Take a step forward and see

The graph can be interpreted in many ways, an Arabian trader once said the KLSE will make it its' just a cup and handle formation, then we look it as a head and shoulder, and plus current instability and economy obsticles, fundamentally Malaysia is more sound compared to some countries, but when there is no leader in a nation we cease to spark a bull in such market, foreign funds might only plough in when the coast is clear, meanwhile 950 is a level to support or else we are looking at regions of 880-900 for a stronger support if the Americano Sneezes!!!!

Weakness in The US and regional areas of asia will bring down the currency, and that is the only support the dollar has, MYR has its fair share of woes and is looking at Sustainable CPO to back up a rally, can we look at that direction if the commodities spark a bullrun, i mean we are still in the process of biofuel acclaimation should we start to have hopes that CPO run will come back??

Look at the lines they are being violated at this moment of the blog being post, please note that there would be technical rebounds between range, but based on the outlook any rally could be short-lived, bearing the fact that the feds do not allow corporations to fail might satisfy what traders want in short term. There are some theories that the transition among American Government Administration periods they would not allow things to fail, but even with efforts to avoid misery we end up at this level, the actual scenario could be worst if capitalism is practiced by book. The Us Banks & Financial Institutions Market Capitalization has shrink about 4 trillion and more to come as deleverage process will unfold the mystery, u dare risk your money??

courtesy of NYtimes.com and the bigpicture.typepad.com; these are great sites view them as frequent as possible

The Feds need help? The worst is not over!!!

" I could clone Einstein several hundrend times, and yet still unable to work on the mortgages they covered"- WB

When I say Feds involved, the Feds are truly involved(see this)!!! Take a look at the Bottom part of post 1, I mentioned that who is next and today we see blood on the streets again, as you see I only suggest you o hold if you can take a devaluation of up to 50% in the few months till 2009 period where I foresee many uncertainty and unwinding is half way thru!! They say we are half way there but 62 trillion of CDS show that we are less than half way thru, the market acts as a sweeper, to clear the path of dust and dirt. Feds need to act super fast and clear AIG illiquid position as soon as possible, more money created in thin air they fight the gold bug no longer!!! 20 day bill, 76 day bills what will the rates look like you tell me, see this: (bloomberg)

• US Treasury rates

“No one and I emphasize no one can beat the forces of nature and the market force! WB followers of then hear that market are irrational, and now when all are still swimming with their tops off, I assume he is behind their listing out his Buys when the downturn strips all holders to their birthday suits!” Many large corporations are still holding cash and we look at Microsoft, Coke, we look at sovereign wealth funds, the new hedge funds, Funds that promote 100% capital perseverance, C.Ds! There are still companies that are worth taking a look and it is all about timing! We all know that any sane human would be stupid to try time markets; I suggest is study behavioral patterns, take the big downfalls to compare, what are the reactions when bottoms show!

You will argue that we have technical indicators, hell I love TA they study price behavior, but its those things that is futile as it will tell u the volume, distribution, the buying pattern, the selling pattern, at a certain level, a certain price, with the assumption that price have a memory! Bear in mind, Bear!! That we are now in a situation that is so new, and such a glum that no one can explain to what extent the severity of toxic loans are going to haunt us to!!!

Look at stocks that are able to produce results to downstream and upstream in the line, look into their book values, their debts, their tangible assets and assets, think of their management as a operation focused which is to boost on their productivity and efficiency! In such a situation, we need to tell ourselves there will be no more easy money, we’ve been working smart too long, so smart we buried ourselves! Analyst reports are a bunch of excrement full of foul smell and waste, would you follow the guide of analyst who keeps that Strong BUY but yet he doesn’t buy!!! Why give the call when you are not confident with your interpretation.

Buy stocks that are undervalued, I would just say that Warren bought stocks that have 2x the value of what he was paying, or what he valued them at and you should be doing what he has been doing for so long! Cut the speculation act, do not play with thin lines unless you have a closet full of cash, even full of cash are you sure all this cash won’t be deemed as FIAT when dollar loses its front line defense! The dollar lose sight of gold today, and it shows that efforts to manipulate gold prices are gone, Feds books also need tidying! What is that news going on now Wachovia is going to merge? Read post 1 bottom. I have been nothing but spot on, we have more derailing to go, either we see a strong nationalization of assets, a big wave of mergers and acquisitions, or else we see a massive devaluation of equity, real estate and debased currency!

All the options above are assumptions and it up to you to judge yourself give me some comments. AIG have a wide range of products, and cannot be allowed to fail… think yourself if government buys their dirty loans, and gives them ample cash, what does that imply? Would you buy a business that has a central weight in all aspects of life in 130 countries and basically all walks of life!! I am not stating a buy cause I am worry to what extent the dilution will affect the price but take a look at its holdings vS assets Vs debts Vs premium.

At the time writing China investment Corp has begun its actions spreading its possible wing to take in Morgan Stanley which was about to take Wachovia in a merger, i reiterate many companies are sitting on cash piles, waiting the correct moment like this to buy a US business, Chinese are real capitalist compared to Americans.(Buffett Style) Wa Mu have no other options but to Auction itself out, would anyone take a stake in that company?

Useful links

Post Comments on the Future of The Economy in The States and how the contagion spread to Asia would affect countries like Singapore and Malaysia.

• even Bankrupts can be selective
• 30000 jobs cut
• Technology softspot.. bang on APL GOOG YAHOO~
• whenHedge Fund fails
• Japan Sees reds like '87
• it is the simultanous debasing of currency that saved the Dollar
• U must be kidding me, poker more like
• AIG missed the edge, employees face the edge now(subprime misses no one)
• Now the fed repairs broken co
• 140Billion total
• Oils down, Real estate slumped, but inflation strong ...???

Read up ye' all, there will be even more unraveling in the US economy we have a handful of mortgage defaults and jeopardized banks and financial institutes, Subprime spares no one, the Feds and so call experts engineered this fall themselves. Risk management is as important as asset allocation and management.

2008 Black Monday and more Financial Irregularities to come ( Part2)

After Barclays purchase of Lehmans investment arm and Bank of America 50 Billion buyout, the Feds have written another cheque to supply money to the markets to help finance AIG illiquid situation. If AIG does not receive the money supply quick enough we are about to see an illiquid insurer turn to an insolvent corporation! Looking at the extent of AIG insurance coverage and CDS it gonna pack one hell of a punch to the Recession Americans were denying so bad. Even worst, would be a recession turned to depression. The news was received with happiness around wall street although there were no rate cut. Despite such adamant activity to defend the dollar, (sell down the gold futures and buy the dollar, the yen/ dollar rallied from 103 – 105 yesterday) the feds cleverly contradict themselves by giving out big chunk of taxpayers’ money that they fully utilized till deficit to the other financial banks.

Asia reacted strongly as well with all the liquidity and the bail-out plan mostly due to the fact that Foreign Funds from US do not need to pull back, the bailout in my humble view was already pre-determined on Sunday together with the OPR. The Credit default Swaps are shooting up like stars with the fear surrounding bank and the unwillingness to open up to the public.
Damm, why not just nationalize most of the banks still around and regulate the entire real estate and mortgage markets, issue re-employment schemes and benefits to the employees, pay fat bonus to CEO and Board directors.

Let’s take a look at the way Asia reacted. Sustainable rally I doubt.

• Initial Report Before Confirmation
• Nikkei looks Up and Retrace a bit
• Tokyo Rises ; HSI^ retreats
• Is it a dead cat?
• China comeback?
• Japanese defensive stance, carry trade unwinding, stronger Yen?
The offer from the states to AIG is imminent as the decline of AIG in the entire market would spur effects globally and turn the already slowdown into depression as it has services in over 130 countries, ranging from general insurance, Credit default swaps, derivates, mortgages, corporate loans and retirement and hedge funds, the fact that all the CDO unwinding and downgrade of bonds leads to CDS and the main provider for these mortgage backed bonds and CDO insurance is none other than the great AIG.

The credit mess is deleveraging and clearing up the only question pondering investors is till when we need to witness and bear the consequences of flawed financial experts. With listings in Tokyo and Ireland the impact there would be quite detrimental (I doubt there would be a safe spot for them) and if the money is not provided the fate of its 30000 employees would be questionable, looks like this time employment claims and reports on the US would look too good. And McCain thought it was sound!

AIG managed to raise 20 billion in capital yet is insufficient and require another 85 billion in terms of shares, warrants, etc which would dilute the company even further, are we going to see another battered MNC worth 2 dollars? Even Morgan Stanley is closely monitoring the Short Term Loan Rates that shot up to 6% two days ago and all these points that the illiquid situation is driving the debt management and bonds rating to the edge of another round of collapse. Morgan Stanley’s earning were on par with analysts expectations but still to avoid the fate of Lehman’s’ they are on the brink of considering being acquired or a merger. For your information there are only less than a handful of banks with AA ratings on Bonds and most of it left is in Australia, evaluate the economy yourself.

Globalization is indeed a double edged sword, the Chinese have a saying that “water can keep u afloat and can make u drown.” MNC have enjoyed earnings too good for too long thru good management of debts and premiums until they forgotten that it is all about book-keeping when dealing with money and when the debt gets out of control they are going to fail themselves.

The feds’ efforts of pushing money into the banks will only allow the bank to generate more money with the liquidity provided through arbitrage of interest rates differences between loan and deposits. At the same time, this will cease bankers to provide emergency funds to the market. These are the actions of corporation’s desperation to save themselves first instead of bail others. The extent of financial failure is so bad that the feds have paid JPMorgan according to CNBC just to help settle the dust in Lehman, how reluctant to bail Lehman , the feds did not give in submissively but instead fought against the tides only to know that the tides where fully against them.

• take a look

No safe-haven
In the market now, there would not spare anyone as the giants sneeze we catch a cold worst still pneumonia, the Money markets which were thought to be the safest are under siege as well, latest news were about a 14 year old Reserve have fallen to less than 1 dollar per share making them to withheld all withdrawals, this is only the initial stage of Lehman’s debt write offs, the unfolding of Lehman’s assets and debts will soon roam the market with more pain and blood, the weakness of AIG may save US from Armageddon or Mayhem but it will not bring them under refuge from financial sell down. More blood has to be shed, markets have to correct, and the only choice we have to make now is to preserve our purchasing power, to hold cash or convert into commodities? Are u a long term holder of US equity, are you able to take a 5 year hold? Are u willing to take a dive of up to 30 % or 40% of your capital? These are questions that we must ask ourselves!!!

2008 Black Monday and more Financial Irregularities to come ( Part1)

This time it has the significance in terms of figures of the 1987 crash, everywhere was filled with anxiety and uncertainty in Wall Street, even abroad the effects was not unknown, the signs of a Sunday Emergency Session opened show how tensed and tight the situation was and it was not going to be easy on the Feds, they won’t have the balls to raise the rates, they have to battle the Inflationary pressure, defend the Dollar and the Financial Giants. They have to choose now who are allowed to fail and who must never be allowed to bring down the world with them. 1987 the Dow took a big plunge of 508 points , so did the Monday news become official that Lehman’s would be forced out of the picture, I mean it was bitter but who decides who to bail-out ? Is this still a capitalist country? With the valuation of 25x Per is there more slumps to visit to clear out the forest, or Buffett says swim naked?

Lehman Brothers had survived the Long Term Capital Management crash, 1987, 1997 stock massive devaluation, the Dot Com Bubble, but Subprime Wreaked the ship and sank them to file for bankruptcy protection. Even the September 11 WTC attack could not move the American Stronghold, but the subprime mess deflowered them and wreaked the fortress with massive toxic derivatives deleveraging and a Big default Note to the mortgage issuance. Indeed another Black Monday for the history of America and this contagion has spread to all around the world. Previous talks of decoupling from the America Subprime suddenly subsided when no one in Wall Street could tell the amount of securities held by this Giant.

We want to take a look at the Subprime mess chronologically, from 2007 around May to July there were news about the mortgage defaults which were too heavy and burdened banks around please note I am addressing the problem in a very demeanor manner, we have the mortgage companies holding defaults that are mere paper or certificates. Then we have the companies who couldn’t bear the massive leverage and declared bankrupt, the DOW back then was about 13,266 average speaking during June and they manage to pull a rally of suppressing the poison pill to about 14000. That’s when July mortgage payments were still unable to recover and the rates were sky rocketing, we see Countrywide ailed, Bear Sterns bought at $2 per share, massive write down till to date where the write downs could not be justified with the insignificant amount of cash raised, they said 100 Billion dollars was an injection to save the market then came a note to save the market with 300 more Billion then lastly they revalued and said the derivatives cost 1 trillion.

Investors are looking at the limelight that the Americano government could extend their interventionist arm to feed banks with big amount of “fiat dollars”, this type of intervention did not exist officially or could I say is used to be represented by a figure known as the PPT but now intervention is on the surface and publicly known, we take a look a Feds open discount windows, Fed short term liquidity boost, Fed open intervention with banks, Fed injection of liquidity , massive Fire sale, buyouts and bailouts what more to say with the invisible hands in the markets. Mind you but financial markets work in a cycle and not in a full upward manner, what would this imply to gamblers and those that place bets with evil grins. Rogers said this is a corrupt act to make winds for financial giants to sail with tax-payers money and this in turn will spur inflation bugs to bite our holdings, we can see that even the manipulation of data with M3; M1 data retracted from the feds office, economic indicators adjustments, and this would debase the dollar so badly that inflation is spread to others to make US look deflated and yes the US giants have done nothing better to increase the trade deficit band and exported nothing extra including their inflation problems to all around.

What we look upon here would be the safe-haven to protect our deposits and our cash, we could see Buffett has some strong strings that he can pull for information, he withdrawn all deposit insurance applications before the announcement last Friday about Lehman brothers, if only he was socially responsible and could give a stronger hint instead of reiterating that the action to nationalize Freddie and Fannie was his course of actions, many would have been spared. The short term oversold condition and the desensitization of all the news of financial dysfunction will probably bounce the dead cat, but nobody!.. I reiterate nobody in this globalized economic situation may it be a GIANT, or even central bankers be spared if the American Giants fails, even they cough Asian equities could catch cold worst still pneumonia. The financial markets need to fail themselves and embrace themselves thru the rough ride to appear sound and develop a secure foundation in the economy.

The ride to unwind all the financial mess, derivatives trading, etc is on the way, with banks refrained from provide liquidity shows that they acknowledge the risk they are facing and the importance to defend their depositors. It is the banks fundamental function to protect deposits and generate profits using a small proportion of their deposits. But it is the lack of liquidity to help banks to turn around and fill the debts , and that is what the Feds has been used to justify all their action, people are missing the point that the banks fail and we will see even more buying , mergers and acquisition, these reforms are taking process to improve the fundamentals. Banks need to clear their reserve with bad loans and divest the failed real estate in a downhill market. All in all these will pave a way to make banks and the US economy make a comeback in a bigger bang given that the Feds does not debase the currency too much and inflate the economy.

Please remember this is just the American chapter, the unfolding of rubbish holdings would overturn the European economy and sovereign wealth funds that have holdings in all the crumbling financial institutions.

Take a Look Below and think which would be next:
BOFA Vs Merrill Lynch
Freddie & Fannie Vs Federal Reserves
Wachovia
UBG
AIG Vs MBIA Vs AMBAC
Morgan Stanley Vs Goldman Sachs
Citigroup Vs Wells Fargo