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Post by unlawflcombatnt on Feb 27, 2007 15:16:01 GMT -6
Dow declines 415 points in 1 day. Durable Orders decline 7.8%, though only a 3% decline was predicted. Existing Home Prices decline 5% in 1 month. Alan Greedspan states possibility of Recession in 2007. Does this sound like a "Goldilocks's" economy? Does it sound like a "strong" economy. Aren't you glad that the housing collapse, the manufacturing slowdown, and the subprime mortgage meltdown aren't "spilling over" on to the rest of the economy? Then we'd really be in trouble, wouldn't we. Below is a bar graph from Briefing.com showing the decline in Durable Goods Orders. Below is a copy of the chart of Existing Home Salesfrom the National Association of Realtors. Though the number of Existing Homes sold increased over the last month, the price of an existing home declined a whopping 5% over the last month. (The latest prices are underlined in red.)
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Post by liberalcapitalist on Feb 27, 2007 15:31:23 GMT -6
this could get worse in the next few days,don't exhale yet,there could be a small bounce and more losses tommorrow in reaction to what happened here today. Got rolaids?
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Post by beachbumbob on Feb 27, 2007 16:31:34 GMT -6
if the trend stays down for the week...lets say by end of Friday, the markets didn't regain any of the losses of Monday/Tuesday. I would say next week could be a bad week. We be looking a bunch of margins having to be covered and who knows what is involved with derivative exposures. All we need now is something to happen in ME
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Post by beachbumbob on Mar 2, 2007 7:13:48 GMT -6
if markets trade negative today, then this "correction" is far from over....
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Post by jeffolie on Mar 2, 2007 14:11:14 GMT -6
As I write the DJIA is down about 75 or .62% while gold is down 22.40 to 640.90 or 3.4%.
Gold was near $700 so it is now down about 10% as opposed to down about 5% for the dow.
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Post by unlawflcombatnt on Mar 2, 2007 15:14:55 GMT -6
Though Gold prices have dropped markedly compared to their most recent peak, today's price of $640/oz. is only down slightly from it's price from a month earlier of $642/oz. (on January 30, 2007). The same pattern has also occurred for Silver and Platinum. While Gold is down 0.26% since January 30th, Silver is down 2.5% and Platinum is still up 1.7%. Below is copy from Kitco.com of the 30d price changes in Gold, Silver, and Platinum. (I added March 2nd's changes to all 3 charts.) Below are the 2 month and 6 month changes in Gold prices. Below is a modified, composite 3-month stock price index taken from Yahoo News. It shows the DJI on the top, the S & P 500 in the middle, and the NASDAQ on the bottom. It appears that over the last 3 months, Gold prices have done slightly better than stock prices. But the difference is fairly small. It certainly does appear, however, that recent stock declines have been matched by equal, or even larger declines in precious metal prices. (Silver prices declined 6% today alone.) As is usually the case, Silver prices have shown larger declines than Gold, while Platinum has shown smaller declines. From watching daily price changes, Silver and Platinum prices usually go in the same direction as Gold. Silver tends to be more volatile than Gold, while Platinum is less volatile. An article from Yahoo News, titled Gold Battered by Stock Market Worries, sheds some light on why Gold is declining along with the stock market. This article affirms some of what I already believed. In addition, much gold is bought with borrowed money, allowing investor/speculators to push prices higher as a result. As a result, a credit crunch will also affect gold prices. One action that would send gold prices through the roof would be if more buyers demanded delivery, since much of the gold that has been purchased doesn't even exist. Forcing gold sellers to deliver real, solid gold in exchange for current paper claims to gold would greatly increase demand for solid gold, and would expose the true difference between the actual supply of solid gold, vs. the virtual supply which adds paper gold "claims" to real, solid gold supply.
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Post by jeffolie on Mar 2, 2007 21:14:26 GMT -6
All along it has been my position that Treasuries would act as the safe haven of choice. Part of my reasoning is a change in attitude that deflation is more of a risk than inflation. The China led decline partially got its motivation from Greenspan warning that a recession, a slow down was coming to China's biggest importer. With the housing meltdown, the prospect for a slowing economy create an opportunity for a decline in exports to the US. Certainly any objective observer would acknowledge gold's 10% decline and the strength in Treasuries this week. New credit applications have decreased sharply, according to a new survey; ''the data suggest that businesses are curtailing their spending in anticipation of an economic slowdown.'' Stephen Taub, CFO.com March 02, 2007 Is the economy due for a downturn? Investors seemed to consider the possibility on February 27, when most major market indexes fell nearly 4 percent. The plummeting Shanghai stock market may have kicked things off, but investors also would have taken notice when Alan Greenspan, the former chairman of the Federal Reserve, observed that a contraction is possible simply because the current economic expansion has lasted so long. advertisement One indicator of a possible slowdown is the monthly Credit Manager's Index, which fell 0.6 percent in February, its sixth decline in seven months. Five of the index's ten components fell, according to the National Association of Credit Management, which has conducted a survey from the standpoint of commercial credit and collections since January 2003. For its survey, the association asks about 500 trade credit managers to rate favorable and unfavorable factors in their monthly business cycle. Favorable factors include sales, new credit applications, dollar collections, and amount of credit extended. Unfavorable ones include rejections of credit applications, accounts placed for collections, dollar amounts of receivables beyond terms, and bankruptcy filings. February's decline was driven by sharp decreases in new credit applications, observed the NACM; disregarding that component, the index would have risen by 0.3 percent. "The data suggest that businesses are curtailing their spending in anticipation of an economic slowdown," said Dan North, chief economist for credit insurer Euler Hermes ACI, in an NACM statement. North observed that business orders for durable goods — those meant to last more than one year — dropped sharply in January, the most recent month for which a report is available. Year on year, the overall index fell 0.7 percent, according to the NACM survey. Although the manufacturing component of the index actually rose by 1.3 percent, this was easily outweighed by a 2.6 percent drop in the services component. For the month of February, the manufacturing sector fell 0.6 percent, largely driven by a 7.2 percent drop in new credit applications. According to North's statement, survey respondents reported that large customers are demanding longer payments terms for their contracts. The services sector, too, fell 0.6 percent last month; new credit applications fell 9.6 percent. The services sector has fallen in four of the past five months and has underperformed the manufacturing sector over that period, according to the survey. North, citing a soft housing market, also noted that survey participants in the home-building and furnishing-supply industries seem to have been hit the hardest. www.cfo.com/article.cfm/8792888/c_8793006?f=home_todayinfinance&x=1Jeremy Warner's Outlook: Greenspan uses 'R' word again. Someone shut him up before he does serious damage Published: 02 March 2007 Watch out, here comes trouble. Twice in a week now, the octogenarian Alan Greenspan, former chairman of the Federal Reserve, has given speeches in which he has talked about the possibility of the US going into recession later this year. No sooner had the present incumbent, Ben Bernanke, succeeded in stamping out the fire set off by Mr Greenspan's first use of the "R" word than he said it again - this time out in Tokyo. He would never have opined in such terms when at the Fed, where he was famous for his Delphic nuancing of the economic debate. I guess that, now he's off the leash, he's free to speak his mind - and, at an estimated $100,000 an appearance, he certainly needs to be saying something that will make people sit up and take notice. Yet, despite his advancing years and growing distance from the levers of power, he still seems capable of exerting enormous influence on markets. His first mention of the possibility of recession was one of the triggers for the disastrous sell-off in the markets which took place on Tuesday. An element of calm descended on Wednesday after soothing remarks from Mr Bernanke. In returning to his theme yesterday, Mr Greenspan seems to have forgotten the first rule of holes. No doubt he had meant his latest utterance - that a recession in the US this year was a possibility, though not a probability - as a clarification of the earlier one. It didn't work out that way, with world markets suffering another serious wobble. Yet it is all a bit odd really. Mr Greenspan is only making a statement of the bleedin' obvious in talking about the possibility of recession. The longer an expansion continues, the greater the chances of it coming to an imminent end. Higher interest rates have already caused a pronounced slowdown in the US housing market, and there was renewed evidence yesterday of the construction sector already being in recession. Yet construction is not the whole economy, and most of the other data emerging from the US yesterday was still positive. The balance of probability, as Mr Greenspan would no doubt concede, is still very much that the Fed has indeed engineered the hoped-for soft landing. So why do markets get so worked up whenever someone important mentions the R word? The reason is that stock markets are already quite high, but there are lots of risks. Confidence is therefore fragile. It only requires a man of Mr Greenspan's stature to remind them of their fragility to prompt another bout of the jitters. Should he be allowed to? Thankfully, it is still a free country. In any case, by saying such things, Mr Greenspan only gives voice to a widely held point of view. If, as seems likely, he turns out to be wrong, then perhaps investors will learn not to take him quite so seriously. news.independent.co.uk/business/comment/article2318807.ece
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Post by unlawflcombatnt on Mar 2, 2007 21:57:02 GMT -6
So why do markets get so worked up whenever someone important mentions the R word? The reason is that stock markets are already quite high, but there are lots of risks. Confidence is therefore fragile. It only requires a man of Mr Greenspan's stature to remind them of their fragility to prompt another bout of the jitters. Should he be allowed to? Thankfully, it is still a free country. In any case, by saying such things, Mr Greenspan only gives voice to a widely held point of view. It's interesting that Greenspan is so rabidly attacked when he says anything pessimistic about the economy, even if he " gives voice to a widely held point of view." Heaven forbid we should start substituting honesty for blind, unsubstantiated optimism. As the Corporate media would have it, the truth hurts, and no one should voice the truth if it isn't optimistic. It's like the old adage: "If you can't say something nice, don't say anything at all." That seems to apply to today's economic forecasting.
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Post by unlawflcombatnt on Mar 2, 2007 23:47:04 GMT -6
Michigan Consumer Sentiment for February finished at 91.3, which was much lower than the 97.5 predicted earlier this month. Interestingly enough, Briefing.com still hadn't downwardly revised their original 97.5 overestimate as of 1 AM EST on 3/3/07, despite the release of the 91.3 number at 10 AM EST on 3/2/07. Apparently they just hate to revise overly optimistic numbers. (But they're quite vigilant about upwardly revising numbers that were originally too low.)
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Post by unlawflcombatnt on Mar 3, 2007 4:54:41 GMT -6
Certainly any objective observer would acknowledge gold's 10% decline and the strength in Treasuries this week. Though I would acknowledge the strength in Treasuries, I would not acknowledge a 10% decline in Gold. For the 7 days ending on March 2nd, Gold prices declined only 6.2%, from $682.90/ounce on 2/23/07 to $640.80/ounce on 3/2/07. The 2-week decline in gold price was 4.1%, the 3-week decline was 3.9%, the 4-week decline was 0.76%, the 5-week decline was 0.59%, and the 6-week change actually showed and increase of +0.85%. Below is a modified graph from Kitco.com showing the last 3 days graphically with previous weeks' ending gold price ( underlined in green). Below is table showing daily Gold prices since January 1, 2007 from Kitco.com
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Post by blueneck on Mar 3, 2007 7:13:59 GMT -6
Indeed. Greenspan still wields more power than lightweight Bernanke, who is spinning around in the positive spin cycle, and sounding pretty out of touch in doing so, thus giving even more credibility to Greedspan
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Post by beachbumbob on Mar 3, 2007 7:14:20 GMT -6
positions in gold and silver unwinding not surprising if you have to liquidate for funds to cover exposures
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Post by jeffolie on Mar 3, 2007 11:12:26 GMT -6
Hedge funds may be unwinding positions as the Yen carry trade forces the Hedge funds to unwind their short the yen while long some other positions. Hedge funds are well know for selling the yen to raise cheap interest cost money to invest elsewhere. The yen has been going up in value making the yen carry a losing trade. Hedge funds have been forced "to liquidate for funds to cover exposures". So, gold's 6.2% decline may be followed next week with a collapse along with a collapse in the stock indexes. I still maintain that the current refuge of safety in the collapse is Treasuries and not gold. Monday will be a dangerous day because the computers may fail on the exchanges. Fears over launch of trading law Anuj Gangahar in New York, Doug Cameron in Chicago and Jeremy Grant in Washington Thu Mar 1, 7:20 PM ET The US stock and options market will come under fresh pressure next week with the introduction of a controversial securities law that will push trading volumes to levels far higher than those that caused systems to crash during Tuesday's market sell-off. The law, known as Regulation National Market System, or Reg NMS, is aimed at levelling the playing field in the US equity market, meaning trades must be routed to the exchange that offers the best price. Reg NMS will shake up the trading environment and has forced exchanges to build new electronic trading systems or update existing ones to comply with the rule in time for next Monday's deadline. It also means brokers must look for the fastest trades at the best price. A sudden spike in trading volumes at the NYSE during the sell-off earlier this week caused a problem with the exchange's servers, leading to trading delays. At about the same time servers supporting the calculation of the Dow Jones Industrial Average went down, meaning that the level of the index lagged that of the broader market, causing more confusion. The US Securities and Exchange Commission on Thursday confirmed that it was working with the NYSE and other market centres to review the events of Tuesday and examine whether enhancements to capacity management were necessary. Jerry Putnam, vice-chairman of NYSE Group, said: "Customers are not going to walk away because of one bad day." Some fear that the rapid development of electronic trading in the run-up toReg NMS means the systems might not have been sufficiently tested and that the spike in volumes that is widely predicted could ex-pose weak points. In Tuesday's sell-off some volume records were smashed, led by electronic trading, across almost all asset classes. If equity trading volumes do rise as predicted under Reg NMS, equity options contracts will follow. The Options Industry Council said that on Tuesday, a record 18,281,667 contracts were traded on exchanges in the US. Equity options trading also set a record with 16,397,163 contracts. Additional reporting by Michael Mackenzie and Saskia Scholtes news.yahoo.com/s/ft/20070302/bs_ft/fto030120071936076619;_ylt=AmLwbrFWZeMP__GhINNzMsvMWM0F
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Post by beachbumbob on Mar 4, 2007 8:35:54 GMT -6
next week will be pivotal
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Post by xtra on Mar 4, 2007 10:18:26 GMT -6
maybe that is why bush+co. are pushing this illegal war into Iran. war seems to always save economies, that is, as long as you win. That senerio is certainly evil.
on a side note.
I have all of my 401k sitting in money markets and government bonds. they have been there for about 6 years. Im losing money due to the decline of the dollar, but other than quitting my job and taking the money out to buy gold or silver is there another option? Should I just leave it there?
I know you dont have a crystal ball, where is your position in?
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rdf
Contributor
Posts: 27
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Post by rdf on Mar 4, 2007 10:59:02 GMT -6
I've been in the same retirement fund for over 35 years and have seen many ups and downs during that time. I've learned several lessons from this. First, it is best to diversify your funds. Second, it is best to keep fully invested and third over the long term common stocks have been the best performing sector. Over the past decade my fund has offered a real estate option (they own real estate, not REIT's) and this has done about 8% a year without the ups and downs. Now some warnings. 1. Stocks can perform poorly for long periods of time. From the early 1970's and for the next decade stocks essentially returned nothing. 2. Money market funds and similar liquid accounts barely keep up with inflation, so they are never a good place for retirement savings. 3. The further you get away from the fundamental investment the more the fees eat up your gains. Today's NY Times has an article on how the 2+20 fees of hedge funds make them a worse deal than regular investments. This means that hedge funds, funds of funds, spiders and other speculations are a poor choice for retirement funds. If you want get some of the fund's good advice visit their site. Most of their funds are limited to those in higher education, but they now offer some mutual funds that you can use in an IRA even if you can't invest in their regular retirement funds. visit tiaa-cref.org and follow the link to the learning center.
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Post by blueneck on Mar 4, 2007 11:31:18 GMT -6
I watched my 401k loose almost half its value in the first Bush recession, and the next five years it took to catch back up was lost earning power.
I do not believe the 401k to be the "answer" to a comfortable retirement - it is too dependent on the economy or more precisely on the stock market.
Hedrick Smith had an excellent program on PBS Frontline a little while ago tracking the performance of the traditional defined benefit pension vs the 401k. In nearly every instance the defined benefit folks did much better over the long term. sadly now companies are trying to palm off their pension responsibilities on the taxpayers, led by corporate lobbyists like NAM.
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Post by unlawflcombatnt on Mar 4, 2007 17:38:58 GMT -6
I thought it would be useful to put a direct link to current Gold, Silver, and Platinum prices in this thread, so the earliest trends for the week can be seen. Gold is up 3 dollars so far for the coming week. 24-hour Gold from Kitco.com 24-hour Silver24-hour PlatinumBelow is current chart from Kitco.com showing gold prices in both Euros and US dollars. Below are some links to bond rates 10-year Treasury Note Graph-3 month chart.finance.yahoo.com/c/3m/_/_tnx10-yr. 5-day finance.yahoo.com/q/bc?s=%5ETNX&t=5dThe following link shows current rates for 3 month to 10 year bonds, as well as prices from previous day, previous week, and previous month. It's interesting to see the decline in yields on the 10-year Treasury note. It went from 4.79% last month to 4.65% last week to 4.53 % on Friday. Yahoo.com-Bond ratesGraph from the Yahoo site above showing rates and the inverted yield curve Here's a link to Dow Jones Industrial Average from Yahoo News. (The S & P 500 and the NASDAQ can be found at finance.yahoo.com/.)NASDAQS & P 500
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Post by Ryan on Mar 4, 2007 22:18:29 GMT -6
This whole stock market thing and economy in general is starting to worry me. If what some people ,who have said that a DEPRESSION is coming do due the debt and housing bubbles, prove correct, then that is a bad bad sign. How will we survive as a nation? In 1929 we still Made things in the USA. Back then we were a creditor nation without the financial debts brought about as a result of a mis-directed war. Today we are a debtor nation, who does not even make some of it's own defense related equipment here in USA. China owns 1 trillion of our debt, our country has budget deficits as far as the eye can see, and a War without end that seems to be on the verge of further escalation (Iran). Too further add to this, some say we are at or nearing a peak in oil production, thus leading to sky high oil prices.
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Post by unlawflcombatnt on Mar 5, 2007 2:45:54 GMT -6
This whole stock market thing and economy in general is starting to worry me. I think any reasonable person should be concerned. If what some people ,who have said that a DEPRESSION is coming do due the debt and housing bubbles, prove correct, then that is a bad bad sign. How will we survive as a nation? In 1929 we still Made things in the USA. Back then we were a creditor nation without the financial debts brought about as a result of a mis-directed war. Today we are a debtor nation, who does not even make some of it's own defense related equipment here in USA. China owns 1 trillion of our debt, our country has budget deficits as far as the eye can see, and a War without end that seems to be on the verge of further escalation (Iran). These are all good reasons to be concerned. What we do have now, however, is a Federal Reserve that will drop interest rates to attempt to bail out the economy. However, many analysts, such as Nouriel Roubini, don't think this will be anywhere near enough. And given that much of temporary benefit from from interest rate drops come from bubble creation, it's dubious how much good an interest rate drop will really have if there are no more bubbles to create.
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Post by jeffolie on Mar 5, 2007 15:08:18 GMT -6
I noticed a trading pattern recently. The market gap opens down, rallies significantly and closes down about half of the opening down gap. This allows the pro's to put on more short positions during the significant rally and close them out the next day during the gap opening down.
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Post by unlawflcombatnt on Mar 5, 2007 16:45:43 GMT -6
That's an interesting idea. I can see how that would have worked over the last 5 days. And if on any particular day the market did not rally, they wouldn't buy that day.
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Post by unlawflcombatnt on Mar 5, 2007 17:13:37 GMT -6
UPDATE 3/5/07
The latest declines for 3/5/07 (at 7 PM EST) are as follows:
Dow Jones: -0.53% S & P 500..: -0.94% NASDAQ....: -1.15%
Gold .........: -0.67% (since close Friday 3/2/07) Silver........: -1.64% (since close Friday 3/2/07) Platinum...: -2.83% (since close Friday 3/2/07)
The surprise here is the decline in Platinum, as the daily change is usually less than gold. The larger decline in silver vs. gold is typical, as silver is normally more volatile.
Unlike last week, the 10-yr. bond yield increased from 4.50% to 4.51%, suggesting that bonds are also being sold off at present.
The Dow has now declined 603 points, or 4.8%, since closing on Friday 2/23/07.
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Post by ig on Mar 14, 2007 5:42:22 GMT -6
it looks like the shorter term bonds are selling well. That is strange. Just looking for a safe haven there. Euro Bonds sold up too.
Another sign of central and investment bank diversification.
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