Black Friday tonight possible?

[jaymee]

Don't know what you guys think hehe. I hope I'm wrong.

From my sources so buyer beware.

Force selling in equity markets to source capital for credit starved firms will possibly result in a major capitulation tonight in Wall street.

Jaymee's trading idea so the caveat applies - nimble and adventurous folks can pick up the ultrashort ETF, nasdaq (QQQ), S&P500 ( QID), Dow (DXD) to make some quick buck. Can also short those highly geared firms.

Short short short.

[Snick]

I'm going with dow off 8000

[katoeylover]

think it all depends what happens in Europe this afternoon.

[PigDogg]

I've had SKF, QID, SDS, and TWM since early January.

Jaymee, It's not clear to me how much counterparty risk is involved in these double inverse products. Is it possible for the market to completely tank yet the NAV not to follow suit due to the failure of counterparties.

I'm not talking about tracking error. That can go either way and I can live with it. And I know the share price can deviate somewhat form the NAV.

[jaymee]

Yup. I've been hearing complaints on the tracking errors.

You'd have made a brilliant pile on SKF (congrats) but financials are making higher lows everyday - not planning to take profit yet?

[Guest]

I dont get the republican party ( Especially Dubya , his advisors and those wtih influence over Dubya ( actually when i say Dubya i really mean the actual president of the US for the past 8 years yup Big Dick) .

I mean the republicans struggled to get this bail out/ pork barrel bill thru both houses, yet they failed to put a pen to paper ( didnt need a vote just a signature ) to temporarily value the market on a 3 week rolling average .

No clue why they so happy to sign a bailout for what will be closer to a trillion now , yet with a totally free signature to value the market on a 3 week rolling average ,things would be so much more stable

I am no expert but why not ,for the sake of stability ? Any good reason not to do it temporarily

[Stogie]

I'll make a guess...

US markets down about 8%, then rallying a little on Monday.

NasDaq will hover around 1600 for a few weeks.

House prices in the US will take 20 years to recover. In the UK it will take about 10.

Pension owners and pensioners themselves who are hardest hit by depleted and mismanaged funds will vote for the Tories blaming Labour for years of ineptitude.

At that time property values will neither rise or fall for about a year.

The UK's investment in banks will never pay off as by the time (20 years) the banks get ready for the next round of misrule and ineptitude, inflation will have made the sacrifices we are making now next to worthless.

Mass unemployment will stretch resources for the welfare state to breaking point. Old people previously silently dieing of neglect and cold will be how the government will be forced to change it's ways.

We are two years away from a two year state of war against local council taxes. Many will be forced to bring in the receivers as old people and others simply refuse to pay or just can't.

Within two years we will be turning on immigrants in a violent way as the English who are getting their benefits taken away are forced to actually work and will be fighting over jobs and food.

In four years the Conservative government will be forced to have a referendum over EU membership. It will be a close one but we will vote OUT!

This is when the real anti-immigrant war will kick in with everyone who even looks foreign under suspicion.

Inflation will be at about 8% and unemployment will be at 2.5 million.

The police will be seriously undermanned (as they are now) and won't respond to burglary call outs. There will be Fixed Penalty Fines for every time a person is stopped, cautioned or arrested.

Teachers will have virtually abandoned the schools over a complete breakdown of trust between them and the government and the rising number of assaults inflicted on them by pupils.

There will be permanent police security at hospitals across the land as doctors, nurses, firemen and ambulance crews are attacked.

High streets will look like ghost towns as they can't afford to do business there.

It won't get better...

Mind you... I could be wrong... It's a guessing game, isn't it!

[thegame925]

Direct Link to BBC Blogs -  Reporters -  Robert Preston  - Senior Economist

Day of reckoning
Robert Peston, BBC Senior economist  10 Oct 08, 07:35 AM

The sharp and nerve-straining falls in share price on Wall Street last night and in Tokyo today are damaging to the wealth of many, especially those saving for a pension.

But it's as well to remember that they are the symptom of the disease, not the disease itself.

The underlying illness remains in the financial system, as manifested in the record amounts banks were charging each other yesterday for lending to each other for three months.

One serious anxiety concerns the auction today to settle liabilities on insurance - or credit default swaps - on debt of the collapsed investment bank, Lehman Brothers.

As I noted a couple of weeks ago, there are estimates that claims under insurance contracts will total $400bn. Sandy Chen of Panmure was one of the first to highlight the scale of this looming problem.

If demands for payment are as big as $400bn, there will be pain for banks, insurers, hedge funds and other financial institutions.

Here's why.

For every winner in a claim, there is a loser, the underwriter who has to divvy up. And if the underwriter lacks the resources to pay - which may turn out to be the case in this under-regulated market - that creates two losers: viz the bust underwriter and the claimant which doesn't get the money on which it was counting.

And if that claimant had been calculating its own financial strength on the basis that it had insurance against its Lehman debt, well then failure to receive payment could shatter the integrity of its balance sheet. Which in turn would create potential losers among its creditors.

So this day of reckoning on Lehman credit default swaps is momentous - and it could not come at a worse time for fragile bank shares.

The fall in Morgan Stanley's share price yesterday was a remarkable 26%, on the back of various nebulous rumours and as Moody's said it was reviewing Morgan Stanley's credit rating for possible downgrade.

There was also a doubling in the credit-default-swap price for insuring Morgan Stanley's debt: there was contagion from this opaque market to the more transparent stock market.

As soon as regulators have time for breath, they surely must as a matter of urgency bring some light, order and proper regulatory oversight into the credit-default-swaps market

But probably more urgent is for the US Treasury Secretary to decide how and whether he will inject US taxpayers' money into banks to recapitalise and strengthen them, along the lines of what the British Treasury is proposing to do.

But he "only" has $700bn to play with, which no longer looks that enormous in the context of the $400bn claims that may be enforced in just the next, anxiety-inducing few hours.

[azza33]

dow futures getting smashed at the moment

Down more than 3%

And to think yesterday they were up at this point... fucking scary

Europe is totalled as well!

[jaymee]

Agrees. Well fire sales since the only place to get cash is to sell stock holdings.

The credit markets are frozen hence my suspicision on a capitulation in the mad race to raise funds quick to pay creditors.

[PigDogg]

(jaymee @ Oct. 10 2008,01:02) not planning to take profit yet?

My problem is that I have significant losses in closed end bond funds.   Besides the decrease in the NAV of these funds, the discounts have widened tremendously so I am reluctant to sell.

So these double inverse ETFs are a rather imperfect hedge against these bond bonds.   I figure the market will only rally if the credit crunch moderates.

And if the credit crunch moderates then the risk of bond default decreases and these closed end bond funds should do OK.

Now one play I'm considering is to buy 2 unit of IRR and 1 unit of DUG in an attempt to capitalize on IRR's huge discount.  

But so far this year my clever supposedly market neutral plays have not really worked out as expected.        

What I'm worried about is the extreme case where the markets completely collapse to the extent that even the inverse funds are worthless due to insolvent counterparties.

[terryw]

The headless chicken attitude of the Europeans is frightening - how many of the 15 countries in the Euro will withdraw by Christmas is anybodys guess.

[Monkey]

(Stogie @ Oct. 10 2008,08:56) I'll make a guess...

...The police will be seriously undermanned (as they are now) and won't respond to burglary call outs...

...There will be permanent police security at hospitals across the land as doctors, nurses, firemen and ambulance crews are attacked...

These things happen already.

Had your house burgled?

Call the Police and they'll give you a Crime Number over the phone so you can claim off of your insurance, don't expect a visit unless someone has been raped or murdered, unless of course you have beatten up the crook who was going through your cupboards in the room you were sleeping but then you can expect to get arrested. If there is someone in your house then they may or may not turn up (unless you beat him up). If you really need to see a Policeman then drive at 85mph on the motorway, one will soon stop for a chat...

Most hospitals have 24/7 security on duty to stop the drunken fights in A&E and attacks on staff are frequent.

In some areas of certain cities the Fire Brigade won't turn out without a Police escort unless there is risk to life. Skips or cars on fire are common events on some rough estates and the Fire Crew can expect to recieve a stoning from the crowd of drunken jeering 13 yo's that started it.

Tell me again Stogie, why do you stay in Thailand?

 

me back on topic:

Yes, values will fall and times will get hard but it'll recover again. Lets hope we can just ride out the storm.

[jaymee]

Mmmm -6.68% or down 600 now. Close to breaking 8000.

[jaymee]

7900 now. 8000 broken!

*Off the lows, head is spinning.