.

[AnneD]

168. Even those with no exposure will get hammered...

just on gp. Happened in Houston during our real estate crash.

[UpInArms]

35. Fed funds trade at 6.000 percent, above 5.25 pct target

http://www.reuters.com/article/bondsNews/idUSNYG00066220070810

NEW YORK, Aug 10 (Reuters) - Fed funds traded at 6.000 percent early on Friday in New York, above the 5.25 percent target rate for overnight money the Federal Reserve sets.

Late on Thursday, fed funds were trading around 5.500 percent.

[UpInArms]

53. Fed adds $19 billion, fed funds rate falls (injected $24 Billion on Thursday)

http://www.reuters.com/article/bondsNews/idUSN1045424320070810

NEW YORK (Reuters) - The U.S. Federal Reserve on Friday added ample liquidity into the banking system for the second day running, in line with other major central banks as financial markets fretted over credit conditions.

In an operation conducted earlier than usual, the Fed added $19 billion of temporary reserves to the banking system through 3-day repurchase agreements, compared with adding $7.5 billion through 3-day repurchase agreements last Friday.

The Fed said all of the collateral accepted in the 3-day repo on Friday was mortgage-backed debt. The repurchase was the largest 3-day operation in at least a year.

The $19 billion fund injection followed a total $24 billion injection on Thursday.

The fed funds rate was trading at 6 percent in early morning trade, but fell back to 5.25 percent shortly after the operation, in line with the target set by the central bank. It was last trading at 5.375 percent.

...more...

[UpInArms]

71. NY Fed: Friday's repo biggest single op in 4 yrs

http://www.reuters.com/article/bondsNews/idUSN1046051220070810

NEW YORK, Aug 10 (Reuters) - Friday's $19 billion cash injection by the Federal Reserve was the largest single temporary open market operation in four years, the New York Federal Reserve said.

The Fed added the temporary reserves to the banking system through 3-day repurchase agreements. It was the largest single liquidity operation by the bank since a $20 billion injection on Aug. 15, 2003, the bank said.

On Thursday, it provided $24 billion through two separate operations.

[Roland99]

77. I was wondering how much more the Fed was pumping in.

[wordpix]

124. this must've been what * was talking about yesterday when he said there is plenty of liquidity

:shrug:

Yeah, on OUR backs to bail out the banks and Wall St. :nopity:

[UpInArms]

67. US RATE FUTURES-Boost chance of emergency Fed cut

http://www.reuters.com/article/bondsNews/idUSCHB00034120070810

CHICAGO, Aug 10 (Reuters) - U.S. short-term interest rate futures on Friday increased the implied chances that the Federal Reserve will step in with an emergency rate cut this month and fully price an cut at the September policy meeting.

Futures built on Thursday's huge rally amid turmoil in global credit markets. As the crisis seems to worsen by the day, potential for the U.S. central bank to make a rare inter-meeting rate cut has been rising.

Latest values suggest a 47 percent chance of a Fed ease before the end of August (FFQ7: Quote, Profile, Research), up from about 33 percent on Thursday.

Futures fully price a 25 basis point cut in Fed's overnight lending rate to 5 percent at the Sept 18 Federal Open Market Committee meeting (FFV7: Quote, Profile, Research), and a further cut before year-end.

[fedsron2us]

173. Sorry I must be stupid

but how can they price in a cut in Fed rates when LIBOR rates have been rising. Does not the historical evidence show that Fed rates tend follow LIBOR rates ? In addition if we have an insolvency crisis on our hands not just a liquidity problem then rate cuts will make no bloody difference as much of the money has probably already been lost. Personally I like the quote from Vinny Catalano on this situation

"It is unwise bordering on imprudent to assume that terrible will not follow bad,"

http://www.marketwatch.com/news/story/how-effective-would-rate-cut/story.aspx?guid=%7b3BE64DE5-C940-4019-8E23-05BC9F64CD97%7d

I have got a nasty feeling that the 'cure' currently being prepared for the financial systems woes is only going to make things worse.

[UpInArms]

68. TEXT-Federal Reserve statement (will provide funds for banks and markets)

http://www.reuters.com/article/bondsNews/idUSWAT00799220070810

WASHINGTON, Aug 10 (Reuters) - The following is the text of a statement issued by the U.S. Federal Reserve on Friday:

"The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets.

The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent. In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always, the discount window is available as a source of funding."

[UpInArms]

28. Subprime lender NovaStar posts big loss

http://news.yahoo.com/s/nm/20070809/bs_nm/novastar_results_dc

NEW YORK (Reuters) - NovaStar Financial Inc. (NFI.N) a struggling subprime mortgage lender, on Thursday posted a large second-quarter loss, hurt by rising credit losses and a writedown of home loans still on its books.

Kansas City, Missouri-based NovaStar posted a net loss of $52.9 million, or $5.84 per share, compared with a profit of $34.7 million, or $3.97 per share, a year earlier.

Results included $116.9 million of pre-tax writedowns, including $73.3 million for credit losses and the rest to reduce the value of mortgage loans and securities.

Loan volume fell 73 percent to $773.7 million, and the real estate investment trust said it is having more difficulty selling loans it makes. NovaStar said it has faced $76.5 million of margin calls since June 30.

"The subprime securitization market continues to be illiquid," Chief Investment Officer Mike Bamburg said in a statement. "We continue to believe the secondary markets will become more rational given better collateral characteristics, although there can be no assurance of this."

...more...

[UpInArms]

73. NovaStar shares down after posting loss

http://www.reuters.com/article/hotStocksNews/idUSN1042101920070810

NEW YORK (Reuters) - Shares of NovaStar Financial Inc. (NFI.N: Quote, Profile, Research) fell before the opening bell on Friday after the mortgage lender posted a quarterly loss late on Thursday and said it expects loan volume to decline "substantially" this quarter.

NovaStar shares fell 13.2 percent to $4.80 in electronic composite trading.

[masmdu]

30. Target SPX 1360-75

as soon as next wed as late as 1st week sept

[UpInArms]

31. Wheeling-Pitt reports $41.6M loss in 2Q (sounds like it's about to fold)

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

WHEELING, W.Va. - The parent company of Wheeling-Pittsburgh Steel Co. lost $41.6 million in the second quarter and its accountants are questioning whether it can continue as a going concern, according to a report filed Thursday with the Securities and Exchange Commission.

Wheeling-Pitt lost $2.71 per share on revenue of $467 million in the three months ended June 30, according to the filing. The steelmaker reported a profit of $9.3 million, or 63 cents per share, on revenue of $493.9 million in the same period of 2006.

Wheeling-Pitt lost $59.8 million in the first quarter, and the SEC filing indicates losses and unexpectedly high capital investments and working capital expenses in the first half of the year are causing liquidity problems.

"Management anticipates that we may require additional financing in the foreseeable future," Wheeling-Pitt said. The company added that current management projections indicate it won't be able to comply with covenants of its term loan and may be unable to borrow more money.

Wheeling-Pitt added that its outside accounting firm, PricewaterhouseCoopers, has determined there is substantial doubt about the company's ability to continue as a going concern.

...more...

[UpInArms]

36. Big investors flee risk-State Street data

http://www.reuters.com/article/bondsNews/idUSL105765720070810?sp=true

institutional investors have turned more risk averse than at any time since August last year, taking positions they typically do not reverse quickly, State Street data showed on Friday.

The U.S. financial services firm said its clients, who keep some $13.04 trillion with it as a custodian, have moved into what it called a "safety first" regime.

This is characterised by moving from emerging to developed market equities, embracing bonds and unwinding currency "carry" trades.

Institutional investors tend to take a longer-term view of markets than other investors, so shifts in their strategy can have a significant impact on a market's recovery.

The firm said that since September last year investors had been taking positions reflective either of abundant liquidity or leverage opportunities.

"A quick move back to risk-seeking is unlikely given ... previous history ... and the backdrop of markets," State Street said in a note.

<snip>

State Street said that a month ago, flows into emerging Asia equities were in the 65th percentile, meaning that they had been larger on only 35 percent of occasions over 10 years.

In the latest data, however, they were in the 5th percentile -- almost the lowest level of demand seen since it started collecting data.

...more...

[UpInArms]

37. Fears of global liquidity crisis grip markets

http://www.reuters.com/article/topNews/idUSHKG3454420070810?sp=true

LONDON (Reuters) - Fears of a global liquidity crisis intensified on Friday, knocking stocks and high-yielding currencies, while the European Central Bank and Asian authorities acted to calm surging short-term borrowing costs.

What started as trouble with risky U.S. residential mortgages is gripping world financial markets as the fallout hits banks globally, squeezes once ample liquidity and threatens to damage world growth.

World stocks have shed over seven percent since they hit record highs only a month ago. Investors rushed to buy safe-haven government bonds, unwind yen-financed carry trades and moved to scale back expectations for interest rate hikes by some major central banks this year.

Emergency action by central banks -- with the ECB acting for the second time on Friday -- underlined that the risk of a global liquidity crunch was more serious than anticipated.

"What we have at the moment is just an all-round sense of panic," said Marc Ostwald, bond analyst at Insinger de Beaufort in London.

...more...

[Maeve]

40. Yes, it shows every sign of being a bumpy ride...however

Hold tight and don't panic (yeah, it's me and no, I haven't switched sides!)

Remember, the Dow topped 12,000 for the first time only last October and 13,000 this April. And we were scratching our heads about the run up then. The drop is something most in this thread have been waiting for--many of us have believed there was a reckoning coming for the loose credit floating around the housing market for some time. It's the sort of thing that explains the warning to diversify your portfolio--spread your nest eggs into a variety of baskets, and don't risk money you need in the short term (aka--less than 20 years). And don't take all your advice from the internet--get a good financial adviser to do the heavy lifting.

That said...my sympathies to those who are watching their losses (includes myself--diversification means you WILL suffer occasional drops in part, and part of my retirement is dropping, too)

[UpInArms]

42. Great Words of Wisdom, Maeve!

Here's hoping that if anyone has been reading this thread for any length of time, they know that isn't the first time they have heard it.

We're just here to record it - 'cuz we knew it would be coming.

:hi:

:grouphug:

[ozymandius]

44. Thanks for the advice Maeve. Do you remember the averages in October

of 2002? The Dow was below 9,000. Nasdaq and S&P were pale shadows of their pre-dot-com-bust days.

The local tragedy for me is that I know two people who are living off investments. One has big chunks of Wachovia and Washington Mutual in her portfolio. Each is 'eating their seed corn'. Precipitous dives will mean that each will plow through the seed corn and start eating the containers as well.

[Maeve]

49. That's about the time I started following the market

Yeah, I lost a lot of retirement money in the bust (bad planner and an imbalanced portfolio that was never re-balanced) We've recovered, but we have the time to do so. This could be Enron Redux for folks like your friends--all those people who believed the company's lies and thought they had found the "coming thing" that would never go broke.

[AnneD]

169. I rebalance my portfolio every 6 months or so....

I tend to be an aggresive risk taker so I have really been sitting on my hands for the last year and a half.....But I have been checking out other potential investments so all is not lost. My index funds and my 'plain vanilla' guarenteed saving look REAL good at the moment (I have a 15 year time horizon). I am still so far ahead in my overseas emerging market as to not be worried. I'll be able to rest my head tonight and not worry. Applied knowledge is the key folks. A sprinkling of good luck helps but now is the time to start looking for those gold nuggets.

[UpInArms]

57. here's a chart of numbers - Oct 2002 is not on it though

 Top percentage falls in the Dow Jones industrial average (.DJI: Quote, Profile, Research)
 
 Date             Percentage    1 week later    1 month later
 Oct 19 1987       -22.6           -8.0        -2.3
 Oct 26 1997        -8.0            1.0        -1.9
 Jan 8 1988         -6.9            2.1        -0.8
 April 14 1988      -4.8            0.1         1.9
 Oct 13 1989        -6.9            0.2         0.03
 Oct 27 1997        -7.2            3.1        -1.8
 Aug 31 1998        -6.4            5.0        -2.7
 April 14 2000      -5.7            0.1         1.9
 Sept 17 2001       -7.1            4.5        -1.6
 July 19 2002       -4.6            1.0         2.4
 Top percentage falls in the S&P500 (.SPX: Quote, Profile, Research)

[raccoon]

78. Thank you, Maeve. nt

[JCMach1]

107. If you have cash on the table, there are buying opportunities on the way down

just won't be buying anything with real estate exposure

[UpInArms]

45. Afghanistan and Iraq boost BAE profits

http://business.guardian.co.uk/story/0,,2145724,00.html

Arms maker BAE Systems yesterday delivered sharply higher profits helped by what it called the "high tempo" of British and American military operations in Iraq and Afghanistan.

Its land systems business had been boosted by "numerous urgent operational requirement orders" for Bulldog FV430 and Warrior armoured cars from the British Army alongside a series of orders for small and medium calibre ammunition.

In the US, the company said it had received a number of additional Pentagon contracts for recovery and fighting vehicles worth £241m in the first half of the year. Its position across the Atlantic has been strengthened by the acquisition of utility vehicle and armour maker Armor Holdings. "The high tempo of military operations continues to generate growth in requirements for land systems in support of US and UK armed forces deployed on overseas operations," BAE said in a statement. Half-year figures from the group showed sales at its land and armaments business, excluding currency movements, had risen 43%.

Overall operating profits for the company, which makes fighter aircraft, warships, nuclear submarines and missiles as well as fighting vehicles, rose from £540m to £643m on sales up by some £515m to £6.9bn. The order book rose £1.5bn to £31.7bn. "Interims have massively exceeded market expectations," Numis analyst Clive Forestier-Walker said in a research note.

BAE is under investigation in Britain by the Serious Fraud Office over a number of arms deals and in June the US department of justice said it had begun a formal investigation into the group's compliance with anti-corruption laws, including the Al Yamamah contract with Saudi Arabia.

...more...

[UpInArms]

48. Yesterday's Lie: Bush says markets can withstand credit concerns

yeah - that's why the Fed and every other central bank is throwing taxpayer dollars at the market :eyes:

http://www.reuters.com/article/businessNews/idUSN0911020070809?feedType=RSS&feedName=businessNews

WASHINGTON (Reuters) - President George W. Bush said on Thursday that U.S. economic fundamentals were strong despite a housing downturn and financial markets were well-positioned to work through credit worries that jolted global markets.

Echoing comments he made a day earlier, Bush said low inflation, a strong job market and global economic growth were helping to support the U.S. economy, and that markets had enough cash to allow them to function efficiently.

"The fundamentals of our economy are strong," Bush told reporters. "I'm told there is enough liquidity in the system to enable markets to correct."

Bush did not directly address Thursday's turbulence in global financial markets after French bank BNP Paribas (BNPP.PA: Quote, Profile, Research) froze payments on three funds exposed to the U.S. subprime mortgage sector, sparking fears of a credit squeeze.

The mortgage market has been hurt by soaring default and foreclosure rates, particularly among borrowers with poor credit histories, as credit terms have tightened and house prices have cooled after a five-year boom.

Several banks and hedge funds that bought securities tied to troubled mortgages have disclosed heavy losses, prompting many lenders to shy away from riskier deals and making it harder for some borrowers to get money.

Bush acknowledged problems in the housing market but repeated his view, which he had expressed a day earlier, that the market was likely to experience a "soft landing."

...more...

[UpInArms]

84. Lies Redux: Bush touts strong economy as markets churn

http://www.marketwatch.com/news/story/bush-touts-strength-us-economy/story.aspx?guid=%7BF2502222%2D32B7%2D46EC%2D82A2%2D24A976C1A285%7D

WASHINGTON (MarketWatch) -- The White House struggled for a second straight day on Thursday to respond to sharp losses in stock markets.

Seeking to reassure investors, President Bush emphasized the health of the nation's economy.

The U.S. economy remains "the envy of the world," enjoying low unemployment and inflation, Bush said during a news conference at the White House.

"I am told there is enough liquidity in the system to allow markets to correct," Bush said.

The European Central Bank and the Fed injected some $150 billion in liquidity earlier Thursday. See related story.

But Bush ruled out a leading Wall Street short-run proposal for Washington to come to the rescue of the housing market. The idea would be to allow Fannie Mae (FNM : 67.81, +1.88, +2.9% ) and Freddie Mac (FRE : 63.02, +1.35, +2.2% ) to buy more loans to help prop up the mortgage markets.

...more...

[UpInArms]

137. Bush, advisers monitoring markets-White House

http://www.reuters.com/article/bondsNews/idUSN1023678120070810

KENNEBUNKPORT, Maine, Aug 10 (Reuters) - U.S. President George W. Bush and his advisers are keeping close watch on the financial markets and believe the economy's fundamentals are strong, the White House said on Friday amid growing concerns of a global credit crunch.

"I can assure you that there are many of the president's advisers who are keeping a very close eye on all of the market activity and making sure that policies are put in place to keep our economy strong and growing," White House spokeswoman Dana Perino told reporters.

World markets have been rocked this week by news of widespread problems at banks and hedge funds exposed to investments in the U.S. subprime mortgage market, provoking fears of a choking-off of the the cheap credit which has fueled growth in recent years.

"What the president said (on Thursday) and what he is briefed on is that the fundamentals of the economy are strong," Perino said.

...more...

[harun]

157. Too bad he isn't as concerned with people losing their houses

as he is with the markets.

[AnneD]

170. And THIS is a suprise?

He hasn't given a rat's ass about the plight of the common folk since Daddy pulled strings to get him into the Air National Guard.

[ozymandius]

50. “ARM”ageddon As Subprime Financial Dominos Fall

http://www.marketoracle.co.uk/Article1779.html
By Ty Andros

The dominos have begun to fall, look for it to cascade into the fall as markets reprice the normalization of credit conditions, and CURTAIL the most risky and foolish lending practices. Cov lite, LBO's, private equity and CDO/CMO paper is dead until the deals are priced in a manner that secures lenders interests in a RATIONAL manner, as they should be as they are just SUBPRIME on a gargantuan scale. I love it as volatility is opportunity for the prepared investor. Volatility rose from 1997 till the high in 2000 and the markets did fine. After several weeks of market turmoil it's time to look at the factors that are the catalyst to this market sell off. It's not over by a long shot but some curious things are happening and I want to inform you of them.

I have resisted talking about sub prime problems for a long time as so many others were covering the issue. Longtime readers know the term “ARM”ageddon was coined in October 2005 in reference to what is unfolding since early this year by yours truly, Mr. metaphor. It's got a long way to run with the ultimate market resolution slated for the fall of this year at which time it should be fully priced into the market.

-cut-

Last week Wells Fargo raised the rate on a jumbo mortgages in California to 8% from 6.75%, Jumbos are loans over $417,000, is there any property in California less than $417,000, not many. Even the smallest homes are priced above this figure. Many people that qualified at 6.75% are not qualified at 8%, this is a big problem. I believe they may have to have a EMERGENCY dropping of rates to facilitate the refinancing of the ARM's, don't be surprised if it is up to two full points lower by January when the refi Tsunami really starts to unfold. Just so these people are qualified to roll into a fixed mortgage. MORAL HAZARD writ large.

-cut-

WOW. This must be addressed and the lower home prices fall the bigger the mess, can you say lower interest rates to make these STUCK speculators qualified to roll? Hedge fund HOUSEHOLD's with no bidders for the properties at present prices. The only thing that can save them is the thing that got them into trouble, mispriced interest rates below the rate of inflation . Thank you Alan Greenspan, his legacy is a federal reserve that must follow his prescription of throwing money at the problem. They are cornered.

These numbers look very bad, but keep in mind the Federal Reserve Regularly creates money at a pace of 30 BILLION a week, so you can expect a lot of business to roll into the people who print the money. Expect emergency authorizations to expand Fannies and Freddie loan books so these people can stay in their homes and avoid the debacle to the financial system. THEY WILL PRINT THE MONEY! And give it to Freddie mac and Fannie mae and by extension to the home owners. And who gets the bill? YOU. You insure the risk through Fannie mae and Freddie macs implied guarantees and from the money you hold in the bank as when they print it it is worth equivalently LESS. It's called work outs, and the banks have to do it as well, another reason interest rates MUST fall to bolster the bottom lines of the banks. To cushion the balance sheet bombshells they are holding. It ultimately translates into INFLATION.

[PassingFair]

56. "It ultimately translates into INFLATION."

The question is:

How long can "ultimately" be staved off?

Seems like they can control the system, like a
continuous loop. The whole world is CAUGHT in
it... or IS it?

What if it is a giant game of musical chairs,
but they keep making enough cheap chairs to
keep the game going indefinately.....

[ramapo]

95. ARM Fantasyland

I am absolutely astounded that grown adults could enter into an ARM without considering how they would pay it when (not if) rates rose. If you can't handle the payment increase caused by at least the first rate adjustment, then you have no business taking out the loan. Maybe that means you don't buy a house. So be it, that might help dry up some demand and prices would perhaps drop out of the stratosphere.

We had an ARM way back in the '80s as it was the only way we could afford to buy as rates where coming down from the upper teens. Our loan had a "bargain" rate of 8.25% which adjusted up two points on the first anniversary. We made sure that we could handle that before going ahead and buying the house.

The idea of fiscal prudence has evaporated and we're now seeing the result.

[RussBLib]

52. Don't panic at the market open today

It will be very, very ugly. Don't lose your head. Don't panic. I get the feeling that Bush wants everyone to panic.

[spotbird]

54. Catastrophe often causes panic

I won't panic for myself, but I have relatives who believe the stock market is rock solid.

Why to you think Bush wants panic? To get people to sell the little the have left?

[UpInArms]

59. nervous pre-opening blather

09:15 am : S&P futures vs fair value: -14.8. Nasdaq futures vs fair value: -18.8. Choppy trading has the futures market retracing its best levels again, but the stage remains set for another day of widespread losses. Evidently the market isn't overly convinced that the Fed's latest move to ensure liquidity to the financial markets, by announcing a 3-day repurchase agreement (repo) in which it is accepting $19 bln in mortgage-backed debt as collateral, will solve the root problem or end the fears about ongoing problems in the credit markets.

09:00 am : S&P futures vs fair value: -18.5. Nasdaq futures vs fair value: -24.8. Still shaping up to be another round of broad-based selling as the recent bounce in both the S&P 500 and Nasdaq 100 futures is short lived. Since credit risk exposure remains impossible to quantify, and the Financial sector is representative of so much influence on an S&P 500, the expected absence of its influential leadership is likely to again be the biggest thorn in the market's side.

Exacerbating the aversion to own financial stocks has been more negative news out of Countrywide Financial (CFC). The stock is tumbling 16% in pre-market action after management said "unprecedented disruptions" in the mortgage market pose a threat to its financial condition.

[ozymandius]

60. at the open

9:30
Dow 13,235.15 Down 35.53 (0.26%)
Nasdaq 2,529.86 Down 26.63 (1.04%)
S&P 500 1,450.05 Down 3.04 (0.21%)
10-Yr Bond 4.744% Down 0.046
NYSE Volume 30,438,000
Nasdaq Volume 52,046,000

[Buttercup McToots]

65. @ open down 127

gold going up though...

[ozymandius]

63. signing off for now

I need to go earn a few pennies helping someone with their ailing computer. I'll check back this afternoon.

Ozy :hi:

[UpInArms]

64. bye Ozy! have a great day

and come back and see what happens

:hi:

[UpInArms]

69. 9:46 EST - off its lows and getting better

Dow 13,127.61 143.07 (1.08%)
Nasdaq 2,523.24 33.25 (1.30%)
S&P 500 1,433.43 19.66 (1.35%)
10-Yr Bond 4.742% 0.048

NYSE Volume 337,193,000
Nasdaq Volume 230,421,000

[UpInArms]

75. 9:57 EST and those botox injections seem to be working!

Dow 13,184.10 86.58 (0.65%)
Nasdaq 2,532.22 24.27 (0.95%)
S&P 500 1,442.53 10.56 (0.73%)
10-Yr Bond 4.738% 0.052

NYSE Volume 557,635,000
Nasdaq Volume 358,632,000

presaged, continued fears of a possible credit crunch arm the bears with more ammunition to take stocks even lower... again. Since growth stocks are greatly impacted borrowing difficulties, the Nasdaq has been hit the hardest, opening down more than 1.0%. Tech is down 1.1%.

As NYSE-listed banks, brokers, and mortgage lenders open, however, it's becoming apparent than another day of weakness in the heavily weighted Financial sector (-1.4%) will remain the bulls' biggest obstacle hindering recovery attempts.

With regard to lingering credit jitters, the Fed has stepped in yet again to provide liquidity to help stem the bleeding, but so have central banks around the globe, marking a concerted effort -- the first since the aftermath of the 9/11 terrorist attacks -- that merely validates the contagion effect and suggesting things may get worse before they get better. DJ30 -128.79 NASDAQ -33.03 SP500 -15.59 NASDAQ Vol 102 mln NYSE Vol 68 mln

[Roland99]

76. 10:07am - Or maybe not...

Dow 13,153.38 -117.30
Nasdaq 2,523.59 -32.90
S&P 500 1,437.37 -15.72
Oil $70.40 $-1.19
10 YR 4.74% -0.05
Gold $675.50 $2.70

[UpInArms]

79. 10:14 EST Ride my seesaw (tuning up :)

Dow 13,170.12 100.56 (0.76%)
Nasdaq 2,524.77 31.72 (1.24%)
S&P 500 1,439.95 13.14 (0.90%)
10-Yr Bond 4.748% 0.042

NYSE Volume 801,351,000
Nasdaq Volume 533,449,000

[UpInArms]

80. 10:29 EST markets eat close to $50 billion in taxpayer injections

Dow 13,114.52 156.16 (1.18%)
Nasdaq 2,514.69 41.80 (1.64%)
S&P 500 1,435.88 17.21 (1.18%)
10-Yr Bond 4.748% 0.042

NYSE Volume 1,020,051,000
Nasdaq Volume 671,387,000

10:00 am : The indices are bouncing off opening lows that had them down more than 1.4% on average; but it remains to be seen if this latest dip and subsequent buying opportunity has any legs. As evidenced by the S&P 500 seeing the biggest improvement, the Tech sector (-0.5%) more than halving its recent decline, led by a turnaround in semiconductors, and the Financial sector (-0.8%) paring a good part of its losses as well, are offering some much needed relief.

Both sectors account for more than one third of the total weighting on the broader market. However, the Industrial sector, which holds an influential 11.4% weighting, is still down about 1.4% to lead the way among all 10 sectors trading in negative territory. DJ30 -86.98 NASDAQ -24.28 SOX +0.2% SP500 -10.56 NASDAQ Dec/Adv/Vol 2000/604/282 mln NYSE Dec/Adv/Vol 2444/319/142 mln

[Roland99]

82. 10:40am - Down over 200

Dow 13,067.78 -202.90
Nasdaq 2,503.17 -53.32
S&P 500 1,431.12 -21.97
Oil $70.55 $-1.04
10 YR 4.73% -0.06
Gold $679.30 $6.50

[AngryAmish]

74. Buy in the last hour of trading

This advice is worth exactly what you paid for it. I just think stocks are undervalued because many derivatives and bonds are illiquid right now, so folks are selling their liquid assets (stocks) to make their margin calls, etc. So I think the price of stocks are down for reasons external to the stock market, making them a bargain.

Of course I won't follow that advice because daily buying and selling is not my game (and should not be except for professionals, but that is another story).

[Buttercup McToots]

89. 2nd pump coming up

Trump sez Ben's gotta cut rates...

What do you think Ben's doing right now?
Think he's in the bathroom?

[roamer65]

92. Bernanke cuts rates and this could head into the currency markets.

He can't play with rates too much, or that yen carry trade could go into full reversal.

[fedsron2us]

176. Choose your nightmare

A credit crunch due to the problems associated with mortgage backed credit derivatives or one due to a disorderly unwind of the carry trade that has been financing the whole ponzi scheme for years. The latter is likely to be harder, faster and more difficult for Central Banks to control than the former. My fear is that Bernanke and company are going to end up giving us both catastrophes one after the other.

This disaster would not have happened if the financial system had been better regulated and if those involved did not constantly try and cheat the pricing mechanism of the market. The problem is that everyone has been trying to rig the game whether it is western investment banks inflating the value of credit derivatives or Asian governments artificially suppressing the value of their currencies.

[OrangeCountyDemocrat]

93. Fed Fucking Things Up Further With 2nd Injection Of Money

No mention that I've heard yet as to the actual amount.

[Buttercup McToots]

101. CNCB just said...

if the 2nd pump doesn't stablize things...that the
FED might do a 3rd dump...

Wild times here...

[UpInArms]

90. 10:55 EST with systemic market risk blather

Dow 13,087.61 183.07 (1.38%)
Nasdaq 2,513.64 42.85 (1.68%)
S&P 500 1,434.16 18.93 (1.30%)
10-Yr Bond 4.744% 0.046

NYSE Volume 1,417,759,000
Nasdaq Volume 890,800,000

10:30 am : Per usual, the market's latest recovery has been with an even bigger wave of selling pressure. As evidenced by the floor recently falling out of the Financial sector, which is now down 1.6% and slipping, there's no question that more evidence to suggest the possibility of growing credit concerns leading to a systemic risk for the market remains a concern for equity investors.

CNBC is reporting that there is a significant forced liquidation going on at a big risk-arbitrage hedge fund. That news has prompted a renewed sense of uncertainty and leaves the indices flirting with fresh session lows. DJ30 -156.16 NASDAQ -43.24 SP500 -18.61 NASDAQ Dec/Adv/Vol 2067/678/542 mln NYSE Dec/Adv/Vol 2464/580/380 mln

[MattSh]

91. Fed May Drop Rates Within Next Week -- Merrill Lynch

The U.S. Federal Reserve may be forced to perform an emergency inter-meeting rate cut within the next week, according to Merrill Lynch analyst Joseph B. Shatz. Shatz told clients in a Thursday note Fed Funds futures point to a significant possibility that the Fed will drop its target rate from a current 5.25% due to a spat of recent concerns over global liquidity, including a move by the European Central Bank to inject €151 billion into European money markets over the past two days.

http://usmarket.seekingalpha.com/article/44157?source=d_email&u=59096

And around and around we go.....

[JNelson6563]

96. Help! My eyes are bleeding!

Most be from all those sharp, pointy cliffs on the charts. Oy!

Julie--watching how shiney, pretty gold is going up

[UpInArms]

98. morning, Julie!

hope you're strapped in tight - looks like today will be a wild ride

:D

:hi:

[JNelson6563]

150. It's a mad, mad, mad, mad world!

Hang on tight! :hi:

Julie

[Maeve]

103. Heya, Julie! Come along for the ride, huh?

We have to stop meeting like this--about the only time you and rad and I all show up, it's because someone let the dogs out (woof!)

[JNelson6563]

151. Hey there "Old Timer"!

Great to see you Maeve, I hope it's all good in your world! :hi:

Julie

[UpInArms]

97. 11:06 EST here's the pump - moving straight up now

Dow 13,161.50 109.18 (0.82%)
Nasdaq 2,533.77 22.72 (0.89%)
S&P 500 1,441.06 12.03 (0.83%)
10-Yr Bond 4.742% 0.048

NYSE Volume 1,574,947,000
Nasdaq Volume 999,841,000

11:00 am : Selling remains the name of the game as the indices continue to struggle to find a bottom. The Financial sector (-1.3%) has come off its recent lows, but the Industrial sector now down a worrisome 2.4% further underscores the lingering worries that subprime woes and tightening credit conditions will lead to slower economic growth.

Exacerbating to the market's struggles over the last hour have been the Dow, S&P 500 and Nasdaq's inability to find support above key technical levels of 13135, 1439, and 2516, respectively. DJ30 -189.57 NASDAQ -45.06 SP500 -19.52 NASDAQ Dec/Adv/Vol 2259/598/842 mln NYSE Dec/Adv/Vol 2651/497/622 mln

[UpInArms]

99. 11:03 Fed takes 2nd action adding add'l $16 Billion liquidity into banking system

01. Fed repurchase agreements target mortgage-backed securities
11:06 AM ET, Aug 10, 2007 - 4 minutes ago

02. Fed takes second action to liquidity into banking system
11:03 AM ET, Aug 10, 2007 - 7 minutes ago

03. Fed accepts $16 billion in three-day repurchase agreements
11:02 AM ET, Aug 10, 2007 - 8 minutes ago

here's the first one:

17. Fed: discount window available as funding source
9:15 AM ET, Aug 10, 2007 - 1 hour ago

18. Fed to provide reserves as needed to keep rates near 5.25%
9:15 AM ET, Aug 10, 2007 - 1 hour ago

19. Fed: 'providing liquidity' to facilitate orderly markets
9:15 AM ET, Aug 10, 2007 - 1 hour ago

(edited to show amount of 2nd injection in title line)

[roamer65]

100. Be interesting to see how fast they eat through this injection.

Straight down again when its gone, IMHO. If there are any non-believers in the PPT (Plunge Protection Team), please now step forward.:rofl: :popcorn:

[Buttercup McToots]

102. I agree...

I wish I had a sandwich...

[UpInArms]

104. here ya go!

[Buttercup McToots]

111. Hey Thanks...

That looks yummy...

[UpInArms]

106. 11:25 EST and starting to fall over again

Dow 13,147.36 123.32 (0.93%)
Nasdaq 2,529.50 26.99 (1.06%)
S&P 500 1,440.86 12.23 (0.84%)
10-Yr Bond 4.748% 0.042

NYSE Volume 1,822,730,000
Nasdaq Volume 1,180,219,000

looks like they're about half-way through that $16 billion now - should be all gone by noon (EST)

[Paulie]

108. As of this writing

IBM is up over 2 but the DOW is down 150. If IBM was going the other way, how much uglier would it be?

[Hawkeye-X]

116. Give you 2-1 odds it'll go down like a $0.05c whore

No offense to the whores out there.

We're looking at inflation for sure, and my feelings is that about 35% of the mortgage companies who has heavy loads will eventually go bankrupt.

Thanks Chimp!

[Hugin]

109. Hey! Where's *MY* cash injection?

I'm starting to get the shakes, man.

It'll only take a couple hundred thousand.

[Mojorabbit]

105. SEC combing Wall St books for subprime losses

http://biz.yahoo.com/rb/070810/sec_banks_inquiry.html?.v=6



Reuters
SEC combing Wall St books for subprime losses
Friday August 10, 10:36 am ET


NEW YORK (Reuters) - U.S. regulators are scrutinizing the books of Wall Street's largest investment banks amid questions they are hiding losses from subprime mortgages, people familiar with the inquiry said.


The Securities and Exchange Commission wants to see whether firms are calculating the value of subprime-mortgage assets on their books the same way they calculate those values for their brokerage clients, such as hedge funds.

Analysts and investors have raised questions whether there are unreported losses from subprime-mortgages and collateralized-debt obligations, or CDOs.

The regulatory checks are expected to include Wall Street's five biggest investment banks, starting with Goldman Sachs Group (NYSE:GS - News) and Merrill Lynch & Co. (NYSE:MER - News). Goldman Sachs and Merrill Lynch declined to comment.

People familiar with the inquiry, first reported by the Wall Street Journal Friday, played down the checks as routine.

[Buttercup McToots]

112. 48 @ 12:14...coming back

but for how long?

[UpInArms]

117. 12:23 and everything is coming up roses!

Dow 13,275.07 4.39 (0.03%)
Nasdaq 2,564.03 7.54 (0.29%)
S&P 500 1,457.48 4.39 (0.30%)
10-Yr Bond 4.75% 0.04

NYSE Volume 2,485,818,000
Nasdaq Volume 1,647,981,000

12:21

Dow 13,254.58 16.10 (0.12%)
Nasdaq 2,559.45 2.96 (0.12%)
S&P 500 1,455.28 2.19 (0.15%)
10-Yr Bond 4.754% 0.036

NYSE Volume 2,466,160,000
Nasdaq Volume 1,611,954,000

[Hugin]

118. Nothing to see here... Move along.

DJIA 13272.38 +1.70 +0.01%
NASDAQ 2565.08 +8.59 +0.34%
S&P 500 1459.87 +6.78 +0.47%

[Roland99]

121. Fed pumped another $16 billion. $35 BILLION total TODAY!

http://www.marketwatch.com/news/story/market-snapshot-stocks-attempt-rebound/story.aspx?guid=%7BAC186060%2DBBBD%2D462D%2D923E%2D0259425CC7C4%7D&dist=hplatest

[Hugin]

123. *urp*

Index Last Change % change
• DJIA 13218.00 -52.68 -0.40%
• NASDAQ 2545.27 -11.22 -0.44%
• S&P 500 1451.91 -1.18 -0.08%

[UpInArms]

125. with yesterday's $24 Billion, that makes $59 Billion lost taxpayer dollars

so that the CEOs could keep their bonuses and golden parachutes and oversized pay packages.

[wordpix]

129. very good statement, thanks, beautifully said. Bush's buds have clout so they won't go down

[wordpix]

127. and where'd the Fed get that $$? We have an $8.5 Trill. deficit so where's the $ from? China? SA?

UAE? Where?

It sure isn't coming from US 'cause we don't have it. First priority, though, is to pump up Big Oil stocks and the rest. :puke:

[Hugin]

130. It's probably coming from my retirement fund...

or Road Maintenance...

or Medicare...

But, NOT FROM THE WAR FUNDING.
or
Taxing those 'haves' they keep babbling on about, fer gosh sakes... NO!

[UpInArms]

131. a printing press (or, today, its electronic equivalent)

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

Deflation: Making Sure "It" Doesn't Happen Here

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system--for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

[Neshanic]

143. Third injection of cash with Xanax from government ATM. 3 Billion. Markets jonesing for a rate cut.

[DemReadingDU]

152. CNBC link for 3rd injection

Fed Adds Funds to Financial System For Third Time With $3 Billion


The Federal Reserve added $3 billion of funds to the U.S. financial system, making the third injection of reserves for the day and bringing the Friday total to $38 billion.

The central bank, trying to keep the benchmark federal funds rate around the target 5.25%, began with a $19 billion injection early Friday, followed by $16 billion in mid-morning and $3 billion in early afternoon.

The Fed said earlier Friday that it will provide "reserves as necessary" to "facilitate the orderly functioning of financial markets."

Financial markets in the United States and around the globe have been shaken by fears about spreading credit problems that started with home mortgages for those with tarnished credit histories. Investors are worried that these problems will infect the larger financial system and possibly hurt the U.S. economy.

http://www.cnbc.com/id/20211772

[UpInArms]

114. 12:18 EST and almost all better!

Dow 13,222.88 47.80 (0.36%)
Nasdaq 2,550.36 6.13 (0.24%)
S&P 500 1,452.24 0.85 (0.06%)
10-Yr Bond 4.752% 0.038

NYSE Volume 2,416,513,000
Nasdaq Volume 1,573,924,000

12:00 pm : The market is trading sharply lower for a second straight day as fears of a possible credit crunch continue to mount.

Growing liquidity concerns across the pond prompted the ECB to inject another $83 bln into money markets. Instead of soothing a nervous market, however, the ECB's latest infusion contributing to a concerted effort among central banks around the globe -- the first since the aftermath of the 9/11 terrorist attacks -- appears to be confirming the worst and suggesting the contagion effect may get worse before it gets better.

The major European bourses fell 2.6% on average, matching yesterday's average pullback on the Dow, S&P 500, and Nasdaq. Japan's Nikkei 225 fell 2.4%; the Hang Seng plunged 2.9%.

Here in the U.S., the Fed funds rate opened at 6.00% in New York, well above the central bank's 5.25% target. That contributed to the Fed pledging to provide a similar liquidity infusion after saying some banks may experience "unusual funding needs." The Fed subsequently spent $19 bln on three-day repurchase agreements (repos) in mortgage-backed securities and recently said it bought an additional $16 bln. The knee-jerk reaction in equities was positive, but not reassuring enough to leave investors convinced that the Fed's latest move will ensure there's enough liquidity to stem the bleeding.

Since credit risk exposure remains impossible to quantify, and the Financial sector (-0.8%) is representative of so much influence on an S&P 500, the absence of its influential leadership is again acting as an overhang. Exacerbating the aversion to own financial stocks has been more negative news out of Countrywide Financial (CFC 26.24 -2.42). The stock has plunged 8% after management said "unprecedented disruptions" in the mortgage market pose a threat to its financial condition.

Industrials (-1.1%), however, ranks as the worst performer among the 10 sectors losing ground. It's weakness further underscores the growing fears that unquantifiable subprime problems and tightening credit conditions will lead to slower economic growth. DJ30 -121.94 NASDAQ -20.23 SP500 -11.48 NASDAQ Dec/Adv/Vol 1935/998/1.37 bln NYSE Dec/Adv/Vol 2401/851/1.04 bln

11:30 am : Stocks spiked higher at the top of the hour as investors rallied around news that the Fed has bought an additional $16 bln in three-day repurchase agreements (repos) in mortgage-backed securities. Earlier, the Fed bought $19 bln. While none of the indices turned positive, the news initially helped lift the Dow and S&P 500 to their best levels of the morning.

However, participants have also almost as quickly reiterated their lack of conviction that this latest infusion will provide enough liquidity "to facilitate the orderly functioning of financial markets." Not even the fed funds rate finally getting back to the Fed's 5.25% target rate, from around 5.37%, has been stimulating enough to keep a small bid in equities. DJ30 -123.40 NASDAQ -27.71 SP500 -12.72 NASDAQ Dec/Adv/Vol 1979/910/1.13 bln NYSE Dec/Adv/Vol 2354/839/848 mln

[Demeter]

115. It's Amazing That They Publicize Their Interventions

I thought that the whole PPT stuff was supposed to be invisible magic, so the markets wouldn't react. So much for magic.

[UpInArms]

126. 12:49 EST Gravity proving that what goes up must come down

Dow 13,186.62 84.06 (0.63%)
Nasdaq 2,539.71 16.78 (0.66%)
S&P 500 1,448.66 4.43 (0.30%)
10-Yr Bond 4.772% 0.018

NYSE Volume 2,779,219,000
Nasdaq Volume 1,845,498,000

12:30 pm : The afternoon session has begun on a much better note for the bulls than the afternoon session did as the major indices are in rally-mode, fueled by leadership from the technology sector.

The S&P 500 for its part has recovered the entirety of a 23-point decline and then some in a move that is no doubt prompting some short-covering activity. The Dow, meanwhile, has rallied all the way back from a 212-point deficit while the Nasdaq has said good-bye to a 53-point loss.

The rebound effort is striking to say the least. We suspect it is owed to the notion that the Fed may soon be cutting interest rates. The market has certainly gotten ahead of itself on that idea before, but for the time being, it's a thought at least that is offering a measure of support.DJ30 +15.20 NASDAQ +2.99 SP500 +6.29 NASDAQ Dec/Adv/Vol 1736/1220/1.59 bln NYSE Dec/Adv/Vol 2159/1099/1.13 bln

[roamer65]

128. So much for that $16 billion.

:popcorn:

[Buttercup McToots]

132. Down 100

@ 1:00 pm...

[UpInArms]

133. Bear Stearns hires law firm to probe fund losses

http://www.reuters.com/article/bondsNews/idUSN1021648820070810

NEW YORK, Aug 10 (Reuters) - Bear Stearns Cos. (BSC.N: Quote, Profile, Research) has hired a law firm to conduct an inquiry into its two collapsed hedge funds tied to risky home loans, a person at the law firm said on Friday.

The firm Davis Polk & Wardwell was hired by the audit committee of the investment bank's board of directors to investigate the funds' stakes in the subprime mortgage markets, said the law firm representative, who asked not to be named.

Davis Polk partners Robert Fiske and Lawrence Portnoy will head up the probe, this person said.

A Bear Stearns representative was not immediately available for comment.

Bear Stearns' shares, and its reputation, have been hurt by the collapse of two of its hedge funds, which made large, wrong-way bets on securities underpinned by mortgages to people with poor credit. Defaults by such borrowers have surged.

...more...

[Hugin]

134. Ah, the bony wizened finger 'o blame...

:popcorn:

[AnneD]

172. Hey...

pass the popcorn....I got a six pack :toast: Are you sure there is enough blame to go around? (she asked rhetorically)

[UpInArms]

135. Another in Trouble (Renaissance?): Hedge Fund Fiasco Growing In Breadth, Depth

http://www.finalternatives.com/node/2287

It’s not 1929, exactly, but hedge fund managers might be forgiven for the hyperbole.

The carnage and catastrophe wrought by the collapse of the sub-prime market continue to hit hedge funds particularly hard. And hedge fund misery is now spreading to previously immune sectors of the market.

Quantitative funds, in particular, are having a rough go of it. Previously untouchable names, including Goldman Sachs’ Global Alpha and Renaissance Technologies are taking big hits, with the former down about 16% this year, and the latter dropping 7% in just the first few days of August. Highbridge Capital Management’s $15 billion multistrategy fund is down 4% this month already, and some of Tykhe Capital’s share classes are down between 17% and 31% through Aug. 9.

Goldman’s troubles, however, are no longer limited to the erstwhile Cadillac of Hedge Funds. Its North American Opportunities Fund, an equity market-neutral vehicle, was down 15% through July 27, before the market bloodbath of the last several days. The once $767 million was down 11% in July. And the troubles in its hedge funds are no longer Goldman’s alone.

Both North American Opportunities and Global Alpha have been selling positions, contributing to the downward spiral in equities markets. Sources told Financial News that Goldman, hit with a massive redemption request—unloaded some $9 billion in positions. Its moves, along with those of other troubled hedge funds, sent large-cap names into a tailspin yesterday.

...more...

[UpInArms]

136. Hedge Fund Managers 'suffering' as quant similarities revealed

http://www.finalternatives.com/node/2287

Computer-driven funds, including Renaissance Technologies, considered one of the best in the world, are believed to have lost heavily almost across the board this week.


Bankers said quantitative funds run by Tykhe Capital, another US hedge fund manager, are down 20% for August so far, while JP Morgan's Highbridge Capital Management has lost 6% in its statistical arbitrage fund. Bankers said DE Shaw is down 5% while State Street Global Advisors has also lost money in its quantitative equity strategies this week. Renaissance is down 3% so far this month.

Tykhe, Highbridge, DE Shaw and SSgA were not available for comment.

A spokesman for Renaissance, whose institutional fund is one of the largest quantitative hedge funds with $27bn (€20bn) of assets under management, said: "Markets have been up and down and a lot of people are deleveraging. It has not been pleasant but it is not a disaster."

A hedge fund manager specialising in managed futures, which relies on computer models to make investment decisions in the commodity and currency derivative markets, said: "Quantitative equity managers are being massacred this month, losses are 5% to 10% and more. I'm told someone has been liquidating positions in one of their funds, but these quant managers are all supposed to be doing different things and now they all appear to be correlated."

...more...

[UpInArms]

146. Renaissance hedge fund down 7 pct - letter says: has "not had good luck during these last few days"

http://www.reuters.com/article/bondsNews/idUSN1022108520070810

NEW YORK, Aug 10 (Reuters) - The Renaissance International Equities Fund, a $26 billion-plus hedge fund managed by mathematician James Simons, is down "in the order of 7 percent" for the year through Aug. 8, according to a letter the fund sent to investors on Thursday.

Renaissance, one of the largest "quantitative" hedge funds, told investors that it has "not had good luck during these last few days." It said it has been "caught in what appears to be a large wave of de-leveraging on the part of quantitative long-short hedge funds."

It also said results for July were "quite disappointing," with returns down between 4 percent and 4.5 percent, according to the letter. (Reporting by Dane Hamilton)

[Demeter]

138. Let Me See If I Understand This

So, some people and companies bought bad collateralized securities. These securities are worthless. So these vicitms sell their stocks to raise cash to meet immediate cash flow needs.

As a result, the market plummets.

The victims now have no assets, or reduced assets, because some of the assets are worthless paper, and the rest are sold for cash.

Now the government and the Federal Reserve go out and print more money, reducing the purchasing power of the cash these vicitms just sold their assets to raise.

But it takes a while for inflation ot percolate through the system.

So the first people out of the system--out of the markets, out of the cash and into something of enduring or rising value (gold, oil supplies or other hard comodities, or maybe even the stock market, if they pick close to the bottom, or at least, less than what they sold out for) win.

And everybody else loses.

[RUMMYisFROSTED]

160. Perhaps the real winners are those who choose not to play at all.*

*Unless you've got political muscle.

[Demeter]

175. Show me how to live outside the global economy, please? Thanks!

[RUMMYisFROSTED]

182. Here:

[Neshanic]

141. These are just the previews. This September and October the curtain rises on the main attraction.

Resets, and all manner of mayhem will be the plot, with lots of action.

[Neshanic]

142. 3rd injection of cash by the Ministry of Economic Happiness.

[UpInArms]

144. Total Fed injections over 2 days -$62 Billion (that's with a "B")

02. Fed accepts $3 billion in three-day repurchase agreements
1:59 PM ET, Aug 10, 2007 - 7 minutes ago

04. Fed takes third action Friday to add liquidity to markets
1:45 PM ET, Aug 10, 2007 - 21 minutes ago

[Hugin]

148. *hic*

Index Last Change % change
• DJIA 13173.70 -96.98 -0.73%
• NASDAQ 2536.17 -20.32 -0.79%
• S&P 500 1445.79 -7.30 -0.50%

1415 ET.

[Roland99]

155. Stocks still down; third time is not the charm for Fed

Stocks still down; third time is not the charm for Fed
Countrywide says mortgage market trouble serious threatens its bottom line

Stock prices on Friday remained under water after an attempted rebound faltered as three daily injections of liquidity by the Federal Reserve followed like moves by other central banks failed to calm fears of a global credit crisis.


...

Continuing the bad news trend on Friday, Countrywide Financial Corp. (CFC 27.05, -1.61, -5.6%) said its allowance for credit losses climbed 97% from the end of last year. Its stock was off 4.7%. The nation's largest home lender said trouble in the mortgage market seriously threatens its earnings and financial condition. See full story.

...

The Fed on Friday injected a total of $38 billion into the markets in three steps, which began with a $19 billion injection into the banking system, followed by a second addition of $16 billion and finally a third dose of $3 billion.

The Fed's decision to conduct multiple operations could mean "there is a greater strain in the market than is evident" or that the central bank wants to make sure there is enough liquidity in the financial system to help it stabilize, said Crescenzi.

Down down about 100pts at this moment.

[UpInArms]

147. 2:12 EST red numbers with "this is really a crisis" blather

Dow 13,155.16 115.52 (0.87%)
Nasdaq 2,535.28 21.21 (0.83%)
S&P 500 1,443.58 9.51 (0.65%)
10-Yr Bond 4.776% 0.014

NYSE Volume 3,548,818,000
Nasdaq Volume 2,340,340,000

2:00 pm : Stocks take a turn for the worse as investors scoff at the Fed's decision to step in yet again, this time adding $3 bln in temporary reserves. At $35 bln (the sum of the first two repos), the Fed had already stepped in more aggressively than its actions following the 9/11 attacks to calm a nervous market.

Since a third injection is unprecedented, as such infusions typically only occur during a crisis, investors are again left wondering just how bad the subprime situation is and questioning whether or not an emergency rate cut would even be enough to avert a possible true credit crunch. DJ30 -116.82 NASDAQ -23.63 SP500 -9.56 NASDAQ Dec/Adv/Vol 1832/1184/2.16 bln NYSE Dec/Adv/Vol 2145/1156/1.63 bln

1:30 pm : The major averages are now trading in split fashion as the market's latest dip fuels another buying opportunity. After recently being down as much as 1.5%, oil prices briefly turning positive has injected new life into an Energy sector (+0.8%) that has lost more than 9% over the last three weeks.

Turnarounds in several other sectors, most notably in Technology (+0.4%) due largely to its lack of exposure to the subprime debacle, are also offering so notable leadership.

Of the seven sectors now in positive territory, resilience on the part of Financials is also noteworthy; but its paltry gain barely places it in positive territory, leaving it vulnerable to a pullback should investors sell into this latest leg of strength. DJ30 -21.22 NASDAQ -3.77 SP500 +1.98 XOI +0.8% NASDAQ Dec/Adv/Vol 1831/1172/2.00 bln NYSE Dec/Adv/Vol 2176/1108/1.50 bln

[roamer65]

149. I agree, rate cuts will do nothing now that the bubble has burst.

All the ECB and Fed can do now is inject cash to ensure a "orderly" liquidation of assets. They must be in there buying the heck out of the mortgage-based securities. Whether we like it or not, those securities have to be converted to cash in order to stop the contagion from spreading.

[Roland99]

156. MarketWatch -- U.S. runs budget deficit of $36.3 billion in July

:O

[RawMaterials]

158. These numbers cant be right look at the volume

Dow 13255.88 -14.80 (-0.11%)
Nasdaq 2546.05 -10.44 (-0.41%)
S&P 500 1456.07 +2.98 (+0.21%)
10-Yr Bond 0.478% -0.01
NYSE Volume 93,354,000
Nasdaq Volume 2,869,083,000

[Roland99]

159. Volume must be off. But, Dow is now to the PLUS side!

Dow 13,279.54 +8.86
S&P 500 1,458.50 5.41
Nasdaq 2,551.82 -4.67
Oil $71.47 $-0.12
10 YR 4.78% -0.01
Gold $681.60 $8.80

[hatrack]

161. Oh, bravo!

At the cost of $60 billion over 24 hours, they've held off a financial crisis for at least 72 hours.

:eyes:

[ozymandius]

163. The damn fools!

A cash injection of this sort is no panacaea. It's more like putting a band-aid on a gushing wound. They're throwing money at it.

[fedsron2us]

164. The Fed is like the band on the Titanic

playing 'Abide With Me' to calm the crowds on the deck as they all wait inevitably to drown.

[Maeve]

166. I think of it more as the stuff the janitor throws down...

It covers the smell, slows the spread of the mess and changes the color so you can't see just what's there.

Of course, someone still has to clean it up...and you know someone lost SOMETHING there...

Y'all try to enjoy the weekend!

[Hugin]

162. Quarter 'till...

Index Last Change % change
• DJIA 13264.58 -6.10 -0.05%
• NASDAQ 2544.66 -11.83 -0.46%
• S&P 500 1455.36 +2.27 +0.16

[A HERETIC I AM]

167. Of the Dow 30, biggest loser and biggest gainer;

GM down 1.00
IBM up 1.91

16 losers, 14 gainers.

Gainers include Boeing, up .14, Proctor & Gamble up .42 Exxon Mobil up .91
Losers include General Electric down .71, Honeywell down .77 and 3M down .89

[PassingFair]

171. Market Watchers: Has there ever been a bail-out of this magnitude before?

Have the banks of the world SPEWED money at this rate
before? Ever?

[UpInArms]

174. one word: unprecedented

and I'm certain that some idiot will say:

Who could have imagined that the subprime overblown housing bubble would ever burst?

[UpInArms]

177. closing numbers and blather

Dow 13,239.54 31.14 (0.23%)
Nasdaq 2,544.89 11.60 (0.45%)
S&P 500 1,453.64 0.55 (0.04%)
10-Yr Bond 4.776% 0.014

NYSE Volume 1,088,374,000
Nasdaq Volume 3,245,889,000

4:20 pm : After yet another bumpy ride, the major averages finished mixed Friday as investors struggled to assess a coordinated effort among central bankers worldwide to dodge a potential crisis in global credit markets.

Following large losses early on, the indices managed to close well off their worst levels and still posted their first weekly advance in nearly a month.

The Dow was down more than 212 points at its lows; meanwhile, the S&P 500, which was off as much as 1.6%, eked out a gain. The Nasdaq, laden with tech names and thought by many to be the most immune to the subprime fallout, lost more than 2.1% of its value at one point before finishing down 0.5%.

Just a day removed from a huge infusion of nearly 95 bln euros ($130 bln), the ECB injected an additional 61 bln euros ($83.6 bln) to hopefully soothe an increasingly risk-averse market. Such efforts, however, fed concerns that the European banks' exposure to the subprime debacle is much larger than anticipated. The major European bourses plunged 2.8% on average, exceeding Thursday's average pullback on the Dow, S&P 500, and Nasdaq.

Even the Bank of Japan added liquidity, which also added to concerns about a contagion effect related to the subprime fallout in the U.S. This marked the first time since the aftermath of the 9/11 terrorist attacks that so many central banks around the world worked in tandem to inject their banking systems with cash. Japan's Nikkei 225 fell 2.4%; the Hang Seng plunged 2.9%.

In the U.S., the fed funds rate opened at 6.00% in New York, well above the central bank's 5.25% target, prompting the Fed to inject cash and saying some banks may experience "unusual funding needs." On three separate occasions throughout the session, the Fed stepped in to bridge the liquidity gap created by illiquid mortgage-backed securities (MBS), eventually pushing the fed funds below 5.25%.

In the end, though, the Fed spending $38 bln on three-day repurchase agreements (repos) in MBS also left investors wondering just how bad the subprime situation is and whether an emergency rate cut would even be enough to avert a credit crunch.

The bulls made a concerted effort late in the day to get buying efforts back on track, inching the Dow and S&P 500 into positive territory. The last ditch efforts were led by strength in Technology, Energy and, of all sectors, Financials. The major indices closed the session mixed while participants, no doubt were left feeling mixed up going into the weekend.DJ30 -31.14 NASDAQ -11.60 SP500 +0.55 NASDAQ Dec/Adv/Vol 1783/1303/2.92 bln NYSE Dec/Adv/Vol 2024/1307/2.38 bln

3:30 pm : Buyers are making one final attempt to right the ship that began the week on such a positive note. If you'll recall, the major indices were up about 4.0% on average on the week as of Wednesday's close.

The resurfacing of new credit concerns more than halved three days of gains and, at their lows today, the market was on pace to close down for the week.

The latest wave of buying now puts the bulls in position to declare a victory, even if the major averages finish where they are right now. DJ30 -5.87 NASDAQ -11.89 SP500 -0.48 NASDAQ Dec/Adv/Vol 1893/1177/2.61 bln NYSE Dec/Adv/Vol 2205/1122/2.02 bln

[ozymandius]

178. I wonder if Greenscam ever looks into the mirror.

Looks and wonders at what his life has been, with his years nearly spent. Wondering what his life means now that poetic gospel and twisted prose from his thundering pulpit at the Federal Reserve has been rendered to naught. He feverishly worked for a debtor economy in which the bowl would always get bigger. Just more capital accumulation from speculative real estate. No job? No problem. Just extract equity from the 2br/2ba that the good chairman had promised would increase in value with no end in sight. Eating one's house in a way.

Does he ever look at his writings and choke back the desire to set it all aflame?

[UpInArms]

179. Remarks by Chairman Alan Greenspan

Understanding household debt obligations
At the Credit Union National Association 2004 Governmental Affairs Conference, Washington, D.C.
February 23, 2004

http://www.federalreserve.gov/boardDocs/speeches/2004/20040223/default.htm

excerpt:

One way homeowners attempt to manage their payment risk is to use fixed-rate mortgages, which typically allow homeowners to prepay their debt when interest rates fall but do not involve an increase in payments when interest rates rise. Homeowners pay a lot of money for the right to refinance and for the insurance against increasing mortgage payments. Calculations by market analysts of the "option adjusted spread" on mortgages suggest that the cost of these benefits conferred by fixed-rate mortgages can range from 0.5 percent to 1.2 percent, raising homeowners' annual after-tax mortgage payments by several thousand dollars. Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.

American homeowners clearly like the certainty of fixed mortgage payments. This preference is in striking contrast to the situation in some other countries, where adjustable-rate mortgages are far more common and where efforts to introduce American-type fixed-rate mortgages generally have not been successful. Fixed-rate mortgages seem unduly expensive to households in other countries. One possible reason is that these mortgages effectively charge homeowners high fees for protection against rising interest rates and for the right to refinance.

American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.

...more...

[ozymandius]

180. That fella sure is equivocal, eh?

Sure - there's some bad in the good and some good in the bad. But it's the American way. Maybe. Could be.

[UpInArms]

181. and that works as long as

the consumer takes advantage of the responsibility of maintaining their own risks that may or may not be asssociated with the challenges that work with the variables that might or might not be associated with the risks that arise from the assumption that work within the variables that will arise.....

:puke: