2008 again?

[odysseus2000]

While we have been meandering, another year has gone past. Shouldn't the title of the thread now be "Isn't 2008 so last year?"

Ha!
Or continuing from johnhemming:

But continuing from johnhemming why does the negative spike promote the likelihood of another "proper financial crisis" ?

I don't think it does. It causes difficulties for countries like Venezuela and Saudi Arabia, but the general world economy finds lower energy prices a stimulus to growth.

"Is 2019 going to be a boom bull year, because we've got lower energy prices, and hence a growth stimulus?"

If markets were as easy as low energy costs = boom, there would be a lot of rich investors.

Regards,

[Ashfordian]

Now we know why the US Treasury Secretary released that statement just before Christmas.

From the BBC Business page:

The European Central Bank has appointed three temporary administrators to take charge of Italy's Carige in a bid to save the struggling lender after it failed to raise capital late last year.

Several members of Carige's board, including the chief executive, resigned on Wednesday. The bank had tried, and failed, to raise about €400m (£360m).

"The ECB appointed Fabio Innocenzi, Pietro Modiano and Raffaele Lener as temporary administrators... tasked with safeguarding the stability of (Carige)," the ECB said in a press release.

[odysseus2000]

Now we know why the US Treasury Secretary released that statement just before Christmas.

From the BBC Business page:

The European Central Bank has appointed three temporary administrators to take charge of Italy's Carige in a bid to save the struggling lender after it failed to raise capital late last year.

Several members of Carige's board, including the chief executive, resigned on Wednesday. The bank had tried, and failed, to raise about €400m (£360m).

"The ECB appointed Fabio Innocenzi, Pietro Modiano and Raffaele Lener as temporary administrators... tasked with safeguarding the stability of (Carige)," the ECB said in a press release.

Nice start to 2019!

Dow futures down well over 300 points as I type.

All fits with the heavy Christmas Eve selling when likely someone got the nod that trouble was coming & this was then concealed letting those in the know get short from elevated positions. Situation normal!

Meanwhile the Fed are raising rates.

Regards,

[odysseus2000]

Fairly bland statement although interesting how one of italies "top" banking families has lost a few hundred million Euros buying into this dog, although who knows how accurate this reporting is:

https://uk.reuters.com/article/uk-euroz ... KKCN1OW0KE

Regards,

[dspp]

While we have been meandering, another year has gone past. Shouldn't the title of the thread now be "Isn't 2008 so last year?"

Ha!
Or continuing from johnhemming:

I don't think it does. It causes difficulties for countries like Venezuela and Saudi Arabia, but the general world economy finds lower energy prices a stimulus to growth.

"Is 2019 going to be a boom bull year, because we've got lower energy prices, and hence a growth stimulus?"

If markets were as easy as low energy costs = boom, there would be a lot of rich investors.

Regards,

Nevertheless, at a time when global:
- oil prices are low;
- interest rates are low;
- commodity prices are low;
one would tend to expect higher growth rates, and less concerns re indebtedness levels, than we are seeing. There is plenty to be worried about.

regards, dspp

[GoSeigen]

Now we know why the US Treasury Secretary released that statement just before Christmas.

Pardon my ignorance, but which statement... and why?

GS

[zico]

Reference is to this statement - posted just before Christmas.

U.S. Treasury Secretary Steven Mnuchin confirmed that he called the heads of the six largest U.S. banks following a tumultuous week that saw a dive in the stock market and partial government shutdown.

In a statement posted to Twitter on Sunday, Mnuchin said that each of the CEOs “confirmed they have ample liquidity for lending to consumer, business markets and all other market operations.”

[odysseus2000]

Now we know why the US Treasury Secretary released that statement just before Christmas.

Pardon my ignorance, but which statement... and why?

GS

Presumably the statement that the US Treasury secretary had personally called the major US banks to check that the then private communication from the ECB that they were going to appoint administrators of an Italian bank would not trouble them.

Then there were several statements that the US Treasury secretary regularly calls the heads of the major US banks to discuss their liquidity & the market rallied for 4 days & now we get the ECB public statement.

I have no idea if the US Treasury Secretary call to US banks is routine, but I have never heard of it being done in normal times but that means nothing. All kinds of things happen that I know nothing about.

I have also no idea how serious this Italian bank is, everything I have read suggests it isn't significant, but that is how things began before the 2008 slide.

To me all these things are a reason to be more wary, to raise cash, look to short index & trade gold so long as it goes up. My appetite for long equities is low to non existent just now, but could change at any moment depending on news & market sentiment.

Regards,

[Ashfordian]

Now we know why the US Treasury Secretary released that statement just before Christmas.

Pardon my ignorance, but which statement... and why?

GS

https://www.bbc.co.uk/news/business-46669300

Now the statements made in this release make sense

[tikunetih]

The most germane recent comment, IIRC, had to do with energy price spikes VS proper financial crisises and the current season being similar to 2008.

1987, not 2008.

1987: 5 years into a new secular bull market (cf. 2018 also being 5 years into a new secular bull market), US markets experienced a gut-wrenching 35% decline.

From the bottom of that 1987 decline, it took 3 1/2 years for the market to decisively exceed its pre-"crash" levels. Think on the market mood during that 3 1/2 year period, as economies struggled and recovery was stuttering and slow.

Yet, the market and economies did recover, and much more besides: by the end of that secular bull market in Spring 2000, the US market was 360% higher than its August 1987 pre-crash highs. That bears repeating: not 360% higher than the post-crash lows, but 360% higher than the August 1987 pre-crash highs.

Some key factors during that secular bull market:
- massive technology innovation and its widespread adoption driving productivity gains;
- energy prices becoming progressively more affordable, removing the most significant headwind to economic growth and common trigger for equity bear markets;
- rapidly growing middle classes in the West driving consumption.

Looking through the headlines and the "fog of war", what do we have in the world today?


Never underestimate humans' desire to make sense of the world around them by looking for patterns, aka "signs from the gods"

[TheMotorcycleBoy]

So are we looking at cyclical bear or a "correction?"

https://www.investopedia.com/terms/b/bearmarket.asp

Please cast your votes.

[GoSeigen]

Now the statements made in this release make sense

Oh, so we're meant to believe that the US Treasury Secretary called the six largest US bank CEOs and made it public because he got wind of the administration of an obscure Italian bank with a minuscule $25bn of assets?????

Blimey...


GS

[Ashfordian]

Now the statements made in this release make sense

Oh, so we're meant to believe that the US Treasury Secretary called the six largest US bank CEOs and made it public because he got wind of the administration of an obscure Italian bank with a minuscule $25bn of assets?????

Blimey...


GS

Contagion.

However if you know better let's hear it?

[TheMotorcycleBoy]

Regarding Mnuchen calling those banks on the Sunday, I remember listening to R4 first thing on the monday. My naive newbie take on the matter was, as it was just following mass sales on the US markets the previous week, it was to ensure that the banks had necessary liquidity to fund any short-term rush for cash.

But as I say, it's just my naive recollection...go easy on the flames if I have things wrong.

Matt

[WorkShy]

This has nothing to do with a minscule Italian bank. Mnuchin was simply trying to improve market sentiment by implying that US banks were fine. Everybody tends to worry about another 2008 so he was trying to stem that fear. The problem is that this is nothing to do with US banks. We've just had a host of negative higher frequency survey data (poor global PMIs out of Europe and China, CFO surveys showing high levels of bearishness etc) combined with yield curve inversion, the big drop in oil prices, government shutdown, Trump being Trump etc. Hard data in the US has been quite good but the market is thinking forward and is concerned that the next recession might be imminent.

You take those issues and they overlay the vast mismatch between the huge need for liquidity from the buyside funds and the very little liqudity provided by the sellside banks and that's a recipe for volatility and price falls. Banks have been regulated out of taking risk by the Volcker Rule, Frank-Dodd Act, Basel III RWA. In the meantime, fund AUMs have ballooned, especially passive funds and momentum based CTAs. Also the number of funds and ETFs where you can sell intraday or daily has risen over the last decade. So you get this bifurcation in volatility leading to an the exit door that has never been smaller. Liquidity in S&P futures in 2018 was less than a third of that observed in the prior 10 years. The last time it was this thin was 2009. Liquidity in single stocks is even worse.

It's not as though actual volatility has been that anomalous. The realized vol on the S&P500 was 17% in 2018, which is about 75th percentile, but it's the highest since 2011 and comes off an anomalously low 6% vol in 2017. December is also about the worse month you could choose for retail investors to attempt large scale exits.

[GoSeigen]

However if you know better let's hear it?

https://www.lemonfool.co.uk/viewtopic.php?p=190248#p190248

As for 2008, I don't believe this is a repeat, neither in the particular sense of a debt/banking crisis nor the general economic sense of imminent collapse of equity markets. If anything it's more like 2007 (early cracks, short yields still rising), so maybe a year or two of volatility ahead before a bottom for USA. And UK markets already look decent value to me, but what do I know?? I also still believe markets are not going to correlate like 2008 so the deeply unfashionable asset picking may be important for outperformance.

I think there is a bit less than zero chance of contagion from that particular bank failure.

GS

[odysseus2000]

Apple's profit warning adds to the thesis that business is slowing around the world.

This article paints a bearish picture along with some general comments including that we have had the worst S&P December since the Great Depression (which is a bit misleading as the 500 share index wasn't created till 1957, it was much narrower in the Great Depression https://en.wikipedia.org/wiki/S%26P_500_Index) :

https://www.reuters.com/article/us-usa- ... SKCN1OX01P

The Apple profits warning has sales at ~12% below consensus estimates. Many are arguing this puts a bottom in for Apple, down about 7% in after hours and now well below is $1.1 trillion valuation of not so long ago, but we shall see.

It will now be interesting to see if the five day strength since the Christmas Eve sell off holds and if not whether the markets take out that low.

Some are now calling for a bottom in the markets, but with the Fed raising rates, Apple slowing and who knows what consequences of the tariff disputes and the other issues around the world it is a brave investors who puts all the funds he or she has into equities.

Regards,

[TheMotorcycleBoy]

Surely a profit warning from Apple can't be a barometer of the wider market?

Their products are ridiculously overpriced and the smart phone revolution came to an end some years ago.

And tada!

https://www.smh.com.au/technology/huawe ... 4zv0q.html

They have just been knocked off their perch by Huawei.

[odysseus2000]

Surely a profit warning from Apple can't be a barometer of the wider market?

Their products are ridiculously overpriced and the smart phone revolution came to an end some years ago.

And tada!

https://www.smh.com.au/technology/huawe ... 4zv0q.html

They have just been knocked off their perch by Huawei.

What anyone thinks about Apple or any product is an opinion.

Sales figures by contrast are a fact.

What we now know is that Apple sales are slowing and that means there is some change in consumer mind sets. It could be many more consumers feel they are not getting value by buying Apple products, or it maybe that many folk fear about their jobs and are cutting back on spending.

All we currently know is that Apple is not doing as well and that is a change.

Whether it is really a barometer for the market or something Apple specific will be revealed later, but it is a change coming on top of equity market falls.

Regards,

[TheMotorcycleBoy]

What anyone thinks about Apple or any product is an opinion.

Obviously.

Sales figures by contrast are a fact.

Obviously.
But, think about what they sell Ody, and ask yourself whether over-inflation annual rises for *that* sort of product are sustainable. True, consumers by and large are idiots, but the iPhone revolution is not capable of perpetual motion.

but it is a change coming on top of equity market falls.

It's (i.e. their revenue plunge) been in the post for at least a year. Especially after customers started to (finally ) get pissed that a £1000s worth of kit was bending in their backpockets.