c2, at beijing airport, readying to board, but of course, as usual, am 1.5 hrs early, my comfort point.
below just in in-tray
player #1
the BKX index is slumping further - the former support level at 60 has now become the new resistance level. i'm surprised it didn't even attempt a bounce at that level - i regard this as pretty serious, as the next technical target is 30 - which would mean that the banks are about to give up the entire gain of the 1990's bull market.
generally, the continued slide in the bank index tells us that the crisis is far from over - i suspect write-downs will proliferate far beyond what people thought possible even a month or two ago, as the bad assets we already know about continue to get worse, and previously 'ok' assets are now joining the party by going bad as well. at the same time, investor appetites for recapitalization deals are probably fading in view of the fact that every single deal so far has produced losses for them.
the Fed meanwhile is proposing to make a few rule changes regarding having to register as a depository institution when acquiring stakes in banks beyond certain threshold levels in order to enable private equity firms to also lose some money with the banks.
this goes to show that the desperation is increasing - the Fed can not bail out everyone after all. so the search for fresh fools with too much money is on.
player #1 again
please note: the GSEs are crashing, for want of a better term:
stockcharts.com
stockcharts.com
this is an 'uh-oh' moment for the market, which in turn is now tanking below the March lows, and likely soon below the 2006 summer correction lows
player #2
Update - FNM/MC CDS snr 80/90 (+10) - sub 195/215 (+20) Debt - 5's FN 07/13 102/100 L-1.5 10's MC 06/18 97/95 L+18.3
GSE are down on Capital Concerns - LEH put out a report that an accounting change may force FN to add $46 bln in capital and MC $29 bln - Also speculation the companies may need to make further writedowns also hurting the stocks.....
Also, cash levels at Asian funds only at 2.2%, 120bps below historical avg. 1998 mkt trough 16%, 2001 was 6%...me thinks there is a wee bit of downside left.
Also, anyone know why the Chinese are increasing restrictions further for travel within China and esp to Macau?
player #1
those capital concerns are well founded. the GSEs will need a capital infusion even though the rules have been relaxed, because their assets are deteriorating faster then expected too.
player #3 quoting news flow
wow! GLD added another 14 tons today
They've added 61 tons since the beginning of June. 61 tons is roughly 2,000,000 ounces. Just eyeballing the average price of gold between the beginning of June and today, I come up with an average price over the period of roughly $892/ounce. That means $1.78 billion went into GLD. This is a very rough estimate, but close enough for handgrenades and horseshoes. I don't think this is Joe 6-pack buying a few shares of GLD on his way home to watch the Simpsons after work. This is largely some big sophisticated buyers who could possibly convert their shares into delivery of the underlying gold (100,000 share blocks are needed to do this).
player #4
Well, my prediction that Indymac would be bust by the July 4th weekend has proven to be wrong. Could it be that someone else front-runs Indymac on the bankruptcy front?
Interesting lunch today. Things are okay in Knoxville, but "soft." That said, I had lunch with Knoxville's largest beer distributor today. He said that beer sales were solid and noticing no big changes in sales. But I dug a little deeper and he did say that grocery sales are up strongly and that restaurant sales are getting hammered. In sum, people are still drinking beer, but they are now drinking it at home because it is much cheaper to do so obviously....
Can get two pairs of dress pants at JC Penny's for $35. Was going to do so, but was going to be late to lunch because I could find anyone to help me as I only found one pair in my size on display. I wonder if attrition is cutting back their staff and consequently service. After all, 11:30 am on a Monday isn't exactly the busiest part of their week....
player #1
yes, IMB is still alive...in a zombie sort of way. a certain daily newsletter service we all know and love sez 'sell gold now' after having been very bullish on it...3 or 4 days ago? i interpret that as a tentative buy signal...
player #6
biz.yahoo.com
IndyMac. You are not off by far.
IMB’s problem is they cannot afford to sell at market price. Writing down the losses means they are out of business immediately. It is not uncommon to have loans secured by worthless collateral today.
I think many others are in the same position. This reminded me of the early days of the RTC when S&Ls were being closed left and right. They used to close them on Fridays, at the end of business. I wonder if they would be doing same this time.
player #7
Interesting story. Power and other material shortages (eg coking coal) will increasingly constrain output of products needed to sustain economic growth in China. No one is talking about this (nor how real loan growth of 6% can sustain real economic growth of 9%). Right now there is not enough coking coal around to fire all the furnaces in steel mills (due to port and rail bottlenecks, primarily in Oz). Iron ore demand has gone through the roof (hence the +90% contract setllement yoy) on the belief that there will be enough coking coal around to fire the furnaces (inventories in China are at record highs) What if there isn't? What does that do to the much talked about infrastructure investment that will maintain GDP growth at 9%?
The Black Swan is that the China economy gets throttled and that this will cause a rather severe ripple effect through Asia. The markets and especially stocks related to this scenario are already pointing that way (eg China Yurun, Noble, Olam, the property and internet stocks etc). I have been and continue to be a seller of all China related stocks and certainly China stocks. Asian stocks in general likely remain under pressure and all but defensive names I am avoiding.
As with all bear markets, the last man standing eventually falls, and in this case I suspect the thump will be quite loud.
By Xiao Yu
July 7 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, is halting production at a venture in the northern province of Shanxi because of a power shortage. The provincial government ordered smelters to cut output to ensure power supply for farming, Wang Suomin, a manager at the Shanxi Huaze Aluminum & Power Co. venture, said by phone today. The venture has an annual capacity of 280,000 metric tons.
The failure of the Shanxi province, a net power exporter in the country, to maintain electricity may indicate that power problems could affect output throughout China, RBS Sempra Metals Ltd. said today. Aluminum prices rallied 31 percent this year after snowstorms in China curbed production.
``This will boost aluminum prices,'' Le Yukun, an analyst at BOC International Ltd., said by phone from Shanghai. ``Power shortages may spread and worsen, forcing more output cuts.''
Aluminum for three-month delivery rose to the highest in four months in London. It gained as much as $85, or 2.7 percent to $3,245 a ton, the highest intraday price since March 6. It traded at $3,236 a ton at 8:42 a.m. London time. The metal rose 1.8 percent to close at 19,700 yuan on the Shanghai Futures Exchange at 3 p.m. The government ordered smelters to halve output, and producers with 700,000 tons of capacity may have been affected, analyst Eric Zhang of research company CBI China Co. said today.
That's nearly 5 percent of output in the world's largest producer. CBI didn't name the affected smelters.
Red Warning
Shanxi, China's biggest coal-producing province, issued a ``red'' warning on power and will limit supplies to energy- intensive and polluting factories, the State Electricity Regulatory Commission said today. Power shortage in the province reached 4,647 megawatts as of June 26, the commission said.
China is in its sixth year of power shortage.
``The power outage in Shanxi is extremely bullish for aluminum prices in the near term,'' RBS Sempra analyst John Kemp wrote today in a report. ``It suggests China's power shortages will not be confined to the southern and eastern regions and that power problems could start to affect aluminum and industrial output across the country as a whole.''
There is a power shortage in the Shanxi province, said Zhang Qing, a spokeswoman with Beijing-based Aluminum Corp, better known as Chalco. Zhang said she wasn't aware of the production situation in Shanxi.
Bigger Smelters
Huaze is ``gradually'' cutting output, Wang said, without giving a loss estimate at the venture, which is owned by Chalco and Shanxi Zhangze Electric Power Co.
The bigger smelters in the province include Shanxi Huasheng Aluminum Co. and Shanxi Guanlu Co. Huasheng is a joint venture between Chalco and Shanxi Guanlu, with an annual capacity of 220,000 tons. Zhen Qijia, secretary of Shanxi Guanlu, said he is unaware of the situation at Huasheng. Calls to Huasheng were not answered. China is the world's largest producer of aluminum, which is used in aircraft and cars, with a total capacity of more than 15 million tons.
p.s. and so there you have it all for this am; recommendation is as before, buygold, then buymore, and yetagain |
