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DJIA Positive @ Close 8/16/07
Yahoo Biz ^ | August 16, 2007 | Staff

Posted on 08/16/2007 1:00:37 PM PDT by abb



TOPICS: Business/Economy; News/Current Events
KEYWORDS: djia; market; stocks
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To: ExSES

PPT?.......


61 posted on 08/16/2007 1:32:33 PM PDT by Red Badger (All I know about Minnesota, I learned from Garrison Keilor..................)
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To: Snardius

Yep, one of many “news” guys hoping and waiting for a Hitlery socialist economy tanking and announcing that the little guy says the economy is terrific.


62 posted on 08/16/2007 1:32:58 PM PDT by melancholy (Quiz: name one country, other than the USA, that doesn't control its borders.)
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To: Red Badger

Peter, Paul and Terry...


63 posted on 08/16/2007 1:34:34 PM PDT by Snardius
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To: Red Badger

Plunge Protection Team. It is the term used when the Fed’s inject ‘liquidity’, money, into the system.


64 posted on 08/16/2007 1:39:23 PM PDT by sheana
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To: Mr J

Yep


65 posted on 08/16/2007 1:39:56 PM PDT by FightThePower! (Fight the powers that be!)
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To: Lazamataz
and buy lobsters!!!!

I prefer eating mine.......

66 posted on 08/16/2007 1:42:12 PM PDT by BOBTHENAILER (One by one, in small groups or in whole armies, we don't care how we do it, but we're gonna getcha)
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To: NeoCaveman
Does this mean we are NOT all going to die? WE'RE ALL GONNA LIVE! It just doesn't sound as dramatic

LOL !

67 posted on 08/16/2007 1:42:29 PM PDT by Red Boots
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To: sheana

Paulson re-activates secretive support team to prevent markets meltdown Judging by their body language, the US authorities believe the roaring bull market this autumn is just a suckers’ rally before the inevitable storm hits.

Hank Paulson, the market-wise Treasury Secretary who built a $700m fortune at Goldman Sachs, is re-activating the ‘plunge protection team’ (PPT), a shadowy body with powers to support stock index, currency, and credit futures in a crash.

Otherwise known as the working group on financial markets, it was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown in October 1987

Mr Paulson says the group had been allowed to languish over the boom years. Henceforth, it will have a command centre at the US Treasury that will track global markets and serve as an operations base in the next crisis.

The top brass will meet every six weeks, combining the heads of Treasury, Federal Reserve, Securities and Exchange Commission (SEC), and key exchanges.

Mr Paulson has asked the team to examine “systemic risk posed by hedge funds and derivatives, and the government’s ability to respond to a financial crisis”.

“We need to be vigilant and make sure we are thinking through all of the various risks and that we are being very careful here. Do we have enough liquidity in the system?” he said, fretting about the secrecy of the world’s 8,000 unregulated hedge funds with $1.3trillion at their disposal.

The PPT was once the stuff of dark legends, its existence long denied. But ex-White House strategist George Stephanopoulos admits openly that it was used to support the markets in the Russia/LTCM crisis under Bill Clinton, and almost certainly again after the 9/11 terrorist attacks.

“They have an informal agreement among major banks to come in and start to buy stock if there appears to be a problem,” he said.

“In 1998, there was the Long Term Capital crisis, a global currency crisis. At the guidance of the Fed, all of the banks got together and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall,” he said.

The only question is whether it uses taxpayer money to bail out investors directly, or merely co-ordinates action by Wall Street banks as in 1929. The level of moral hazard is subtly different.

Mr Paulson is not the only one preparing for trouble. Days earlier, the SEC said it aims to slash margin requirements for institutions and hedge funds on stocks, options, and futures to as low as 15pc, down from a range of 25pc to 50pc.

The ostensible reason is to lure back hedge funds from London, but it is odd policy to license extra leverage just as the Dow hits an all-time high and the VIX ‘fear’ index nears an all-time low – signalling a worrying level of risk appetite. The normal practice across the world is to tighten margins to cool over-heated asset markets.

The move is so odd that conspiracy buffs are already accusing SEC chief Chris Cox of juicing the markets to help stop the implosion of the Bush presidency.

As it happens, I used to eat Mexican enchiladas with Mr Cox 20 years ago at a dining club in Washington, where California Reaganauts gathered to plot the defeat of Communism. Die-hard Republican he may be, but I can think of nobody less likely to betray the public trust in such a way.

So one is tempted to ask if Mr Paulson and Mr Cox know something that we do not: whether other hedge funds are in the same sinking boat as Amaranth Advisers and Vega Asset Management, keel-hauled by bets on natural gas and bonds.

Or whether currency traders with record short positions on the Japanese yen and the Swiss franc are about to learn the perils of the Carry Trade, a high-stakes game of chicken where you bet against fundamentals with high leverage to make a quick profit. Everybody knows it will blow up if the dollar goes into free fall.

They had a fright last week when US growth for the third quarter came in at just 1.6pc, and new house prices plummeted 9.7pc year-on-year in the sharpest drop since the property crash of 1981.

The dollar dived from 119.65 to 117.57 yen in a heartbeat. With $2.9trillion of derivatives now trading daily on the currency markets alone – according to the Bank for International Settlements – is this the start of the most vicious short squeeze ever seen?

The futures markets have priced in a 77pc chance of a flawless soft-landing for America’s obese economy, now living 7pc of GDP beyond its means off foreign creditors. They are counting on moderating oil prices, and – a contradiction? – another year of torrid world growth. Nice if you can get it.

They have not begun to price in the risk of recession, typically entailing a drop in the S&P 500 stock index of 28pc from peak to trough. Evidently, the equity markets assume the Fed can and will rescue them by slashing rates in time, if necessary.

They should examine a recent report by the New York Fed warning that whenever the yield on 10-year Treasuries has fallen below 3-month yields for a stretch lasting over three months, it has led to each of the six recessions since 1968.

The full crunch hits 12 months later as the delayed effects of monetary tightening feed through, even if the Fed starts easing frantically in the meantime. By then it is too late. “There have been no false signals,” it said.

As of last week, the yield curve was inverted by 29 basis points, was continuing to invert further, and had been negative for over three and a half months. If the Fed is right this time, the recession of 2007 is already baked into the pie. Those speculative positions may have to be unwound very fast.


68 posted on 08/16/2007 1:45:51 PM PDT by FightThePower! (Fight the powers that be!)
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To: FightThePower!

I have been actively trading full time for 10 yrs. Futures for 5 of those 10 yrs.
I am here from 6 am til close every day.
Thanks but you can’t educate me anymore than I already am. ;)


69 posted on 08/16/2007 1:55:09 PM PDT by sheana
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To: Snardius

When Wall Street is down, it’s bad for “Main Street.”

When Wall Street is up, “Main Street” “doesn’t participate.”

Liberals amaze me. They also dominate the media.


70 posted on 08/16/2007 2:14:55 PM PDT by rightinthemiddle (Without the Media, the Left and Islamofacists are Nothing.)
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To: sheana

But wait...it’s different this time... :)


71 posted on 08/16/2007 2:25:55 PM PDT by Snardius
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To: Snardius

of course it is! ;)


72 posted on 08/16/2007 2:27:36 PM PDT by sheana
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To: abb
A couple or two weeks following the peak price in 1929 there was a vertical moonshot just like the last half hour today. The price evolution actually tracks very closely, day by day. Basically op-ex short covering and a resurgence of hope to be followed by a drawn-out swoon.
73 posted on 08/16/2007 2:33:47 PM PDT by steve86 (Acerbic by nature, not nurture)
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To: rightwingintelligentsia
How come CNN’s business page is still showing the Dow down 300+ points?

Let's rephrase that. Why would the Communist News Network want people to be afraid of stock investing?

74 posted on 08/16/2007 2:43:41 PM PDT by 3niner (War is one game where the home team always loses.)
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To: Snardius

That’s what I’ve been telling some of my younger coworkers.


75 posted on 08/16/2007 2:46:03 PM PDT by 3niner (War is one game where the home team always loses.)
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To: 3niner

Because government run investment schemes are so much more “fair” to citizens than that fraudulent free market.


76 posted on 08/16/2007 2:48:53 PM PDT by Snardius
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To: sheana
I have been actively trading full time for 10 yrs. Futures for 5 of those 10 yrs. I am here from 6 am til close every day. Thanks but you can’t educate me anymore than I already am. ;)

So tell this novice know-nothing computer programmer: Are we in for a FecesStorm, or is it just the usual gyrations?

77 posted on 08/16/2007 2:53:05 PM PDT by Lazamataz (JOIN THE NRA: https://membership.nrahq.org/forms/signup.asp)
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To: abb

Great finish....

short-term, that is a very positive technical trend.
intraday reversals after down days are usually turning points.

long-term, depends on how many other shoes drop.


78 posted on 08/16/2007 3:29:58 PM PDT by WOSG ( Don't tell me what you are against, tell me what you are FOR.)
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To: NeoCaveman

WE’RE ALL GONNA DIE .... someday, in the distant future.


79 posted on 08/16/2007 3:32:20 PM PDT by WOSG ( Don't tell me what you are against, tell me what you are FOR.)
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To: Lazamataz
So tell this novice know-nothing computer programmer: Are we in for a FecesStorm, or is it just the usual gyrations?

Laz, I use the Will Rogers investing technique: "Only buy stocks that go up. If they aren't going to go up, don't buy them." Works every time...

80 posted on 08/16/2007 3:35:46 PM PDT by abb (The Dinosaur Media: A One-Way Medium in a Two-Way World)
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