Bloodbath

Well, I haven’t said that for while, but it’s a bloodbath in Asia.  Dubai seems to have caught the attention of everyone, but as I noted yesterday, there are plenty of other quote dramatic developments at the moment to bring us down hard from the peak.  Vientman has spooked investors, as has China and Japan is getting slaughtered with a yen thats appreciating far far to far against the USD.

 

 

You have to admit sentiment has turned on a dime, and I believe we’re going to follow through hard today.  Accordingly, i’m short from yesterday and adding to positions.  I’m also using binaries for leverage.  One thing i’ve been quite successful at recently is looking for out of the money 12pm FTSE binaries right at the open.  As we stand, we’re looking at a ftse opening down about 30.  So, we’ll look to buy a binary FTSE 12pm to be down say 70 or 80 for single points.

 

Stay safe out there. 

 

Market Bear

 

 

"Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. … Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series."

 

 

All Ordinaries	4,597.200 12:18AM ET	130.400 (2.76%)
Shanghai Composite	3,102.881 12:23AM ET	68.099 (2.15%)
Hang Seng	21,445.13 12:23AM ET	765.28 (3.45%)
BSE 30	16,458.00 12:28AM ET	396.93 (2.35%)
Jakarta Composite	2,393.519 Nov 26	68.009 (2.76%)
KLSE Composite	1,270.61 Nov 26	0.39 (0.03%)
Nikkei 225	9,145.09 12:18AM ET	238.15 (2.54%)
NZSE 50	3,094.437 Nov 26	32.875 (1.05%)
Straits Times	2,762.22 Nov 26	30.62 (1.10%)
Seoul Composite	1,546.23 12:18AM ET	53.29 (3.33%)
Taiwan Weighted	7,522.57 12:18AM ET	216.59 (2.80%)

 

 

 

And Europe last night:

 

ATX	2,508.84 Nov 26	74.44 (2.88%)
BEL-20	2,426.40 Nov 26	77.13 (3.08%)
CAC 40	3,679.23 Nov 26	129.93 (3.41%)
DAX	5,614.17 Nov 26	188.85 (3.25%)
AEX General	306.72 Nov 26	11.52 (3.62%)
OSE All Share	397.16 Nov 26	12.05 (2.94%)
MIBTel	15,743.0000 May 29	174.0000 (1.09%)
ISE National-100	N/A	0.00 (0.00%)
Madrid General	1,217.58 Nov 26	31.89 (2.55%)
Stockholm General	294.34 Nov 26	9.28 (3.06%)
Swiss Market	6,283.38 Nov 26	138.82 (2.16%)
FTSE 100	5,194.13 Nov 26	170.68 (3.18%)

 

 

 

 

HSBC tumbles, banks retreat across Asia amid Dubai worry

Related stories

 

• Vietnam stocks lower after rate hike, devaluation (3:36a)

 

• Tokyo faces yen trouble, as China banks slide more (5:02a)

 

• Yen's rise hits Japanese exporters (11:18p)

 

• Dubai World's sprawling empire (9:33a)

 

HONG KONG (MarketWatch) -- Banking stocks across Asia were lower Friday, especially those traded in Hong Kong and Australia, amid concerns over the extent of exposure lenders may have to financial troubles in Dubai.

Dubai said late Wednesday it would seek a delay in debt repayments owed by Dubai World, a state-run conglomerate with about $60 billion in liabilities. The conglomerate has interests in real estate, ports and the leisure industry. See related story on Dubai.

In Hong Kong, shares of banking giant HSBC Holdings (UK:HSBA 705.60, -35.60, -4.80%)(HK:5 88.40, -5.75, -6.11%) were knocked 6.1% lower by midday, while Standard Chartered Plc's (HK:2888 191.30, -11.70, -5.76%) stock sank 5.8%. The banks rank as the top two respectively in the United Arab Emirates.

 

HSBC has about $15.9 billion in loans to the UAE, while Standard Chartered has $12.3 billion, according to the Financial Times, which cited research by Goldman Sachs.

In Sydney, shares of Australia & New Zealand Banking (AU:ANZ 21.19, -0.79, -3.59%) were down 3.1%, while Commonwealth Bank of Australia (AU:CBA 50.60, -1.78, -3.40%) fell 3.1%. Australian media reports said Commonwealth bank is understood to have some exposure to Dubai, while ANZ is thought to have none.

 

"The demise of Wally World [Dubai World] shows that economic reality will always ultimately prevail, however long it takes," wrote MainFirst analyst Mark Jolley in a note to clients Friday.

He added the Dubai fallout would have little material impact on Chinese banks which are not believed to have much, if any, exposure.

Japanese banks were also lower, although the downside was muted compared to elsewhere in the region.

Mitsubishi UFJ Financial Group reportedly refused to comment on whether it had exposure to the troubled Dubai entity, telling the Nikkei it was not its policy to comment on loans to individual customers. The bank's shares were down 0.8% in mid-afternoon trade.

Mizuho Financial Group (JP:8411 154.00, 0.00, 0.00%), which also refused to comment on its Dubai exposure, was down 2%.

Also trading weaker, shares of Sumitomo Mitsui Financial Group(JP:8316 2,720, +15.00, +0.55%) fell 2.2%.

The weakness follows a harsh session for financials in Europe, where banking stocks were among the biggest causalities. Estimates of exposure of European banks to the Dubai entity vary widely but could be as high as $40 billion, according to research by Calyon, Credit Agricole CIB.

"What part of this is

While the States are away...the bears shall play...

Morning bears,

Hang in there - our time is near.  Amusing how the markets ran upto last nights pre thanks giving holiday with a semi-decent claw back/sideways trade and then, when the states is closed for it's turkey and tankie doodle dandy celebrating, the rest of the world has shat itself.  Why????  Well, how about dropping in all this news....just when they big sod bull of the US is too busy eating turkey to notice.

Have we seen the start of the next leg down?  Who knows.  But we're well off on the markets this morning, and there's no states to prop them up later.

MB


"Dollar rebounds vs. most rivals except yen as stocks drop"

http://www.marketwatch.com/story/dollar-falls-to-14-year-low-against-yen-2009-11-26

"Vietnam shares retreat in wake of rate hike, dong devaluation"

Vietnam's central bank said Wednesday it would devalue the dong, the Vietnamese currency, by 5.4%, effective Thursday, and raise interest rates by one percentage point to 8%, effective Dec. 1.

The Vietnamese benchmark VN Index ended Thursday's session 4.1% lower, its fifth-straight day of declines.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aNWsFUk6r5Dw

Chinese shares slump on policy change fears

Leading Chinese shares have slid ahead of a key government economic meeting with investors wary of the outcome.
The benchmark Shanghai Composite Index fell 119.2 points, or 3.6%, to 3,170.98, the market's biggest daily fall in almost three months.

http://news.bbc.co.uk/2/hi/business/8380241.stm

^ATX	ATX	2,526.12 4:59AM ET	57.16 (2.21%)	Components, Chart, More
^BFX	BEL-20	2,450.65 5:15AM ET	52.88 (2.11%)	Chart, More
^FCHI	CAC 40	3,809.1599 Nov 25	24.5398 (0.65%)	Components, Chart, More
^GDAXI	DAX	5,684.73 5:00AM ET	118.29 (2.04%)	Components, Chart, More
^AEX	AEX General	311.18 5:15AM ET	7.06 (2.22%)	Components, Chart, More
^OSEAX	OSE All Share	402.74 5:00AM ET	6.48 (1.58%)	Components, Chart, More
^MIBTEL	MIBTel	15,743.0000 May 29	174.0000 (1.09%)	Components, Chart, More
^IXX	ISE National-100	N/A	0.00 (0.00%)	Chart, More
^SMSI	Madrid General	1,227.79 4:55AM ET	21.68 (1.74%)	Components, Chart, More
^OMXSPI	Stockholm General	298.73 5:14AM ET	4.89 (1.61%)	Components, Chart, More
^SSMI	Swiss Market	6,345.97 5:00AM ET	76.23 (1.19%)	Chart, More
^FTSE	FTSE 100	5,269.36 5:00AM ET	95.45 (1.78%)	Components, Chart, More

^AORD	All Ordinaries	4,727.600 12:47AM ET	13.400 (0.28%)	Components, Chart, More
^SSEC	Shanghai Composite	3,170.98 2:00AM ET	119.185 (3.62%)	Chart, More
^HSI	Hang Seng	22,210.41 3:01AM ET	401.39 (1.78%)	Components, Chart, More
^BSESN	BSE 30	16,817.87 5:00AM ET	381.08 (2.22%)	Chart, More
^JKSE	Jakarta Composite	2,393.519 4:00AM ET	68.009 (2.76%)	Components, Chart, More
^KLSE	KLSE Composite	1,270.61 3:50AM ET	0.39 (0.03%)	Components, Chart, More
^N225	Nikkei 225	9,383.24 2:00AM ET	58.40 (0.62%)	Chart, More
^NZ50	NZSE 50	3,127.312 Nov 25	11.921 (0.38%)	Components, Chart, More
^STI	Straits Times	2,762.22 4:10AM ET	30.62 (1.10%)	Components, Chart, More
^KS11	Seoul Composite	1,599.52 4:03AM ET	12.36 (0.77%)	Components, Chart, More
^TWII	Taiwan Weighted	7,739.16 12:46AM ET	17.15 (0.22%)	Chart, More

HK gets UGLY post recess

Good morning and welcome to another day in the mad house.

I'm just getting back into things post holiday, and you can taste the
Euphoria in the market from a distance. All the classic signs are there
and there's a hell of a lot of rhetoric out there calling for continued
rises, a move up and into the santa rally. This move will never end
blah blah blah. Boring after a while for sure.

Being on holiday definitely allows you to step back and assess things on
a more objective basis. For example, Prechter is without a doubt the
key market strategist at the moment BUT, we need to remember he was
calling his 'wave 3' crash in the early 90's, and then again in 2003
just as the market turned up and into a 4 year 100% bull rally. His
short calls (and long) are on form without a doubt, but his margin of
error may be 100's of Dow points. Layering trades is a good way to
avoid going 'all in' too early. Who cares if you miss the first bit any
move down. If it goes down 50%, there's still plenty more downside
left.

Once again, I'll clarify my position on the markets. The US economy is
rotten to the core. It has lived off the excesses generated by Bretton
Woods for 65 years.

http://en.wikipedia.org/wiki/Bretton_Woods_system

And now, it's all coming to dramatic and climatic end. OK, this will
not be over night but the excesses are not sustainable. Let's not
pretend the US is alone in its economic woes. It's not. But, it is
alone in its unique 'Bretton Woods' currency backed privileged position.
You see, as we stand, the world has to trade in USD. Oil, gold....it's
all USD, and it's mostly cleared through Manhattan. The world finances
the US because it has no option. It has to buy USD, it has to buy US T
bills.....and perversely, the world is (was) quite happy to let them do
so. It's a bit like a betting shop or casino offering credit to its
biggest customer. Even if that credit gets totally out of hand, the
casino/betting shop will continue to lend the cash because the Customer
is such a good customer. In fact, it's their best Customer. Why the
hell would you stop your best customer in his tracks? Well, you'll do
so when the amount he owes is so huge that you shit yourself and turn
the tap off. That process is not that far away.

On a contrarian note, the USD continues to be so far out of flavour it
hurts. Articles about it's demise are all over the place, but many seem
to forget that the world cannot really trade without the greenback.
Those shorting the USD need to be careful. As with anything oversold, a
counter move will be violent. One of the commentators I read regularly
stated only today that an earlier than expected Fed rate hike triggered
by an unexpected pick up in inflationary pressures or a large bout of
risk aversion (driven by a double dip recession in the US economy) would
see substantial dollar strength (no surprise there) however, what's more
interesting is the evidence of the USD "carry trade" implying an
eventual turn higher in the USD is likely to be sharp and very fast.
Ummmm, that sounds like a recipe for the indices to move just as fast
and just as aggressively in the opposite direction.

Santa crash anyone?

MB

US 3 month T Bills

This one has me lost.  We're at 10,450 Dow....and yet the yield on 3 month US treasury bills is lower than just after Lehmans collapse.  Work that one out!

Nov 23rd: US Treasurys

Back from hols. Hope you are all well. I'll get things moving later
but in the mean time, have a read of this. How odd, and the
explaination below doesn't quite make sense. If people were more
comfortable about the future, would they not feel more relaxed with
riskier non gilt holdings?

It doesn't add up.

MB

UPDATE: Treasury Bill Demand Seen Pushing 3-Month Yield Negative

NEW YORK (Dow Jones)--Demand for the three-month Treasury bill is
ramping up as investors seeking safety heading into the end of the year
stock up on the safest possible securities at a time when Treasury bills
are in short supply.
This is driving the bond equivalent yield on the three-month T-bill
down, and strategists said its yield is likely to fall into negative
territory before the end of the year. When market participants buy
Treasury bills at negative rates, they're essentially paying the
government to keep their money safe.

The three-month bond equivalent yield fell as low as 0.15% Thursday,
according to TradeWeb.
Bill yields last fell below zero in late 2008 amid the financial market
panic that was triggered by the Lehman Brothers bankruptcy. The decline
now isn't driven by the same sorts of fears though - it's more about a
scarce supply of T-bills amid strong demand for safe assets given the
hazy economic outlook.

The amount of T-bills in the marketplace has dwindled with the
government letting the bills in its Supplementary Financing
Program--which financed the ballooning deficit though the issuance of
bills--mature rather than sell new bills to roll over the debt. At the
same time, money market investors face fewer options to park their cash.
For instance, the issuance of commercial paper, a popular money-market
investment, has shrunk during the credit crisis. On a seasonally
adjusted basis, the commercial paper market, where companies go to
finance day-to-day needs like payroll, is $1.267 trillion in size,
substantially down from a peak of $2.2 trillion in July of 2007.

"The money market cash on the sidelines is looking for places to go,"
said William Larkin, a fixed-income portfolio manager at Cabot Money
Management in Salem, Mass.
Larkin said that with T-bill yields likely to slide even further in
December, the higher yielding two-year Treasury note is a much better
bet for investors who still want to hold onto safer, more-liquid
securities as the year draws to a close.
Into next year, Larkin expects the amount of cash being funneled into
money funds to drop as investors start to feel a little more secure
about taking risk, and that could push T-bill yields back up again.

Assets in money funds have already ticked down. After peaking at $3.936
trillion in January, according to the Investment Company Institute,
money fund assets on a weekly basis were last at $3.334 trillion. Larkin
said that they could fall under $2.5 trillion if yields turn and remain
below zero.

For now though, demand for T-bills remains robust and supply scarce.
In September, the Treasury said that it was going to reduce the balance
of its supplementary financing program, which was about $200 billion in
September, to $15 billion. The SFP kicked off in September 2008. Through
the program, Treasury sold T-bills to provide cash for use in Federal
Reserve initiatives.

The three-month bond equivalent yield last fell negative in December
2008, to as low as -0.04%. That was the first time it had fallen below
zero since the Great Depression. The yield fell last year on a massive
flight to quality--market participants nervous about their
counterparties preferred to stick with government debt with the shortest
maturities. During the weeks heading into the Christmas holiday in 2008,
the three-month bond equivalent yield traded negative to flat, and then
improved into the beginning of 2009.
George Goncalves, managing director and head of fixed-income rates
strategy at Cantor Fitzgerald in New York, said that this year it could
fall as low as -0.05%.

"As much as people have worries about the Treasury market, there's still
a preference to have those securities at the end of the year on their
books," Goncalves said.
"This is going to be evident across the curve," he said, but it's
starting with T-bills.
-By Deborah Lynn Blumberg, Dow Jones Newswires; 212-416-2206;
deborah.blumberg@dowjones.com