Internet Coffee Shop Talk
boon, nice to hear fm you ... been reading yr great calls for the past few weeks from yr blog ... lol agreed on lee shau kee, thats why the tongue in cheek writing and commentary, at least he stepped down from the pedestal before being pushed from it I agree about the sector spread influence, but a bigger worry should be the collateral damage from even good sectors - even gold and silver may get whacked ... the yen has been on a tear n I suspect the yen carry trade have not been fully unwound yet... my short term watch include European banks implosion due to subprime and related bad debts, UBS figure was a start... it cannot just be the US banks with the bad news, their half yearly reporting (European) compared to the US' quarterly reporting will bring forth another round of bad news from European banks.. Wednesday’s announcement by UBS of a US$14 billion in write-downs was a shocker as this was additional losses ... UBS had said a month back that they anticipated about US$10 billion in write-downs from securities linked to U.S. subprime mortgages... hence the 40% higher figure is huge. .. more importantly, UBS only blamed US$12 billion of the write-downs on subprime. About US$2 billion in write-downs, UBS said Wednesday, are from “other positions related to the U.S. residential mortgage market.” What does that mean? Even the less-risky parts of the U.S. home-mortgage market are running into trouble ... that sounds like bullshit... less risky means what???... prime mortgages? ... or as I suspect... home equity lending??? Citigroup's US$4bn allocated on future detriration of consumer debt was the biggest catalyst for the credit bubble implosion trigger... UBS US$2bn figure though smaller, its huge because their commercial operations and branch operations are nowhere as wide as Citigroup. Citigroup was the catalyst, UBS was the confirmation... which bank will be the destruction...? now that the 50bp cut wanted by the market was given ... players know they cannot focus on the Fed to read the markets for at least a few more weeks... sigh ... what else can they be looking at ... a-ha inflation... Hershey bar up 13% ...
I never regard Lee Shau-kee as the Warren Buffet of Asia anyway. Lee Ka-Shing is the Warren Buffett of Asia.
Most Wall Street 'strategists' and fund mangers were calling for a year end target of more than 15,000 and some 17,000 for the Dow when the index broke 14,000. These guys are now at huge losses, and the media has been trying to put a very good spin on the bad news.
We should see the weakness spreading to sectors other than the financials in the future.
Best wishes
Boon