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Tracked by: 0 Boarder
Dow drops more than 450 points as investors worry that recent government actions won`t be enough to revive the economy....
In reply to:
The crisis: A timeline
Posted by :
sambala
WASHINGTON - The country`s economic health won`t snap back quickly even if badly needed confidence in the U.S. financial system returns and roiled markets finally calm, Federal Reserve Chairman Ben Bernanke cautioned Wednesday.
Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said in a speech to the Economic Club of New York.
The government`s new powers under the $700 billion financial bailout package signed into law two weeks ago should help reduce risks to the economy, Bernanke said.
Tapping that new authority, the Treasury Department announced Tuesday that it will inject up to $250 billion in U.S. banks in return for partial ownership. It is hoped that banks will use the cash infusion to rebuild their reserves and lend money more freely to businesses and consumers.
The government also plans to buy rotten mortgages and other bad debts held by banks, another new power granted by the bailout package.
The rationale behind capital injections and buying bad debts is to unclog credit. That should help financial markets function more normally again and — in time — help the wobbly economy get back on stronger footing.
"We now have the tools we need to respond with the necessary force to these challenges," Bernanke told the group. Still, he warned, "I am not suggesting the way forward will be easy."
In his speech, Bernanke did not give a fresh clue about the Fed`s next move on interest rates.
In a coordinated assault on the global financial crisis last week, the Fed and other major central banks ordered hefty rate reductions. The Fed dropped its key rate to 1.50 percent, from 2 percent, in an emergency move.
Many economists said the Fed might cut rates again at its regularly scheduled meeting later this month, or may be later this year.
Bernanke said it is likely economic activity will "fall short of potential for a time."
A growing number of analysts predict the economy will actually shrink in the final three months of this year and the first three months of next year, meeting the classic definition of a recession.
"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning," Bernanke said.
Even with a flurry of radical steps recently taken by the Fed, the U.S. government and others around the world, "credit markets will take some time to unfreeze," Bernanke said.
The economy had been losing traction even before the financial crisis intensified last month. Fallout from the housing market`s collapse continues to be the primary source of weakness for the economy and for financial markets.
All the problems have led to employers cutting jobs and other investments. Nervous consumers have hunkered down. Slowdowns overseas is sapping export growth, which had been a key source keeping the economy afloat.
"These restraining influences on economic activity, however, will be offset somewhat by the favorable effects of lower prices for oil and other commodities on household purchasing power," Bernanke said.
With the economy slowing, inflation should moderate, he added.
As with financial crises in the past, the root of the current debacle is a loss of confidence by investors and the public in the strength of key financial institutions and the overall financial markets.
"The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market and allowing the normal business of extending credit to households and firms to resume," Bernanke said.
Tracked by: 0 Boarder
WASHINGTON - The country`s economic health won`t snap back quickly even if badly needed confidence in the U.S. financial system returns and roiled markets finally calm, Federal Reserve Chairman Ben Bernanke cautioned Wednesday.
Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said in a speech to the Economic Club of New York.
The government`s new powers under the $700 billion financial bailout package signed into law two weeks ago should help reduce risks to the economy, Bernanke said.
Tapping that new authority, the Treasury Department announced Tuesday that it will inject up to $250 billion in U.S. banks in return for partial ownership. It is hoped that banks will use the cash infusion to rebuild their reserves and lend money more freely to businesses and consumers.
The government also plans to buy rotten mortgages and other bad debts held by banks, another new power granted by the bailout package.
The rationale behind capital injections and buying bad debts is to unclog credit. That should help financial markets function more normally again and — in time — help the wobbly economy get back on stronger footing.
"We now have the tools we need to respond with the necessary force to these challenges," Bernanke told the group. Still, he warned, "I am not suggesting the way forward will be easy."
In his speech, Bernanke did not give a fresh clue about the Fed`s next move on interest rates.
In a coordinated assault on the global financial crisis last week, the Fed and other major central banks ordered hefty rate reductions. The Fed dropped its key rate to 1.50 percent, from 2 percent, in an emergency move.
Many economists said the Fed might cut rates again at its regularly scheduled meeting later this month, or may be later this year.
Bernanke said it is likely economic activity will "fall short of potential for a time."
A growing number of analysts predict the economy will actually shrink in the final three months of this year and the first three months of next year, meeting the classic definition of a recession.
"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning," Bernanke said.
Even with a flurry of radical steps recently taken by the Fed, the U.S. government and others around the world, "credit markets will take some time to unfreeze," Bernanke said.
The economy had been losing traction even before the financial crisis intensified last month. Fallout from the housing market`s collapse continues to be the primary source of weakness for the economy and for financial markets.
All the problems have led to employers cutting jobs and other investments. Nervous consumers have hunkered down. Slowdowns overseas is sapping export growth, which had been a key source keeping the economy afloat.
"These restraining influences on economic activity, however, will be offset somewhat by the favorable effects of lower prices for oil and other commodities on household purchasing power," Bernanke said.
With the economy slowing, inflation should moderate, he added.
As with financial crises in the past, the root of the current debacle is a loss of confidence by investors and the public in the strength of key financial institutions and the overall financial markets.
"The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market and allowing the normal business of extending credit to households and firms to resume," Bernanke said.
...
In reply to:
The crisis: A timeline
Posted by : sambala
Bernanke: Quick economic rebound not in cards
Tracked by: 0 Boarder
Bernanke: Quick economic rebound not in cards ...
In reply to:
The crisis: A timeline
Posted by : sambala
U.S. stocks sharply lower after downbeat data wave
Intel advances after third-quarter report; Bernanke speech to come
U.S. stocks dropped at the start on Wednesday after data underlined a recession is likely to come or is already under way, dispelling any optimism on better-than-forecast results from the Coca-Cola Co., Intel Corp. and J.P. Morgan Chase
Retail sales were worse than expected, core PPI was hotter than forecast, and the Empire State Index outcome was fairly ugly,
Tracked by: 0 Boarder
8900 or may be 8400 is possible. Beware...
In reply to:
Do you see the Sensex slipping below 10,000 in October?
Posted by : MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger
Markets still in bears' grips: Modern Shares
Market Analysis - Technical View
Posted by : MMB MessengerTracked by: 0 Boarder
Neppolian Pillai of Modern Share & Stockbrokers feels the markets are still not out of the woods and the bounceback rally was on the cards. ...
Tracked by: 0 Boarder
When everybody expects then it does not happens. We will see...
In reply to:
Do you see the Sensex slipping below 10,000 in October?
Posted by : MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger
Tracked by: 111 Boarders
Dear SANJU,
We may see Nifty hitting 2970 within a few days and
bottom of about 2870 may not be too far away. Correction
may be over in October. However Dow may linger on months
near its bottom....
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
SANJU786
HI HLN,
I DONT THINK NIFTY WILL GO DOWN TO 2970 IN HURRY, MAX IT MAY TOUCH 3150, MY TARGET 3800 BEFORE EXPIRY.
MAY BE IN NOV OR DEC NIFTY WILL START TRADING SUB 3000 LEVELS.
REGARDS
SANJU
Tracked by: 1 Boarder
let me add ..i have been thru all the crashes above and held onto the same stocks for dear life. Let me explain why stocks rise and fall in india (O we are still a special case). Why/ Well for starters we have little depth - whcih few deep pocket investors. This bull run promised to be diff as we thght FII`s were deep enough
they it turend out was they were in deep trouble so much so that they sold right left and centre without any care for valuations
our Regulators have a penchant to wake late - so sure enough short selling was introduced at the fag end of the run.
then again we have operators who can run up a scrip to a price they like and then ofcourse no percentage fall is enough. All this is easy to track but who will do it? no one and till then we will have a den of speculation not investment - lo and behold some valudations if we were invetors we would be buuying ......
In reply to:
What to do when markets fall and can fall further?
Posted by : latikav
Stock market crashes are not different from personal crises, first comes denial, then disbelief and depression.
Coming out of it is difficult but not impossible. That`s what investors need to do, even if emotions have no place where money is involved.
Financial advice remains the same: buy things at the right price and don`t get greedy.
And the experience in India, going back to the Harshad Mehta scam (1992-93), the economic slowdown (1995-96) and the burst internet bubble (2000), all saw massive market crashes, which, in hindsight, were all opportunities.
Kinds of Investors----------So does that mean you should start investing now? There are two kinds of investors today.
One is beyond his mid-thirties and has hence bled in the earlier crises too. If he lost everything this time too, he should give up on equities. Debt, the safe variety like fixed deposits, is his best hope. But those who have some cash left, by lowering exposure to equities starting, say, two years ago, have some hope. They can now begin scouting for stocks.
Then, there are people who have been investors since 2003; they have been hit by a long epidemic of the winner`s curse. Those who shifted into cash are the wise ones; they just have to wait for good picks. The others who are sitting on huge losses, this is the best time to start applying the basics of investing.
When to invest?---------------------------First, reassess your personal financial health. If liabilities are higher than assets or the gap is narrow, and similarly with expenditure and income, set it right. This has nothing to do with investing, but first your house should be in order. It may mean selling off loss-making shares, a holiday home or any non-essential investment. If you have borrowed to invest in shares get rid of that loan and this practice.
With your financial income secure, now focus on your portfolio. Is the asset allocation appropriate? If this rally has made you nervous, shift towards fixed income, the secured variety, mind you. FDs are giving you returns of 10.5%, not the 6% you were getting some years ago. Use this time to rebalance your debt portfolio, lock into some of these debt instruments. Chances are you won`t see these rates in some years from now.
Investment tips---------------------
If you are a mutual fund investor, with a SIP, do nothing, just examine if your scheme is a sound one. Is the investment theme a broad one or does it tie the fund manager to a particular asset class.
Broad themes are better because exposure to a sector or segment is riskier now.
In equities, look at your investments. A stock may have halved from Rs 100, but it can halve again. Scrutinise its fundamentals; look at earnings growth for the next two years, its cash position, dilution prospects and, most importantly, management quality.
Throw out those fancy bull market ratios like EV/EBIDTA (enterprise value divided by earnings before interest, depreciation, tax and amortisation), P/E (price to earnings ratio) is back in fashion.
continued...................
Tracked by: 12 Boarders
SENSEX 15778....................
In reply to:
How much more downside do you see for the Sensex?
Posted by : MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger
Tracked by: 0 Boarder
8800 IS THE TECHNICAL TRGT.FOR THE SENEX AND BELOW 10000 IN TWO TRADING SESSION WHOLE OCTOBER IS FAR AWAY....
In reply to:
Do you see the Sensex slipping below 10,000 in October?
Posted by : MMB Messenger
Dear Boarders,Do let us know your views and opinions on the poll.-MMB Messenger
Tracked by: 0 Boarder
Paul Krugman said that the present bailout plan is much better. He feels that this plan actually addresses the critical problem of inadequate capital at the banks and the need for guarantees to calm the markets down. ...
Tracked by: 1 Boarder
Dear
The world is changing and changing very fast.
Developed countries have begun the war against liquidity and recession thereby acknowledging that they are amist a serious crisis situation and need some unprecendent steps to minimising the risk
The steps, moves & intervention may not be liked by the markets initially but it will realize if this war has to be won these bitter pills are must. If these doses postpond the crisis for qtr or half year we may get some more clarity and a better feeling of how deep is the crisis. This better assessment pain as most of the pain is quiet visible can make all the difference.
Indian government has also made unprecendent moves in this front to infuse more liquidity in this system.
With world giving up most of its speculative positions, overpricing and now living with utmost caution can make a better world. If we start identifying growth engines in the economies we can definatly change the the course world economies
Cheers...
In reply to:
Is indian economy collapsing????!!!!
Posted by : rpandey
Hi marketman,
In today`s globalised world all economies are linked to one another more or less, so how could a major financial crises not affect Indian economy. Having said that Indian economy on the whole is less export dependent than say China`s excluding sectors like IT. Stock markets are not true barometers of strength of an economy esp in short term, they are dependent more on factors such as liquidity, valuations and expectations. They may rise or fall to crazy levels but does it mean the Indian growth story has ended? That is the question one needs to ask oneself.
Just because we are not making 10% returns every month does not mean Indian economy has collasped, it may be slowing down but if one looks around he can surely find good growth stories at interesting valuations now. The only need is to buy low and stay long enough to get your returns.
Rakesh
Tracked by: 0 Boarder
Bush: Bailout will `preserve free enterprise`
President calls the government a `passive investor` in banks, says he is confident in a long-term recovery
President Bush, seeking to allay concern about federal intervention in the market, said Wednesday that the government will be a "passive investor" in shoring up banks.
"It`s very important for the American people to know that the program is designed to preserve free enterprise, not replace it," Bush said in a meeting with his Cabinet at the White House.
On Tuesday, his administration announced a $250 billion cash infusion into selected banks to help stabilize the system and nudge banks into lending again. Despite the plan, Wall Street remains wary of job losses, the housing crisis and consumers` decision to curb spending.
Retail sales fell by the largest amount in three years as worried consumers stayed away from malls and auto showrooms in the midst of the country`s financial meltdown.
The Commerce Department reported Wednesday retail sales decreased 1.2% last month, nearly double the expected drop of 0.7%. The decline - the largest since retail sales fell by 1.4% in August 2005 - fueled talk that the U.S. economy is in recession.
"There`s no question that our economy is weaker today because of the credit crisis," said White House deputy press secretary Tony Fratto. "That`s why it is so critical that we put in place these programs that will restore credit and allow our banking sector begin to support growth again."
Bush said the program to help the banks is limited and designed so that the shares will eventually be sold back and that the banks will remain privately under private control.
"The government will be a passive investor," he said. "There won`t be government officials sitting on the boards of private companies."
The president said the plan was necessary to deal with extraordinary hardship in the U.S. economy.
"They are necessary and I`m confident in the long run, that this economy will come back," he said.
Bush, who sat next to Treasury Secretary Henry Paulson during the Cabinet Room meeting, said Wall Street was not the sole beneficiary of the government intervention.
"The American people must understand that this carefully structured plan is aimed at helping you," he said. "If I`d have thought this situation would have been contained only to Wall Street, we`d have had a different response. But in our judgment, had we not acted decisively at the time we did, the credit crunch, the inability for banks in our communities to loan to your businesses would have affected the working people and the small businesses of America."
...
In reply to:
The crisis: A timeline
Posted by : sambala
Fears send London shares crashing
Recession fears came to the fore today to undo the rally in London shares, sending the FTSE 100 index down more than 7 per cent.
More grim news on the economy, including a rapid raise in unemployment figures, sparked fears for investors that Government action would not be enough to avoid a long-term recession.
The concerns were echoed around the world. In New York, the Dow Jones also fell nearly 4 per cent. Both France`s Cac and Germany`s Dax also fell nearly 7 per cent.
In London, Heavyweight commodity stocks were weighed down by falling oil and metal prices.
The declines come after a recent rally on optimism over global banking bail-outs.
The downbeat economic sentiment was not helped after UK unemployment jumped at its fastest rate in 17 years during the three months to August.
Miners occupied the top ten places on the blue-chip fallers board after metal prices dipped, leaving Xstrata - off 247p at 1069p - the leading Footsie casualty with an 18 per cent plunge.
The stock was closely followed by Kazakhmys down 81p at 352.25p and Anglo American off 262p at 1398p as brokers at Bernstein marked down the sector on weakening demand.
The fears sent crude oil for November delivery down to 76.05 dollars a barrel - the lowest since September last year - as oil cartel OPEC also scaled back its estimates for global demand in 2009.
Tracked by: 1 Boarder
Flying one bankrupt airline felt a little awkward, but by the time half a dozen were in the same condition, it seemed perfectly natural. That would apply to the Detroit Three. There is still an appetite out there in America`s heartland for Detroit iron, and in the end bankruptcy may be the best way to continue to satisfy it.
...
In reply to:
No one is too big not to fall
Posted by : sambala
GM: Better off bankrupt
The automaker is in trouble, but even Chapter 11 would be better than hooking up with Chrysler.
By Alex Taylor III, senior editor
NEW YORK (Fortune) -- GM certainly is keeping a close eye on its cash these days.
One supplier reports he is now getting paid 60 days after he presents an invoice - not the 30 days he was used to. Worse, the clock doesn`t start ticking until after the bills get approved in Detroit - and then sent to Arizona for processing.
Next thing you know, GM will be inflating its float by cutting supplier checks on banks in Fiji that will take weeks to clear.
It is a measure of GM`s desperation that it is reported to be considering a linkup with Chrysler to get access to Chrysler`s cash so it can remain in business. The idea has provoked nearly universal skepticism among analysts and GM watchers.
With good reason; they have history on their side. The list of unsuccessful auto mergers stretches from the present day - Daimler (DAI) and Chrysler, BMW and Rover - all the way back to Studebaker-Packard and Nash-Hudson.
Buying Chrysler would only get GM (GM, Fortune 500) more of what it doesn`t need: more brands, more models, more factories, more employees, more dealers. You have to wonder what makes GM think it could run Chrysler`s operations more successfully than it has run its own. Like a second marriage, a GM/Chrysler merger would be a triumph of hope over experience.
So what`s an ailing automotive giant to do?
GM has the wrong products to sell into a shrinking market and can offer little or nothing in the way of financing to its customers.
To remain liquid through next year, it needs to raise $10 billion to $15 billion through a combination of internal measures, borrowing and asset sales. That`s next to impossible these days. With some of its bonds selling for less than 50 cents on the dollar, the cost of new debt would be prohibitive. Not even vulture investors are clamoring to buy shuttered parts or assembly plants. And Hummer, which GM is trying to shed, does not appear to be the next iconic American brand. Harley-Davidson it isn`t.
Bailout or bust
So how about a government bailout? What`s good for GM is good for the country, and vice versa. The federal government has promised more than $1 trillion to keep banks, insurance companies and other financial institutions afloat. Couldn`t it find another $100 billion or so to invest in the Detroit Three on top of the $25 billion in loans already approved?
A government loan wouldn`t be about protecting well-compensated union jobs or keeping afloat inefficient suppliers in Michigan and Ohio. It could be directed toward advancing Detroit`s and the country`s strategic interests by speeding development of alternative fuel technologies that reduce our dependence on foreign oil as well as help limit the generation of greenhouse gases.
GM may have a decent shot at that in a Democratic administration. If not, there is bankruptcy. That`s a horrible possibility, to be sure, and one that GM claims is not an option because it would destroy consumer confidence in its vehicles. Who is going to accept a three-year warrantee on a new car from a bankrupt company?
But hear me out. Bankruptcy would give GM a chance to negotiate further cost reductions with its union workers, work out its obligations with those suppliers that are still solvent, and help speed the rationalization of its dealer body.
Would GM then be stigmatized as the only bankrupt auto company? No way. Ford (F, Fortune 500) and Chrysler would immediately find that they have been made uncompetitive by GM`s actions and quickly follow it into Chapter 11.
Tracked by: 0 Boarder
Yes tektrader,
JET AIRWAYS sacks so many.
Ooops.. all of you hold on to your jobs, stop coming to MMB and take what you have with both hands....
In reply to:
Will Sensex Test 6250 - 2004 Top / 2000 Top
Posted by :
tektrader
Gentelman with world economy at the brink of largest recession it has faced yet, it is not that tough to foresee sensex testing 2000 top of 6150 and 2004 peak of 6250... all comments welcome.
Tektrader
