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Market Outlook - Short Term
Tracked by: 1 Boarder
I have already entered at 3600 level with short term horizon. Though nifty may touch level below 3000, but it will bounce back from 3600 levels and it can go upto level of 4000-4100 level within few trading session where it is advisable to offload short term holdings and apply wait & watch approach going forward....
In reply to:
At what Nifty level will you invest fresh money?
Posted by :
MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger 
Tracked by: 1 Boarder
I have already entered at 3600 level with short term horizon. Though nifty may touch level below 3000, but it will bounce back from 3600 levels and it can go upto level of 4000-4100 level within few trading session where it is advisable to offload short term holdings and apply wait & watch approach going forward....
In reply to:
At what Nifty level will you invest fresh money?
Posted by : MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger
Tracked by: 0 Boarder
Dear Kalidas
While we are witnessing the distressed selling in the world markets but still some how I feel that India will emerge as the best destination for equites as and when this selling is diluted and we stablize. This is not because of Tata, Ambani or politicians but credit might go to our systems of Banking, Mutual fund, Insurance, RBI and not to forget our hard earning middle class citizens.
But Short term pains are severe and will take its toll.
Regards...
In reply to:
Paulson`s Poison & Antidote
Posted by : Kalidas
for slowhand22
Is liquidity in Indian market affected. it should not. Interest rates are very high now, so RBI has lot of leeway to reduce the interest rates.
Banking collapse has started already, this is what I was forecasting from 12 months onwards. US is heading towards Civil War, and I will not be surprised if national emergency is declared and election postponed.
Solution is already there, but the US Administration did not listen to me or respond to my letter. As I have stated before, I am the only person in the world who has solution to US problem. I am not boasting or not telling you out of ego. Whatever actions taken by Paulson and Bernanke are terribly wrong. They are printing their way out of the problem.
If they had listened to me earlier, they would have prevented all these collapses, in fact there could have been massive rally. I will release the letter at appropriate time.
Now that the situation has come out of hand, the solution will be more curative rather than preventive. it will hurt almost all, regardless of your country.
India will emerge strongest in the world. I am only worried about Rupee policy of the RBI and Government. They know that it has not worked for over 60 years, and they are still following the beaten path.
In India, most banks are nationalized, so there should not be any problem in Inter-bank lending. Nothing may happen to India, unless the Indian officials become super charged and panicky in which case they will hurt the nation. This is more likely to happen, if past is the indication.
Inflation is no longer a problem now - there is no money in the market. The present problem is liquidity. Indian government has most powerful tools in its armoury. The rates are inordinately high at about 10% for deposits. Even if the rates are progressively reduced by 5% in small steps of 0.5% for next 16 months, (0.5% per 2 months)
Further, next step will be to lower the taxation rate. These are all bullish scenario being set up by the present crisis. To be quite honest, I am super bullish at Indian prospect, but that time has to wait. You have to be stock specific.
A few months ago, I had asked for investing into HPCL (came down to 180), BPCL (came down to 230) when the Index was near 15000 or about. Today, the market is down to below 11000 or by about 35%, and the same stocks are up by 35% to 50% in less than 4 months.
At that time, there were many who were comparing Reliance (RPL) as best buy which was at about 172 to 192. Now it is at Rs 132, down 25%.
This is the difference between my recommendations and others blind loyalty to Ambanis, Tata, Birla, etc. I never attach myself to any stock, and allow my self to be conducted by the sheer logic and dispassionate analysis of any scrip or market.
Perhaps I am the only one today, who is superbullish about the Indian market, and you will see that in coming days.
Kalidas, Hong Kong
6-10-2008
Tracked by: 108 Boarders
Boos shall I phone Houston and tell them the train has stopped.... n plz prepare for a rocket....jut kidin...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : raj_tibs
Of course, the puts that is sold were my entry into the markets last year (august)... As of now, notional loss is less than ledger bal. But margin short.. so i am thinking in 2 years, shares in margin account should fetch some decent return, as opposed to cash in margin account.
Tracked by: 108 Boarders
Dear pkjattking,
It looks like that DOW has given ENOUGH jitters to different market PLAYers to do something! :)
Those Media headlines are as of now on the expected lines! :) :)
Tomorrow, if one see Nifty around 3450-3500 level, then perform some TA to build a part of LT investoments! Perform that TA on weekly charts! :)
Daily charts are useful for Traders, weekly charts are useful for LT investors! :)
Let us hope better SENSE prevails among those BIG Players! :)
Let us hope for the best! :)
Gud luk & happy investing! :)...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : pkjattking
I think you missed that... me and Mr bsrules were saying the day bailout passed and Dow dived 2 mins after.... that this manufactured fall will probably take us to 9800 on Dow which will mentally confuse most traders...... so Dow is now at that level so lets c where we go from here...... I now have losses In India..portfolio is down 30%.. but still doing better in Us...... keep faith.
Tracked by: 6 Boarders
-Q-
I questioned his take over only one ground - he bought when the GBP was at highest, Steel prices were at highest, and stock prices at highest. how could he expect to make money. And where was he, when he could have bought Steel Authority of India which was trading at Rs 5 at the height of crisis a few years ago? The stock SAIL then went up to over Rs 160 or so.
-UQ-
Kalidas Ji,
Agree with the points mentioned. But I have some doubts. Appreciate if you can clear them.
(1) What is the Fair value of Corus.? Do you think Ratan Tata paid higher Value, not Price, in acquiring Corus.!
(long term investment for retail investors might be 2 years, 3 years or at the best 5 years. But for persons like Ratan Tata it could be something like 10 to 20 years)
(2) Is SAIL on sale a few years ago?
Regards,
Sri...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : Kalidas
for ysb
An excellent and intelligent question. Honestly, I never like a company or business leader who day in and out buys some or the other different companies or floats new ones not related to their core business. (This applies to Reliance group also).
Mittal invested in related business, but he never had that kind of money as projected. Most of the wealth of the tycoons are only on paper, their wealth goes up because their share prices go up in bull market. We therefore call them billionaire. They never disclose their personal liabilities.
The FORBES list of top 100 is nothing but a bogus list. They value the existing holding of the controlling shareholders by multiplying his stake x current stock price. How about his personal liabilities, that are never disclosed?
Whenever they buy new companies or float new ventures, they fund it not from their liquid cash, but borrow from their brokers or banks by pledging the shares of existing companies. The borrow in their personal capacity. When the situation like this comes, and their bankers issue Margin calls. If they can not meet (and they would not) the margin calls, the financing banks or broker sells out those shares in market or in private deal.
The real stature of Mittal will come out during this testing time. The persons like Mittal love debt more than anything else. His original venture Ispat, the main borrowing vehicle, is still neck deep in debt. But he is not longer liable, having migrated to London. (or ran away?)
When the debt crisis is in full swing, and metal prices are plummeting, his share values pledged as collaterals will also come down. He should get margin call from his bankers or brokers. If he can not meet them, his pledged securities will be sold off and all the mountains of debt will come to the light.
If he passed this test during these times, then he would be deemed to have real wealth. Until such time, watch his empire closely.
Tell me, which banker in India is going to lend Rs 4000 to 8000 crores to Anil Ambani`s Reliance Power, when they have no other assets and the plant is just on paper or under part execution? Obviously, he would have pledged the shares of his flagship companies like Reliance Communication, Reliance Capital etc. which he is not required to disclose under any act because these are his personal holdings.
Ratan Tata was a disciplined businessman in the past. But he had personal ego - Yeh kalka Chhokra Lakshmi Mittal, mere se hajaro miles aage nikal gaya. Main bhi kuchh bataa doon. (This yesterday`s boy has advanced several miles ahead of me. Let me also show the world that I am not anything less than him) So he bought Corus.
When I wrote against Ratan Tata on this subject, somewhere in December or January, everyone on this board pounced on me, how a person from cozy office in Hong Kong could write on Ratan Tata who is visionary and best businessman of India. I questioned his take over only one ground - he bought when the GBP was at highest, Steel prices were at highest, and stock prices at highest. how could he expect to make money. And where was he, when he could have bought Steel Authority of India which was trading at Rs 5 at the height of crisis a few years ago? The stock SAIL then went up to over Rs 160 or so. If he was so bullish on India, why did he become so foolish to go all the way to London to buy Corus that was 5 times the size of TISCO for which he did not have expertise or experience?
Refer my old write up on Ratan Tata if you can retrieve that from the Archive. It had full article on Ratan Tata.
Kalidas, Hong Kong
6-10-2008
Tracked by: 6 Boarders
for wbuffet001
I can not believe it. It is hyped up figure. Anyway, let us leave it at that.
Kalidas, Hong kong
6-10-2008...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by :
wbuffett001
Dear Kalidas,
The famous website middle-east-onlinedotcom also gives the figure of USD 875 billion for Abu Dhabi Investment Authority.This figure of USD 875 billion for Abu Dhabi Investment Authority is quoted in many places. I mentioned only sovereign wealth funds ( not forex reserves) figures as quoted by Peter Heyward (for all the countries I mentioned). Anyway thanks for a detailed reply as you only can give.Have a nice day.
regards
wbuffett001
Tracked by: 6 Boarders
Yes kalidas was 100% on the dot the most brilliant fundamental analys on board we have......
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by :
jems000
A most popular Thread is going on MMB is "Will Nifty hit 3600 & sensex 12000?" which was created after 3000 points crash on Sensex 22 & 23 January` 2008 and also this thread is Quation not Answer. But there was one post posted by KALIDAS SIR on 03 January 2008 that Sensex would come to 12000 which came true today and his ability to predict major sensex crash before 26 january still came true.
HATS OF YOU SIR!!!!
here is post!
Posted by: Kalidas on (03-Jan-08 01:28 ) Rating
Price : BSE: Rs 93.65 ( -2.45 % ), NSE: Rs. 93.85 ( -2.29 % )
for Guest - King Porus, (Ref: 08-005)
There is nothing to be confusing about. I have said very clearly that I do fear that massive equity crash is coming soon. This is the reason I said that one should raise cash to 75% by selling progressively on or before 26/1.
The reason was the acute credit crisis for which I gave ample examples. Many banks and investment banks will be reporting their December quarterly numbers from 3rd week of January that will be devastating. Severe losses may be reported. I feared that one major US bank and a leading Investment Bank, that have seen Government of Abu Dhabi and Singapore investing over USD 17 Billions collectively, may report even larger losses, and possibly they could close the doors.
You can understand what happens if some major bank fails. In today`s world, almost all banks are inter-dependent. Failure of major bank can have cascading effect. This is why I said that major Indian banks operating abroad like SBI, BOI, IOB, ICICI may find their credit lines suddenly withdrawn.
When I said raise the cash up to 75% and keep only 25% in the equity - the message is very clear. SELL most of the high flyers and stay with valuable equity (at reduced holding level ) which have not yet seen their value reflected. Everything will fall - be it your favorite or mine. Whichever stock has gone up by 30% to 300% are likely to suffer severe downfall.
ADD to it the recent permission (from January 1) by RBI and SEBI, these two idiots, to permit short selling at such most vulnerable time. There will be computerized selling where at the touch of the button, massive selling wave will cause the stock prices to drop severely, On one hand they permit short selling and on the other they introduce `circuit breakers` at 5%,10% and 20% at their whims and fancies. Such measure should be introduced when the markets are in very stable mod, not at the time when the market takes the swoon by 200 points to 1000 points in a day.
Earlier, money used to flow from bonds to equity and vice versa. If bonds dropped, the money traveled to equity; and if equity dropped, the money will return to bonds or banks.
But today, there is only one way street. The bond market is at its worst (not in India) and almost scary where no one trust the other lender or borrower. If bonds dropped, the equities rose because of money flew from bonds to equity; but when the equities drop, where the money will go?
They do not get into bonds because of sub prime mess. People do not want to place the money into banks because banks are falling into pieces - look at Citicorp, Bank of America, HSBC, UBS, Northern rock in England etc - all are in serious trouble. This is why GOLD is rising - today up 2.3% to US$ 860 - but gold can not absorb trillions of dollars/euros/pounds/rupees/yeans or yens.
Most of liquidity you are seeing today are all paper money created out of thin air(by practice of deficit financing, trade deficits, budget deficits and Derivatives), and they will vanish into thin air with even higher speed.
Look at water. The rain brings down the water, but the heat reverts into vapor and throws back into thin air. This is why the money will disappear into thin air from where it came in at first place. This is going to happen for the first time in last 70 years. This is why the kind of crash that may come will be horrific.
Read further Part-II
Kalidas, Hong Kong
3-Jan-08
Tracked by: 0 Boarder
for tally
Profit is yours if you take it. Book the profit in scrips in which you are in money and buy back same scrips in violent correction.
If RBI eased CRR, it is good thing. They should reduce rates rather than reducing CRR - reducing CRR does not enlarge credit, as most banks in India are anticipating tight money conditions ahead in inter bank market.
You should remain long on Gas stocks like Indraprashtha Gas, GAIL, GSPL, Petronet, and State Owned Refineries, Buy LIC HSG FINANCE when it corrects more in violent crash. When there are no bids for such counters, is the time to buy them at 20% lower circuits
I am not bullish for RIL - as I had mentioned before, this stock is hyped up and its real value should not be above Rs 900. It has long way to go down - but do not listen to me. Others were telling me that it will never go down and see it is collapsing.
Not because of fundamentals, but the shares of RIL must have been pledged by the promoters for their various projects. If the share value go down, they will get margin calls and if they can not meet thousands of crores of margin calls, their shares will be simply sold off in the market. That will cause the market to fall also because of their index weighting
Kalidas, Hong Kong
6-10-2008...
In reply to:
Paulson`s Poison & Antidote
Posted by : tally
Dear Kalidas, your write up makes eminent sense. I have advised my daughter in USA to divert some of her savings to Indian banks. I am a long term investor and my holdings consist of RIL, Indraprastha gas, HUL, ITC, SAIL, Syndicate bank, GAIL, RPL and small holding of high risk cat & dog shares. Any comments? I remain in profit in above stocks notwithstanding my earlier exit would have ensured better profit.Normally I book profits at regular intervals. I have some little cash for stock market investment but contemplate diverting these funds to buy gold/silver. which one is better? RBI HAS REDUCED CRR, which for sure is good news. What specific measures should Govt / RBI must undertake to ensure liquidity commensurate with inflation control and reasonable growth?
Tracked by: 0 Boarder
Emerging markets hammered amid global crisis
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Emerging-market assets around the world came under heavy selling pressure on Monday, as the global financial crisis prompted a spike in risk aversion and encouraged investors to dump risky assets.
Led by a 16% plunge in Russian equities, emerging stock markets in Asia, Europe, Latin America, the Middle East and Africa all posted sharp losses.
Stocks in China, India, Russia and Brazil -- all of the BRIC heavyweights -- were deeply in the red.
In Moscow, the RTS stock index plunged 16%, leading the RTS exchange to suspend trading. In Asia, China`s Shanghai Composite index fell 5.2% and India`s Sensex index dropped 5.8%.
In Sao Paulo, the Bovespa stocks index tumbled 10% in intraday trading.
There is "a deepening of the deleveraging, risk reduction phase we saw last week," said Paul Biszko, senior emerging markets analyst at RBC Capital Markets. This deleveraging is going to last three to six months, he said.
"Fears of banking system vulnerabilities are spreading to Asia and Europe," Biszko said. "It`s not just a U.S. phenomenon. Everyone is becoming increasingly bearish."
The iShares MSCI Emerging Markets Fund (EEM:iShares:MSCI Emerg Mkt EEM 28.16, -2.56, -8.3%) , which tracks the performance of the MSCI Emerging Markets index, fell 7.7%.
On Wall Street, U.S. stocks tumbled at the open, with the Dow Jones Industrial Average falling about 250 points.
High-yielding, emerging-markets currencies fell sharply against the U.S. dollar. The Brazilian real tumbled 4% against the dollar, the South African rand fell 3% and the Turkish lira dropped 2%.
In the debt markets, the EMBI+ spread index has soared by a further 18 basis points to 458 basis points, according to data from RBC Capital Markets.
In Asian, equity markets dived. The hardest hit was Indonesia`s JSX Composite index, which tumbled 10%. Thailand`s SET index fell 6.5% and South Korea`s Kospi index dropped 4.3%. .
In the Middle East, Saudi Arabia`s TASI index fell 9.8% and the Dubai Financial Market General index dropped 7.6%.
Elsewhere around the world, South Africa`s All Share index fell 4.2% and the Czech Republic`s PX index dropped 5.5%.
In Istanbul, the IMKB-100 stock index dropped 7.4%.
The fall in Turkish equities is "nothing specific to Turkey really; it is all about the global markets," said Emre Tezmen, managing director of Istanbul-based brokerage Tera Stock Brokers.
"The spread of the crisis to Europe accentuated worries throughout the region," Tezmen said. "Russia is also sharply down. Turkish equities follow China and Russia quite closely." ...
Tracked by: 108 Boarders
it could going by the NYSE TRIN of 0.1 on Friday... i knew they will fall opening but they will retrace coz of that bullish TRIN which meant there were buyers at lower levels and hungry buyers with a trin of 0.1!!
See they are retracing already... sad i dint trust my own analysis and buy a Call today the 3600 or 3500 call which i was so tempted to buy....
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : vam_aru
RN,
Do you really think DOW will finish in green?, If it does along with P notes lifting, CRR rate cut we will be flying high tomorrow...
Tracked by: 6 Boarders
WE ARE ENTERING INTO THE PERIOD OF DERIVATIVE COLLAPSE. What you see options, futures, LBO, CDO, structured deposits or advances are nothing but derivatives. They are collapsing.
And what happens if the equities crashed and FII start short selling highly expensive Indian stocks like Reliance trading at 33 times PE, RNRL trading at 1oo times and other equities like Hindustan copper at 300 times PE and stocks like MMTC trading at 3000 times PE? It will not take more than 7 days for the market to crash from 20000 to 12000.
Read further Part-II
Kalidas, Hong Kong
3-Jan-08...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : jems000
A most popular Thread is going on MMB is "Will Nifty hit 3600 & sensex 12000?" which was created after 3000 points crash on Sensex 22 & 23 January` 2008 and also this thread is Quation not Answer. But there was one post posted by KALIDAS SIR on 03 January 2008 that Sensex would come to 12000 which came true today and his ability to predict major sensex crash before 26 january still came true.
HATS OF YOU SIR!!!!
here is post!
Posted by: Kalidas on (03-Jan-08 01:28 ) Rating
Price : BSE: Rs 93.65 ( -2.45 % ), NSE: Rs. 93.85 ( -2.29 % )
for Guest - King Porus, (Ref: 08-005)
There is nothing to be confusing about. I have said very clearly that I do fear that massive equity crash is coming soon. This is the reason I said that one should raise cash to 75% by selling progressively on or before 26/1.
The reason was the acute credit crisis for which I gave ample examples. Many banks and investment banks will be reporting their December quarterly numbers from 3rd week of January that will be devastating. Severe losses may be reported. I feared that one major US bank and a leading Investment Bank, that have seen Government of Abu Dhabi and Singapore investing over USD 17 Billions collectively, may report even larger losses, and possibly they could close the doors.
You can understand what happens if some major bank fails. In today`s world, almost all banks are inter-dependent. Failure of major bank can have cascading effect. This is why I said that major Indian banks operating abroad like SBI, BOI, IOB, ICICI may find their credit lines suddenly withdrawn.
When I said raise the cash up to 75% and keep only 25% in the equity - the message is very clear. SELL most of the high flyers and stay with valuable equity (at reduced holding level ) which have not yet seen their value reflected. Everything will fall - be it your favorite or mine. Whichever stock has gone up by 30% to 300% are likely to suffer severe downfall.
ADD to it the recent permission (from January 1) by RBI and SEBI, these two idiots, to permit short selling at such most vulnerable time. There will be computerized selling where at the touch of the button, massive selling wave will cause the stock prices to drop severely, On one hand they permit short selling and on the other they introduce `circuit breakers` at 5%,10% and 20% at their whims and fancies. Such measure should be introduced when the markets are in very stable mod, not at the time when the market takes the swoon by 200 points to 1000 points in a day.
Earlier, money used to flow from bonds to equity and vice versa. If bonds dropped, the money traveled to equity; and if equity dropped, the money will return to bonds or banks.
But today, there is only one way street. The bond market is at its worst (not in India) and almost scary where no one trust the other lender or borrower. If bonds dropped, the equities rose because of money flew from bonds to equity; but when the equities drop, where the money will go?
They do not get into bonds because of sub prime mess. People do not want to place the money into banks because banks are falling into pieces - look at Citicorp, Bank of America, HSBC, UBS, Northern rock in England etc - all are in serious trouble. This is why GOLD is rising - today up 2.3% to US$ 860 - but gold can not absorb trillions of dollars/euros/pounds/rupees/yeans or yens.
Most of liquidity you are seeing today are all paper money created out of thin air(by practice of deficit financing, trade deficits, budget deficits and Derivatives), and they will vanish into thin air with even higher speed.
Look at water. The rain brings down the water, but the heat reverts into vapor and throws back into thin air. This is why the money will disappear into thin air from where it came in at first place. This is going to happen for the first time in last 70 years. This is why the kind of crash that may come will be horrific.
Read further Part-II
Kalidas, Hong Kong
3-Jan-08
Tracked by: 108 Boarders
Well look what happen.... it kind of bounced off from 9800.... lets just hope it holds...... tsx down more than 10%....today damn......
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : BullSheetRules
Dear pkjattking,
Even I expect some recovery and close around 9800 for that scary, fearful headlines! Let us see!
Gud luk & happy investing! :)
Tracked by: 6 Boarders
A most popular Thread is going on MMB is "Will Nifty hit 3600 & sensex 12000?" which was created after 3000 points crash on Sensex 22 & 23 January` 2008 and also this thread is Quation not Answer. But there was one post posted by KALIDAS SIR on 03 January 2008 that Sensex would come to 12000 which came true today and his ability to predict major sensex crash before 26 january still came true.
HATS OF YOU SIR!!!!
here is post!
Posted by: Kalidas on (03-Jan-08 01:28 ) Rating
Price : BSE: Rs 93.65 ( -2.45 % ), NSE: Rs. 93.85 ( -2.29 % )
for Guest - King Porus, (Ref: 08-005)
There is nothing to be confusing about. I have said very clearly that I do fear that massive equity crash is coming soon. This is the reason I said that one should raise cash to 75% by selling progressively on or before 26/1.
The reason was the acute credit crisis for which I gave ample examples. Many banks and investment banks will be reporting their December quarterly numbers from 3rd week of January that will be devastating. Severe losses may be reported. I feared that one major US bank and a leading Investment Bank, that have seen Government of Abu Dhabi and Singapore investing over USD 17 Billions collectively, may report even larger losses, and possibly they could close the doors.
You can understand what happens if some major bank fails. In today`s world, almost all banks are inter-dependent. Failure of major bank can have cascading effect. This is why I said that major Indian banks operating abroad like SBI, BOI, IOB, ICICI may find their credit lines suddenly withdrawn.
When I said raise the cash up to 75% and keep only 25% in the equity - the message is very clear. SELL most of the high flyers and stay with valuable equity (at reduced holding level ) which have not yet seen their value reflected. Everything will fall - be it your favorite or mine. Whichever stock has gone up by 30% to 300% are likely to suffer severe downfall.
ADD to it the recent permission (from January 1) by RBI and SEBI, these two idiots, to permit short selling at such most vulnerable time. There will be computerized selling where at the touch of the button, massive selling wave will cause the stock prices to drop severely, On one hand they permit short selling and on the other they introduce `circuit breakers` at 5%,10% and 20% at their whims and fancies. Such measure should be introduced when the markets are in very stable mod, not at the time when the market takes the swoon by 200 points to 1000 points in a day.
Earlier, money used to flow from bonds to equity and vice versa. If bonds dropped, the money traveled to equity; and if equity dropped, the money will return to bonds or banks.
But today, there is only one way street. The bond market is at its worst (not in India) and almost scary where no one trust the other lender or borrower. If bonds dropped, the equities rose because of money flew from bonds to equity; but when the equities drop, where the money will go?
They do not get into bonds because of sub prime mess. People do not want to place the money into banks because banks are falling into pieces - look at Citicorp, Bank of America, HSBC, UBS, Northern rock in England etc - all are in serious trouble. This is why GOLD is rising - today up 2.3% to US$ 860 - but gold can not absorb trillions of dollars/euros/pounds/rupees/yeans or yens.
Most of liquidity you are seeing today are all paper money created out of thin air(by practice of deficit financing, trade deficits, budget deficits and Derivatives), and they will vanish into thin air with even higher speed.
Look at water. The rain brings down the water, but the heat reverts into vapor and throws back into thin air. This is why the money will disappear into thin air from where it came in at first place. This is going to happen for the first time in last 70 years. This is why the kind of crash that may come will be horrific.
Read further Part-II
Kalidas, Hong Kong
3-Jan-08
...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : sanjay38000
swnswx lost 2200 points in 5 days
Tracked by: 0 Boarder
Our tanking today is mostly driven by europe markets tanking..
--------------------------------
Lack of EU cooperation worsens turmoil: economists
By William L. Watts, MarketWatch
Last update: 9:03 a.m. EDT Oct. 6, 2008
LONDON (MarketWatch) -- Even a watered-down pledge by the European Union`s top leaders to "coordinate" individual efforts to shore up the troubled banking sector proved overly ambitious, undercutting the euro and exacerbating losses across European equity markets on Monday, economists said.
The hastily-called Paris meeting Saturday of top E.U. leaders -- French President Nicolas Sarkozy, German Chancellor Angela Merkel, British Prime Minister Gordon Brown and Italian Prime Minister Silvio Berlusconi -- offered no pan-European plan for dealing with troubled banks.
"Each government will act in its own way, but will have to coordinate with others," Sarkozy said at a news conference following the meeting Saturday.
The leaders also agreed to take steps to strengthen regulation and to call for more leeway under the EU`s growth and stability pact, which requires annual deficits to remain below 3% of gross domestic product and public debt to remain below 60% of GDP.
But with the ink on the leaders` joint statement barely dry, the unspooling of a German rescue plan for troubled property lender Hypo Real Estate prompted Berlin to indicate it would guarantee all personal deposits in the German banking system -- echoing controversial and much-criticized moves by Ireland and Greece last week.
Fearing a massive outflow of deposits to nations with full guarantees, Denmark followed suit. And France and Great Britain were seen under pressure to do the same. Meanwhile, confusion reigned over the exact terms of the German pledge.
As a result, European governments appear "dazed and confused," said Jim Reid, a strategist at Deutsche Bank. "And this isn`t helping confidence and will probably end up costing them more in the long run."
While Germany moved to shore up the Hypo Real Estate (DE:802770: news, chart, profile) rescue, problems cropped up elsewhere.
French banking giant BNP Paribas (FR:013110: news, chart, profile) moved to take control of troubled Belgian-Dutch lender Fortis` (BE:000380118: news, chart, profile) operations in Belgium and Luxembourg as well as international banking franchises in a 14.5 billion ($19.7 billion) cash and shares transaction. See full story.
Outside the euro zone, British Chancellor of the Exchequer Alistair Darling was reportedly weighing a plan that would call on U.K. taxpayers to recapitalize British banks. The measure would likely see taxpayers receive preferred share or warrants in troubled banks, which could pay significant dividends in the future, the Financial Times reported.
European equities fell sharply, led down by banking shares. See Europe Markets.
The euro dropped to a new 13-month low against the U.S. dollar and its lowest level against the Japanese yen in more than two years. See Currencies.
In the end, it`s almost certain that euro-zone members will follow Germany`s lead in guaranteeing deposits, said Simon Derrick, chief currency strategist at Bank of New York Mellon. And that`s not good news for the euro, he said.
"Although the move to provide such guarantees is undoubtedly better than the highly destabilizing alternative, this will raise questions about how these guarantees would be funded were they to be called upon," Derrick said, in a research note.
Moreover, recent developments leave the impression that politicians are responding to domestic events and have no overriding plan to deal with the crisis -- an impression that won`t help the euro.
"In the circumstances, it would not be surprising if investors decided to exit the euro and instead seek the security of a currency where just one government is responsible for financial policy," Derrick said.
The weekend meeting also heightened worries over the fiscal picture, said Marco Annunziata, global chief economist at UniCredit MIB.
"Most concerning is the statement that competition rules and fiscal limits should be interpreted with greater flexibility: this means governments are getting ready to exceed the [stability pact] limits and bail out or nationalize individual banks as necessary," he said. "In other words, less coordination, not more."
Economists at BNP Paribas said turmoil is unlikely to abate until officials take steps to address the root cause of the crisis by providing explicit guarantees for bank liabilities. European banks have virtually stopped lending money to each other due to fears of further bank failures.
"We think this is just the beginning of the European financial storm and European governments will need to be more forthcoming in their rescue plans in order to prevent outright euro selling," they wrote.
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