Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (13613)

2/14/2013 2:08:09 AM

From: John Pitera

Respond to of 33421

To: John Pitera who wrote (8118)	8/14/2007 1:34:33 PM
From: Davy Crockett	of 13613

I was in Florida a few weeks ago for my daughters dance competition, I couldn't believe the number of cranes that I saw, & it didn't matter what city I was in. Cranes for condos blighted the sky. I couldn't help but think, who is going to buy when the Condos are completed. It was a very surreal experience.
Recommend \| Keep \| Reply \| Mark as Last Read

From: Hawkmoon	8/16/2007 2:51:44 AM
	of 13613

Will the Fed finally act tomorrow, and given the market it's interest rate cut? Asian markets are getting POUNDED as I type this.. And the DOW looks destined to plunge to 12,500, if not 12,000.. Hmmm.... Today's trading will be VERY INTERESTING... Hawk
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (1)

To: Hawkmoon who wrote (8120)	8/16/2007 6:49:47 AM
From: John Pitera	of 13613

The currency markets are in the most turmoil that I think I've ever seen. The Yen carry trade has been unwinding with much more rapidity than I have ever seen before. It's hard to believe that NZD was at 79 cents less than a month ago and has fallen to .6750, the AUD from .8870 to .7850 the GBP/JPY has fallen from 251 to 225 and the 40% of the fall in the above markets has been in the last 3 or 4 trading days. All of this huge movement in the currencies is very destablizing. We see the Central banks coming up with steps today and tomorrow.
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (1)

To: Louis V. Lambrecht who wrote (8107)	8/16/2007 7:50:31 AM
From: John Pitera	of 13613

Fed Has Already Introduced `Temporary' Easing: Chart of the Day By Mark Gilbert Aug. 16 (Bloomberg) -- The U.S. Federal Reserve has already introduced a ``temporary'' reduction in interest rates by driving the four-week Treasury bill below the Fed funds target, says Charles Diebel, a strategist at Nomura International in London. ``It is clear that a `temporary' easing has been put in place by the Fed,'' Diebel wrote in a research note today. ``This is what has really spooked markets overnight.'' The chart of the day shows the four-week bill rate has declined to 4 percent, below the Fed target of 5.25 percent and the actual rate, which dropped to as low as 1 percent last week and rebounded to 5.25 percent yesterday from 5 percent the day before. ``If this artificial suppression of short-term rates has to be maintained, which we suspect it will, then the Fed will eventually formalize the de facto ease with a move lower in the official target,'' Diebel wrote. ``It is likely to be at least a 50 basis-point move if and when it comes.'' William Poole, president of the St. Louis Federal Reserve Bank, said yesterday that the subprime mortgage rout doesn't threaten U.S. economic growth, and only a ``calamity'' would justify an interest-rate cut now. The Fed's next scheduled meeting is on Sept. 18. To contact the reporter on this story: Mark Gilbert in London at magilbert@bloomberg.net Last Updated: August 16, 2007 06:32 EDT
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (1)

To: John Pitera who wrote (8122)	8/16/2007 8:36:11 AM
From: Jon Koplik	1 Recommendation of 13613

"The latest" from those talentless people at KKR (a commercial paper hit) .................. August 16, 2007 A Commercial-Paper Hit Close to KKR By RANDALL SMITH and HENNY SENDER The meltdown in mortgage markets hit Wall Street titan Kohlberg Kravis Roberts & Co. yesterday, as a KKR real-estate affiliate sought to delay repayment of $5 billion in short-term debt held by 15 money-market funds. The action at KKR Financial Holdings LLC is the biggest blowup to hit the market for commercial paper, a form of short-term debt used by companies to fund operations. Although it is designed as a haven for cash, some issuers of asset-backed commercial paper have been hit by declining values of collateral linked to subprime mortgages. The repayment delay and related losses of up to $290 million amount to a black eye for KKR founders Henry Kravis and George Roberts at a time when they are weighing a public offering and trying to complete several buyouts whose financing plans have been disrupted by the debt-market turmoil. KKR is also the latest big Wall Street name, after Bear Stearns Cos. and Goldman Sachs Group Inc., to face a situation in which an affiliate confronted losses and possible demands for debt payment or redemptions. Bear put up funds to repay creditors of a mortgage hedge fund, and Goldman pumped its own money into a money-losing hedge fund. But it wasn't clear whether KKR would consider such a step. The news came as markets gyrated for a second day amid jitters over how far problems with the mortgage market might spread. An analyst downgrade of mortgage lender Countrywide Financial Corp. sent its shares lower and contributed to the hand-wringing over the credit markets. The Dow Jones Industrial Average fell below the 13000 mark for the first time in nearly four months, losing 167.45, or 1.3%, to 12861.47 after being up as much as 90 points during the day. KKR Financial has been hit by a pullback by banks and other lenders from investing in "jumbo" mortgages of more than $417,000, according to people familiar with the situation. While such loans aren't in the subprime category, which comprises risky loans to less-creditworthy borrowers and is at the heart of the current turmoil, they aren't eligible for the same backing as smaller loans by federally sponsored housing finance agencies. KKR Financial, in which KKR owns a 12% stake, said yesterday it recently sold $5.1 billion of mortgage loans at a loss of $40 million, and may lose as much as $200 million more on its investment in two issuers of commercial paper. It also said it could face an additional $50 million in related but unspecified "liabilities." The KKR commercial-paper issuers, KKR Atlantic Funding Trust and KKR Pacific Funding Trust, asked to delay the repayment and extend the notes' maturity for up to six months, citing "the unprecedented disruption in the residential mortgage and global commercial-paper markets." The two issuers raised money with $500 million in equity backing from KKR Financial and invested in mortgage securities based on a debt-to-equity ratio of about 20 to 1, said the people familiar with the situation. Such mortgages might fetch only 90% or less of their face value now, these people said. KKR Financial sold some of the mortgages beginning in May, based on a decision to convert to a limited liability corporation from a real-estate investment trust, which offered favorable tax treatment but required that 75% of its assets be in real estate. The KKR payment extension is the latest bomb to rock the market for short-term commercial paper, where three other issuers extended repayments last week. While offering a cheap source of financing, the market can be vulnerable to shocks. Two weeks ago, Bear Stearns disclosed that it reduced its reliance on such debt as part of its effort to weather what it described as a "market storm." The repayment delay doesn't appear to pose an immediate threat to the money-market funds that hold the paper, said Peter Crane, a money-fund expert in Westborough, Mass. Mr. Crane said such funds must limit any single holding to 5% of assets, and many have other backstops to cover losses. "They all learned the lessons" of blowups in the 1990s. KKR Financial's strategy for KKR Atlantic and KKR Pacific was to issue triple-A commercial paper at low short-term rates and invest in triple-A mortgage securities, which paid slightly higher rates. However, the strategy depended on the ability to resell the mortgages on short notice, while demand has dried up unexpectedly. The turmoil in the asset-backed sector of the $2.2 trillion U.S. commercial-paper market "has exposed a serious Achilles' heel in the global credit markets," said a report from CreditSights Inc., a bond research firm. The upheaval "now looms as the most pressing issue facing financial markets," research analysts at Banc of America Securities LLC warned this week. KKR Financial went public in June 2005. Yesterday's news knocked the stock down $4.75, or 31%, to $10.52 on the New York Stock Exchange. Write to Randall Smith at randall.smith@wsj.com and Henny Sender at henny.sender@wsj.com Copyright © 2007 Dow Jones & Company, Inc. All Rights Reserved.
Recommend \| Keep \| Reply \| Mark as Last Read

To: John Pitera who wrote (8121)	8/16/2007 9:16:43 AM
From: Hawkmoon	2 Recommendations of 13613

All of this huge movement in the currencies is very destablizing. We see the Central banks coming up with steps today and tomorrow. Y'know John.. there's only one REALLY nagging fear that I have about this correction.. And that fear is that the enormous growth of the unregulated, opaque, hedge fund industry has created a condition where financial regulators have decided that the only way in which to restore the "balance of power" is to permit a market collapse so severe that the public demands they be regulated, or that they lose their luster as investment vehicles. Maybe it's an irrational fear, but the Hedge Fund industry has grown to control so much capital in an unregulated form that they are potentially a risk to national sovereignty and governmental power. But furthermore, the traditional "long only", and heavily regulated, mutual fund industry has been seriously challenged by the hedge funds (who can deploy any strategy to make money). I don't know.. but while some hedge funds are losing their @sses in mortgaged backed debt, there have to be others that are raking it in from their shorts in the equity markets (given the recent all-time highs in the NYSE short interest) accelerated by the removal of the "up-tick" rule on short sales. We'll see what happens over the next couple of days.. But whatever it is, it will be highly volatile.. Hawk
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (1)

From: Louis V. Lambrecht	8/16/2007 9:54:39 PM
	1 Recommendation of 13613

Fairy tales vs. reality? PPT got the Dow up. I'd rather sell some notes an lend them on London, less risky then shares. Or is it a game for large banks only?<g> <IMG src="http://lvlamb.com/charts/20070000/3moyld0816.png"
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (2)

To: Louis V. Lambrecht who wrote (8125)	8/17/2007 8:30:28 AM
From: John Pitera	of 13613

The Fed approved a half-percentage point cut in its discount rate on loans to banks, declaring that increased economic uncertainty poses risks for U.S. business growth. So we've seen the Fed come with assistance. The Reserve Bank of Australia was in the FX market yesterday. Talk of the PPT team in the US stock market yeterday. we're seeing some reaction by the CB's
Recommend \| Keep \| Reply \| Mark as Last Read

To: Hawkmoon who wrote (8124)	8/17/2007 9:54:20 AM
From: John Pitera	of 13613

BTW, I think this rally in the stock market should be sold. the carry trade currencies have just moved back to levels to give us a chance to sell them if we had not yesterdary, certainly with Eur/JPY that should be the case.
Recommend \| Keep \| Reply \| Mark as Last Read \| Read Replies (4)

To: John Pitera who wrote (8127)	8/17/2007 11:23:42 AM
From: Louis V. Lambrecht	of 13613

4 to 6 weeks suckers rally until the firms know their balance LOL
Recommend \| Keep \| Reply \| Mark as Last Read