asia - really melting - scary

by truthbetold Mon Aug 08, 2011 11:12 pm

At this time Asian markets are melting. Korea is down 8%, rest are around 4% plus. Whether S&P intended or not, this event is turning into a major tsunami. Will sanity return?

by charvaka Mon Aug 08, 2011 11:20 pm

Oh no. I gotta kill my limit buys now. Or may be I will wait a couple hours.

by truthbetold Mon Aug 08, 2011 11:26 pm

only mitigating factor is that all the bad news is out there. US, Euro debt, china slow down, oil prices, commodity scarcity etc. May be we can expect market to price all of them into stocks and market will reach a bottom in days.

by charvaka Mon Aug 08, 2011 11:29 pm

truthbetold wrote:only mitigating factor is that all the bad news is out there. US, Euro debt, china slow down, oil prices, commodity scarcity etc. May be we can expect market to price all of them into stocks and market will reach a bottom in days.

I am concerned there could be more bad news from China and India. China in particular has some rather weak bank balance sheets. If the turmoil and strengthening yuan means sharp cut in exports, that will put a lot of bad loans pressure on those banks. Also, I expect some level of political revolt in France and Germany to bailing out Italy and Spain. And I don't think the central bank by itself can save Italy... it has a limit on how much Italian debt it can buy. Don't know how many days away a further worsening of that is.

by Marathadi-Saamiyaar Mon Aug 08, 2011 11:52 pm

S & P has warned that credit rating of China and India could be in trouble due to the global nature of today's trade and heavy involvement of chinese and Indians money in the US treasuries (for the same reason why NY Life, and other insurance agencies were downgraded today).

China has a very high "internal debt" as does India. Things will be rolling down till Wednesday and at this rate, better to throw up our hands and just wait for the market to go quite low before investors realize they over reacted.

Expect another low like in 2008 and GET READY to jump in - that too, those who missed out last time.

by truthbetold Tue Aug 09, 2011 12:02 am

Uppili,

Are you expecting a V type recovery? There is likely to be a rebound rally as the first down draft will go beyond sensible level. The move up could also be very quick. Stocks like AAPL will bounce back real fast.

However, stocks may not stay up for long. New economic reality may require stocks to work around 10K or less.

As I said in another post, only good news is that all the bad news is out there and likely to be digested by market soon.

by Marathadi-Saamiyaar Tue Aug 09, 2011 12:22 am

QE 3 - how good that will be for the Lotters?

Downgrading of munis - how bad that will be?

Greece coming into the picture in a month or so.

Spain and Italy still rolling the dice

Germany getting jittery having to bankroll the bankrupt socialists.

If the oil prices keep dropping at this rate, expect some tremors in the middle east as well.

All in all, the diarrhea has to run its course.

by charvaka Tue Aug 09, 2011 12:28 am

Marathadi-Saamiyaar wrote:QE 3 - how good that will be for the Lotters?

Didn't one of them put out a warning to the Fed to not do it, calling it disastrous for the dollar or something like that? If that's any indication, it may not be good for them.

Marathadi-Saamiyaar wrote:Downgrading of munis - how bad that will be?

That's going to be pretty bad for local governments, and it will trickle down into the economy by reducing all kinds of bond-funded spending like public works construction. It's like the Tea Party ordered a double dip recession when they decided to make the debt ceiling a political issue.

Marathadi-Saamiyaar wrote:If the oil prices keep dropping at this rate, expect some tremors in the middle east as well.

The key level is $80 a barrel. That's the level at which Iran's and Venezuela's public finances tend to unravel; they will go into serious unrest at $70. If you drop below $50, Saudi tends to unravel, but they have a lot of stockpiled cash (some of it in treasuries and Euro debt, but also lots of gold and stuff, so they can weather any storm above $40 a barrel I think.)

by truthbetold Tue Aug 09, 2011 6:37 am

asia moderated by the end of day. Europe has started around 2 % plus down.

US will finally give us an Idea of end of begining of this crisis. I think most crisis, stock losses follow a non linear waterfall type of process.

Speculation should be with a portion of your ammunition. One should be Quick to pull.

Is it time to pick up long term investment picks? Patience may be a good thing.

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