Rates cuts are coming! It's June 25, 2003

Hein-Verbruggen

It is what it is, GRIM. Put whatever spin on it you must, just like denying doping in TV-based sport or your personal favorite doper.

The EKG for global credit markets is sick. ICU trauma ill. Life support must be applied. The present pulse rate is that of a gravely ill patient.

Here is the EKG reads (annual yield quotes) for last August 2007 on the 90 day T-Bill, the safest known investment on the planet earth.

August 8, 2007 4.95%
August 20, 2007 3.07%
August 27, 2007 4.58% (discount rate cut and CDOs offerred for collateral)
August 30, 2007 3.80% (more fed guidance demanded)
September 5, 2007 4.47% (Euro bank trouble noted, ECB will react)

These historic wild variations on such a stable investment prove that institutional investors (big banks, brokers, hedge funds, pensions) have NO CLUE whatsoever as to what is safe in the marketplace. They lack confidence and are waiting for yet more steroids from central bankers or they will revent back into panic mode.

You were told. Look for ECB to get on board soon with the fed and lower rates. As the USA economy goes--all others must follow.

Crankyfeet

Heiny-whiney...yes there has been some massive inflows into T-bills. remember, these are 90 day bills with annualized yields. The 90 day yield differences (in absolute yields over 90 days) are about a quarter of the ones' you quote. The 90 day T-bill is about the closest thing you can get to stuffing cash in a mattress for skittish fund managers. The yield spikes have all been downward, meaning that money has been going in here without much concern for short term returns. Heiny, when you see a lot of panic, that is a bullish sign. When you see problems in the market place which the whole world has observed (as in this case), and no one seems to see much risk (as NOT in this case)....that is when one should be nervous. However sometimes the crowd is right. The more examples of media and public panic I witness though, the less concerned I am.

The worrying scenario for the Fed would be deflation in the property sector and inflation in every other commodity. Little room to manoevre on interest rates then.

Hein-Verbruggen

You are on uncharted waters Cranky w/o a life raft. Not bullish for most sectors. T-Bills have been whipped up and down as steroid tactics entered the system last month. (not stable, not a clean sustainable EKG reading)

I will look for you from my money supplier helicopter.

Crankyfeet

You miss the point. Economic bearishness has nothing to do with where the market is going. Do you think it looked bearish on October 22nd, 1987 (just after the crash). Or how about October 1990, just prior to invading Iraq. Of course it did. But this was the bottom in the markets. I am not saying this is the bottom (short-term correction) as I am still monitoring other domino indicators. And in any case I don't have the ignorant ego to proclaim "I know" what's going to happen. I am saying that a bleak economic outlook is not bearish in itself. That's what you get near the bottom of a downward move. I am just weighing the odds. Nothing is guaranteed.

Maybe we are talking about different things. I am talking about financial asset exposure. If you have real assets such as expensive real estate with heavy gearing in California, that's a different story.

I don't like your MO of big-talking predictions based on little other than media-hyped paranoi and limited knowledge. If I see you trying to grandstand fraudulently I am going to try to expose you. I don't know much about doping practices but if you want to act like you are some kind of Financial Market Guru, and I sniff you as a fraud, I'm going to take aim.

Hein-Verbruggen

Not so Cranky. Forest fires cause property damage. Evacuate or you may suffer a harsh BBQ. Heavy rains may cause floods too. Get a raft.

Ignorance and denial are unhelpful (as in doping crimes too), action and awareness may save lives.

The credit markets are in paralysis mode. Until ECB and US fed offer up more steroids, IV feeds, free money gifts and lower interest rates--real estate values will continue to tank, sales will decline to zilch, unemployment will grow, and stagnation & recession would then follow. (already happening)

Ignore the past 30-day T-Bill yield spread EKG at your own peril.

Today's news (lagging indicator) is that 1% of all USA mortgages are now in forclosure---a new historical record.

In addition, 5% of all US mortgages are presently delinquent (pmts past due), also a new hostrical record. These are NOT BULLISH economic indictors.

T-Bill yields are in a wild EKG fluctuation, revealing a gravely ill patient.

Often times---the obvious clues are a warning. recession is near the longer the central bankers dilly dally with the inescapable rate reductions. They WILL lower rates, but sooner is better than later.

ECB will LOWER rates too. All the world benefits from the mighty USA consumption, credit driven machine, blood-for-oil, and financial hedge fund black boxes of private equity capital. All world economies shadow the USA, Asia included.

Petro dollars = solient green

Crankyfeet

We'll see.

Hein-Verbruggen

Yes we will Cranky and we are:

Today's news is:

4,000 FTE jobs lost in August (that is NOT bullish) 110,000 new jobs were expected so the negative news helped explained why the Dow Jones tanked again.

Still awaiting a September 18 fed rate cut!

Crankyfeet

From USA Today (9-9-07):

"Lenders are collapsing, home sales and prices in many markets are falling and lots of investors are panicking. Not Warren Buffett. He recently told a group of his real estate managers in Omaha, Neb., that he sees this as a time of opportunity."

Mmmm.....seems some minds are thinking alike. And others would prefer to lead the crowd. Now who do I feel more comfortable thinking alike? The self-appointed 24/7 Sage of Cycling Forums, or the Sage of Omaha who has accumulated investment capital in the markets that makes him the 2nd richest man in the world.

Hein-Verbruggen

Warren Buffet would NOT touch an empty housing tract with a 2,000 meter pole, not even to protect his silly & struggling home furnsihing store chain RC Willey's. Don't buy Warren's bottom feeder trash talk. He got it WRONG on Microsoft. Mr Softy can buy his tired corn-fed act anytime.

Even Jean Claude Trichet is getting on board today. (no more rate INCREASES despite Lim's opinion) and is softening his 'inflation trash talk'. Jean will be LOWERING ECN rate soon---as I predicted he would as he defends Bernie's lower rates and junk bond 'open market' collateral purchaces' junk-for-free-money steroids. Greenspan's steroid policies are set in stone.

Much like the oil producers will be forced to INCREASE production--and thereby LOWER oil prices.

Look for DEFLATION in the world economy, cheap money, stiff underwriting, and for the rich to get richer off this latest Wall Street bail out plan.

Crankyfeet

Too much to answer here. Not even worth it. Short term interest rate moves are about the easiest things to predict. They are discounted by the street almost every time before they are announced. Surprizes are rare.

OK Heiny, here's the challenge. You name any market you want to make a trade on and I will happily go the opposite way. Heck, I don't even have to have an opinion. I have had experience trading against an egotistical know-nothing like you once before I retired and it was the easiest money I ever made. Heck, I'll even give you the high of the day for entry price if you want to go short. I won't even consider that you would already be losing a bundle on oil. Just put your hypothetical money where your mouth is, Mr. "I'm bigger than Warren Buffett". $30,000,000,000 donated to the Gates foundation says you are an envious cynical moron who longs for the day when he can be considered a "Guru", when, after 16 attempts, he predicts a big bad bear market, ala Marty Zweig (1987). And loses his shirt in it.

The only unfortunate thing is you won't have any real money exposed (anyone with your level of psychological paranoi/neurosis and cynicism IMO has no significant assets worth risking) which makes it a little easier for you to ride your losses.

Oh and da oil companies will be forced to increase production you reckon. By whom? Don't you think that already would have happened if it were possible. And the analogy of the institution providing money supply to doping is ludicrous. Or is that just another way you have found to tie-in your hobbyhorse phrase.

Oh and we're going to see a Global Meltdown with commodity and asset depreciation. It will be "brutal". But the rich will get richer. Huh??? Sounds to me like you use to work in a bank, on bank salary, and just drooled in envy at the fat bonuses the investment bankers were making on Wall Street.

You need to find a real soap box and go talk in Hyde Park. Its your best chance of feeding your appetite for public applause.

limerickman

Crank : European Central Bank Sept 07 Monetary Committee decided to leave interest rates at the same level.
The Bank of England last week also agreed to maintain their rates at the same levels.

As I told Hein before - this "crisis" has not and will not deflect monetary policy here in Europe and Britain.
The interbank interest rate is the only interest rate which has moved in Britain and Europe- and that has moved upward.
Hein's spoofing.

The Fed on the other hand - it's in a bind.
It's damned if it leaves rates as high as it has but if it starts to drop rates then
the Fed is being seen to bail out reckless borrowers and reckless lenders.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Crankyfeet

I agree Lim. And am aware of The Hein (il)logic (see my ref. to Hein logic in post#15: Rates not going down in Europe = Rates going down in Europe).

I'm not sure the Fed bailout label is something that they are unduly worried about. The Fed has had a history of bailing industry out to protect the US economy. It reassures them that they're powerful enough (like the forgiving father) in the scheme of today's financial world.

I think the biggest threat is either them failing to protect the currency (esp if Europe maintains higher interest rates) or perhaps a rising commodity index (inflation) coincident with a deflating property market and need in the financial sector for cheap money (as I post October crude is hitting $78 a barrel). Then they're in a quandry. The LT Bond market though doesn't seem to see this as much of a risk with bond prices going up.

However this is all just speculation. For all I know, the bullish effects of lowering rates (in the US) could spark a surge in the currency.

IMO this problem is not being ignored. I think it will be mitigated and contained. Everybody is aware of it. Its not the problem that people are underestimating. Go back and look at the S&P throughout the Savings and Loan crisis in the late eighties. Something I equate this too. I presume Hein is referring to a Global Meltdown that affects stock markets. I just want him to go on the record with something measurable (in $$$). Otherwise he will pull a "Guru" trick of calling something, which when it happens in two and a half years, will be saying "I told you so". Kinda like me saying there is going to be big hurricane hit the US and then when one finally does in 2010, I say "I told you so".

Hein-Verbruggen

Lim: The US fed is presently bailing out Wall Street bankers and their Hedge Funds, NOT retail borrowers. Not yet anyway, if ever.

By June 2008, we will be in yet another "I told you so crisis", not just in the USA, but the whole planet--including Chinese made Matle toys.

Jean Claude Trichet will LOWER ECB rates and follow the US fed and defend the dollar (Treasury sales). Look for a 25 bp rate cut on Septemeber 18, followed by 12-18 months of additional rates cuts.

Trichet has already engaged in quiet 'open market transactions' to buy junk commercial paper (CDOs) from his sick member banks. With much more to come. Nothing at all like Lim's theme of inflation fear. Just the opposite.

Hey Cranky, you have picked the wrong horse to bet against here. You are way out of your depth. I never apologize for being correct which is my legacy at CF.

You will go the same way that Jan Ulrich fans went---down the tubes in a grand flames of denial. The Ulrich doping matter parallels the ECB. A day late and a Euro short.

btw: Did you know that Italian soccer fans actually believe that soccer is clean whilst cycling is dirty? The media can fool almost anyone.

Crankyfeet

So what do you want to take as a position in the market today? I haven't got time for gutless "the world is coming to an end" blow-hards. Name your call in the markets and we'll see the real financial results of your shotgun prophecies. Usually its close to a 50/50 bet, but with the revelations about yourself you have provided, it will be close to 90/10 taking the opposite side to your market calls.

Put-up or shut-up windbag.