My prediction: DOW -500 tomorrow Tuesday Jan 22, 08….

[davelj]

I was on a plane for most of the day so I just got a review of the action.

From my first post in this thread: “I hope you’re right [the market declines big]. I just fear candy and cake (re: “surprise” rate cut) from Uncle Ben.”

Well, just as I suspected. Uncle Ben hands out more candy because God forbid anyone should lose some money or we should have a recession. Now, both of those things are going to happen going forward anyway, but at least the kiddies can pretend for another month that they won’t.

I actually thought the “surprise” cut would come tomorrow (Wednesday), after the market tanked 5% or so today. I thought maybe, just maybe, that Ben would think, “Let the children suffer just a little bit to remind them that bad things can happen sometimes.” But no. Too much to ask.

Given the 75 bps rate cut I’m actually surprised that we didn’t close in positive territory today. After all, I believe that this is the first time in the history of the Fed that (a) rates have been cut by more than 50 bps at one time, and (b) that an intra-meeting rate cut has been greater than 50 bps. It surprises me that that didn’t get the kids more hot and bothered – today’s market close was a Bronx Cheer. In my view, it shows how serious the problems are.

Shoes that will be dropping over the next 6-12 months that are not fully priced into stocks include: (1) Problems in Credit Card Land, (2) Problems in Commercial Real Estate Land, (3) Problems in Leveraged Lending Land, and (4) Recession, with all that implies. But at least we’re moving in the right direction.

[drunkle]

boa and wach both reported abysmal earnings… those stories got drowned out by the rate cut. maybe that’s what got the markets in a tizzy? whatever, some bit of info got out, info that spooked the institutionals and insiders, big ben included. i’m not so sure that the market move instigated the cut. rather, the markets got a jump on the action. and the upswing in reaction to the cut was dominated by the outsiders and casual gamblers.

another bit of news, on mbia:

NY Insurance Dept. Working With Bond Insurers To Stabilize Market
11:33 AM ET – Dow Jones News
NEW YORK -(Dow Jones)- The New York Insurance Department said Tuesday it is closely monitoring the health of bond insurers and working closely with companies to stabilize the market.
The department has played an active role in trying to shore up the sector, which guarantees some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. The department previously invited Warren Buffett’s Berkshire Hathaway (BRKA BRKB) to open a new bond insurance company in New York and gave quick approval to a capital-raising plan for top bond insurer MBIA Inc. (MBI).
Without being specific, the department said more injections of capital are possible.
“The Department is currently in discussions with other parties about possible future capital investments,” the department said in a release.

{cut}

[drunkle]

boa and wach both reported abysmal earnings… those stories got drowned out by the rate cut. maybe that’s what got the markets in a tizzy? whatever, some bit of info got out, info that spooked the institutionals and insiders, big ben included. i’m not so sure that the market move instigated the cut. rather, the markets got a jump on the action. and the upswing in reaction to the cut was dominated by the outsiders and casual gamblers.

another bit of news, on mbia:

NY Insurance Dept. Working With Bond Insurers To Stabilize Market
11:33 AM ET – Dow Jones News
NEW YORK -(Dow Jones)- The New York Insurance Department said Tuesday it is closely monitoring the health of bond insurers and working closely with companies to stabilize the market.
The department has played an active role in trying to shore up the sector, which guarantees some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. The department previously invited Warren Buffett’s Berkshire Hathaway (BRKA BRKB) to open a new bond insurance company in New York and gave quick approval to a capital-raising plan for top bond insurer MBIA Inc. (MBI).
Without being specific, the department said more injections of capital are possible.
“The Department is currently in discussions with other parties about possible future capital investments,” the department said in a release.

{cut}

[drunkle]

boa and wach both reported abysmal earnings… those stories got drowned out by the rate cut. maybe that’s what got the markets in a tizzy? whatever, some bit of info got out, info that spooked the institutionals and insiders, big ben included. i’m not so sure that the market move instigated the cut. rather, the markets got a jump on the action. and the upswing in reaction to the cut was dominated by the outsiders and casual gamblers.

another bit of news, on mbia:

NY Insurance Dept. Working With Bond Insurers To Stabilize Market
11:33 AM ET – Dow Jones News
NEW YORK -(Dow Jones)- The New York Insurance Department said Tuesday it is closely monitoring the health of bond insurers and working closely with companies to stabilize the market.
The department has played an active role in trying to shore up the sector, which guarantees some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. The department previously invited Warren Buffett’s Berkshire Hathaway (BRKA BRKB) to open a new bond insurance company in New York and gave quick approval to a capital-raising plan for top bond insurer MBIA Inc. (MBI).
Without being specific, the department said more injections of capital are possible.
“The Department is currently in discussions with other parties about possible future capital investments,” the department said in a release.

{cut}

[drunkle]

boa and wach both reported abysmal earnings… those stories got drowned out by the rate cut. maybe that’s what got the markets in a tizzy? whatever, some bit of info got out, info that spooked the institutionals and insiders, big ben included. i’m not so sure that the market move instigated the cut. rather, the markets got a jump on the action. and the upswing in reaction to the cut was dominated by the outsiders and casual gamblers.

another bit of news, on mbia:

NY Insurance Dept. Working With Bond Insurers To Stabilize Market
11:33 AM ET – Dow Jones News
NEW YORK -(Dow Jones)- The New York Insurance Department said Tuesday it is closely monitoring the health of bond insurers and working closely with companies to stabilize the market.
The department has played an active role in trying to shore up the sector, which guarantees some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. The department previously invited Warren Buffett’s Berkshire Hathaway (BRKA BRKB) to open a new bond insurance company in New York and gave quick approval to a capital-raising plan for top bond insurer MBIA Inc. (MBI).
Without being specific, the department said more injections of capital are possible.
“The Department is currently in discussions with other parties about possible future capital investments,” the department said in a release.

{cut}

[drunkle]

boa and wach both reported abysmal earnings… those stories got drowned out by the rate cut. maybe that’s what got the markets in a tizzy? whatever, some bit of info got out, info that spooked the institutionals and insiders, big ben included. i’m not so sure that the market move instigated the cut. rather, the markets got a jump on the action. and the upswing in reaction to the cut was dominated by the outsiders and casual gamblers.

another bit of news, on mbia:

NY Insurance Dept. Working With Bond Insurers To Stabilize Market
11:33 AM ET – Dow Jones News
NEW YORK -(Dow Jones)- The New York Insurance Department said Tuesday it is closely monitoring the health of bond insurers and working closely with companies to stabilize the market.
The department has played an active role in trying to shore up the sector, which guarantees some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. The department previously invited Warren Buffett’s Berkshire Hathaway (BRKA BRKB) to open a new bond insurance company in New York and gave quick approval to a capital-raising plan for top bond insurer MBIA Inc. (MBI).
Without being specific, the department said more injections of capital are possible.
“The Department is currently in discussions with other parties about possible future capital investments,” the department said in a release.

{cut}

[HereWeGo]

Basically, drunkle, the banks can pay lower and lower rates to borrow depositors’ capital. The yield curve may steepen due to inflation worries, so the banks’ lending rates go up a bit, or at least don’t drop commensurate with the fall on the low end. Yay banks!

[HereWeGo]

Basically, drunkle, the banks can pay lower and lower rates to borrow depositors’ capital. The yield curve may steepen due to inflation worries, so the banks’ lending rates go up a bit, or at least don’t drop commensurate with the fall on the low end. Yay banks!

[HereWeGo]

Basically, drunkle, the banks can pay lower and lower rates to borrow depositors’ capital. The yield curve may steepen due to inflation worries, so the banks’ lending rates go up a bit, or at least don’t drop commensurate with the fall on the low end. Yay banks!

[HereWeGo]

Basically, drunkle, the banks can pay lower and lower rates to borrow depositors’ capital. The yield curve may steepen due to inflation worries, so the banks’ lending rates go up a bit, or at least don’t drop commensurate with the fall on the low end. Yay banks!

[HereWeGo]

Basically, drunkle, the banks can pay lower and lower rates to borrow depositors’ capital. The yield curve may steepen due to inflation worries, so the banks’ lending rates go up a bit, or at least don’t drop commensurate with the fall on the low end. Yay banks!

[drunkle]

oh, i understand that, higher profit margins… whether or not that offsets outstanding losses, though, is the question; can the banks bail out water faster than they’re taking it on? despite the sequentially larger bilge pump given to them by the fed since august, continued deflation in re and now bond ratings questions resulting in their 95% loss in profits, i’m not so sure…

[drunkle]

oh, i understand that, higher profit margins… whether or not that offsets outstanding losses, though, is the question; can the banks bail out water faster than they’re taking it on? despite the sequentially larger bilge pump given to them by the fed since august, continued deflation in re and now bond ratings questions resulting in their 95% loss in profits, i’m not so sure…

[drunkle]

oh, i understand that, higher profit margins… whether or not that offsets outstanding losses, though, is the question; can the banks bail out water faster than they’re taking it on? despite the sequentially larger bilge pump given to them by the fed since august, continued deflation in re and now bond ratings questions resulting in their 95% loss in profits, i’m not so sure…

[drunkle]

oh, i understand that, higher profit margins… whether or not that offsets outstanding losses, though, is the question; can the banks bail out water faster than they’re taking it on? despite the sequentially larger bilge pump given to them by the fed since august, continued deflation in re and now bond ratings questions resulting in their 95% loss in profits, i’m not so sure…

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