Wednesday, March 19, 2008

Wedding & Marriage

What we had yesterday from the US was a wedding, but they are in a long drawn out marriage as well. Weddings are joyous occasions, weddings are an event... marriage is a sentence, no, marriage is a life long thing. Weddings are always made up of hyper optimistic people and well-wishers, maybe they know the couple need all the luck they can get.

Pumping an additional US$200bn and then standing by Bear Stearns/JP Morgan for up to US$30bn, basically staved off a mini confidence crisis. Obviously the Fed has spent a lot on this wedding, maybe too much. Somebody has to pay off that via credit cards. There had been too much drinking during the wedding, now the day after, everyone has to trudge back to work and wait for the weekends again.

The chart above shows that the bulk of the recovery was in stocks which had the highest short positions - hence a short covering rally. Another 200-300 points uptick from here will see shorts starting their positions again.


solomon said...

Normally lavish wedding don't have good ending.

Imagine US interest rate of 2.25%, only 9 bullets of 25 basis points left. Monetary policy is only short term effect, try to fix the economy instead.

If the world commodity price continue to slide, then it may be gd for taming inflation but the hedge funds may get burn again. With less money circulating in the market, the economy is decelerating this time with unknown speed.

WS.Loke said...

Hi Dali,

Do you mind if you review Maybank on your blog? The stock has pushed down from RM12 to current RM8.70 since GE started.

pureland said...

Hi Mr Dali

What say U ?

Is the Financial Crisis Over? Some Believe It May Be
| 20 Mar 2008 | 04:34 PM ET
After the Federal Reserve's aggressive moves this week to ease the credit crunch, some on Wall Street are starting to wonder if the worst is finally over.

Well-known banking analyst Richard Bove even delivered a report on the financial sector Thursday with the bold heading, "The Financial Crisis Is Over."

Bove, of Punk Ziegel, admitted in the note that such a proclamation "sounds ridiculous," but he genuinely believes the crisis is over.

"There will be more negative developments, but they will be meaningless," Bove wrote.

Later, in an interview on CNBC, Bove said: "I'm convinced that all the signs that you would want to see that would tell you that this thing is over are there. And this is over."

Bove said last weekend's rescue of Bear Stearns was the watershed event that heralded the end. "This event sent so much fear through the market that action was taken," Bove wrote, calling the Fed's actions, "innovative, dramatic, and ... brilliant."

Still, most aren't convinced. Many on Wall Street argue that the problems may be subsiding in some areas of the financial sector, but they're going to spread to other areas.

"I admire a courageous call by Dick Bove," Art Cashin, director of floor operations for UBS Financial Services, told CNBC, but "I’m not sure we’re totally out of the woods."

"The focus is going to shift from the brokers and the bankers to the hedge funds now, Cashin said. "And that’s so opaque that the rumor mongers are going to have a field day."

That sentiment was echoed later by Marc Pado, U.S. market strategist at Cantor Fitzgerald, who told CNBC that he agrees that the crisis will now ripple into hedge funds and we'll see another Carlyle-like collapse.

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