The ISEQ Thread Part II - Trading below 2000

DOW closed 11% up expect the bulls to run through Asia tonight and may still have some momentum tomorrow.

Libor dollar rates drop

http://www.bloomberg.com/apps/news?pid=20602007&sid=aRZTg5IzBnI0&refer=govt_bonds

EDIT
Don't be in a hurry to proclaim we are out of the woods just yet, serious recession ahead and with the printing presses running inflation will be up in the near future. Right now we have a period of reducing interest rates in front of us. It is the a lull use the time well.

Pacific and Asia opening up. AORD up 5.9% NZX50 up 6.9% Nikkei225 up 1.59%

EDIT
All up except the Shanghai Composite. I suppose fear of recession are on minds there.

What's wrong with the ISEQ. It's going UP !

Squire wrote:

DOW closed 11% up expect the bulls to run through Asia tonight and may still have some momentum tomorrow.

Libor dollar rates drop

http://www.bloomberg.com/apps/news?pid=20602007&sid=aRZTg5IzBnI0&refer=govt_bonds

EDIT
Don't be in a hurry to proclaim we are out of the woods just yet, serious recession ahead and with the printing presses running inflation will be up in the near future. Right now we have a period of reducing interest rates in front of us. It is the a lull use the time well.

Makes sense to me. What needs to be done?

CF

Globally, need to impose effective regulation on the financial sector now. Simple and effective. It is the only way to sort out Swaps, derivatives, hedge funds and all the rest of it. Utterly essential.

The rally will probably lose momentum very quickly as thoughts of recession take hold.

Ireland needs to sort out the banking sector alas. ISEQ Financial down 40 points when I last looked. The guarantee is not working and they are avoiding necessary action.

Other than that move spending away from the likes of Roads to high tech and energy. Need to cut many areas even ones that are desirable. Pain now for long term good. Get various professions and interest groups to propose changes in legislation that encumber. I am not taking deregulation just getting rid of (often well meaning) nonsense.

To me bubbles often happen because people cannot see other places to invest. On the other side we often have many people with good ideas and no money. I think that all countries would do well to look at that problem and make investing and seeking investment much easier. It does not have to be a grand scheme. I think there is great potential the problem often is access to finance.

Change taxation on small business to tax on money received. Increase some of the acceptable allowances for using home as office and car for business. IMO many small businesses pay much more than they strictly should. Also need to move the burden of state schemes back to the state and away from this sector. They are crucial to the economy and many just do not have the money. These are the ones that will employ in areas of multiple deprivation, and who are unlikely to set up shell companies or similar so encourage them. You need to encourage people to invest and this is where ethics and regulation are important. However what we are witnessing is an utter disgrace.

Tax land speculation to pay for infra structure, really easy money!

Squire wrote:

CF

Globally, need to impose effective regulation on the financial sector now. Simple and effective. It is the only way to sort out Swaps, derivatives, hedge funds and all the rest of it. Utterly essential.

The rally will probably lose momentum very quickly as thoughts of recession take hold.

Ireland needs to sort out the banking sector alas. ISEQ Financial down 40 points when I last looked. The guarantee is not working and they are avoiding necessary action.

Other than that move spending away from the likes of Roads to high tech and energy. Need to cut many areas even ones that are desirable. Pain now for long term good. Get various professions and interest groups to propose changes in legislation that encumber. I am not taking deregulation just getting rid of (often well meaning) nonsense.

To me bubbles often happen because people cannot see other places to invest. On the other side we often have many people with good ideas and no money. I think that all countries would do well to look at that problem and make investing and seeking investment much easier. It does not have to be a grand scheme. I think there is great potential the problem often is access to finance.

Change taxation on small business to tax on money received. Increase some of the acceptable allowances for using home as office and car for business. IMO many small businesses pay much more than they strictly should. Also need to move the burden of state schemes back to the state and away from this sector. They are crucial to the economy and many just do not have the money. These are the ones that will employ in areas of multiple deprivation, and who are unlikely to set up shell companies or similar so encourage them. You need to encourage people to invest and this is where ethics and regulation are important. However what we are witnessing is an utter disgrace.

Tax land speculation to pay for infra structure, really easy money!

tax is levied on cash received basis. hence addback of non cash items such as depreciation and mark to market revaluations when working out taxable profit.

accounting profit before tax (on accruals basis) is much different to taxable profit for the revenue purposes.

the measure in the new budget to forgo corp tax on new businesses for the first 3 years is going to have a massive imputus to create indiginous industry. its a great and imaginative move (assuming i read it correctly!).

zakalwe wrote:

Squire wrote:

CF

Globally, need to impose effective regulation on the financial sector now. Simple and effective. It is the only way to sort out Swaps, derivatives, hedge funds and all the rest of it. Utterly essential.

The rally will probably lose momentum very quickly as thoughts of recession take hold.

Ireland needs to sort out the banking sector alas. ISEQ Financial down 40 points when I last looked. The guarantee is not working and they are avoiding necessary action.

Other than that move spending away from the likes of Roads to high tech and energy. Need to cut many areas even ones that are desirable. Pain now for long term good. Get various professions and interest groups to propose changes in legislation that encumber. I am not taking deregulation just getting rid of (often well meaning) nonsense.

To me bubbles often happen because people cannot see other places to invest. On the other side we often have many people with good ideas and no money. I think that all countries would do well to look at that problem and make investing and seeking investment much easier. It does not have to be a grand scheme. I think there is great potential the problem often is access to finance.

Change taxation on small business to tax on money received. Increase some of the acceptable allowances for using home as office and car for business. IMO many small businesses pay much more than they strictly should. Also need to move the burden of state schemes back to the state and away from this sector. They are crucial to the economy and many just do not have the money. These are the ones that will employ in areas of multiple deprivation, and who are unlikely to set up shell companies or similar so encourage them. You need to encourage people to invest and this is where ethics and regulation are important. However what we are witnessing is an utter disgrace.

Tax land speculation to pay for infra structure, really easy money!

tax is levied on cash received basis. hence addback of non cash items such as depreciation and mark to market revaluations when working out taxable profit.

accounting profit before tax (on accruals basis) is much different to taxable profit for the revenue purposes.

the measure in the new budget to forgo corp tax on new businesses for the first 3 years is going to have a massive imputus to create indiginous industry. its a great and imaginative move (assuming i read it correctly!).

How will they stop people setting up serial 3 year companies? Claw back? That would be surely not feasible?

Oh look - a budget bounce


http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

zakalwe wrote:

Squire wrote:

CF

Globally, need to impose effective regulation on the financial sector now. Simple and effective. It is the only way to sort out Swaps, derivatives, hedge funds and all the rest of it. Utterly essential.

The rally will probably lose momentum very quickly as thoughts of recession take hold.

Ireland needs to sort out the banking sector alas. ISEQ Financial down 40 points when I last looked. The guarantee is not working and they are avoiding necessary action.

Other than that move spending away from the likes of Roads to high tech and energy. Need to cut many areas even ones that are desirable. Pain now for long term good. Get various professions and interest groups to propose changes in legislation that encumber. I am not taking deregulation just getting rid of (often well meaning) nonsense.

To me bubbles often happen because people cannot see other places to invest. On the other side we often have many people with good ideas and no money. I think that all countries would do well to look at that problem and make investing and seeking investment much easier. It does not have to be a grand scheme. I think there is great potential the problem often is access to finance.

Change taxation on small business to tax on money received. Increase some of the acceptable allowances for using home as office and car for business. IMO many small businesses pay much more than they strictly should. Also need to move the burden of state schemes back to the state and away from this sector. They are crucial to the economy and many just do not have the money. These are the ones that will employ in areas of multiple deprivation, and who are unlikely to set up shell companies or similar so encourage them. You need to encourage people to invest and this is where ethics and regulation are important. However what we are witnessing is an utter disgrace.

Tax land speculation to pay for infra structure, really easy money!

tax is levied on cash received basis. hence addback of non cash items such as depreciation and mark to market revaluations when working out taxable profit.

accounting profit before tax (on accruals basis) is much different to taxable profit for the revenue purposes.

the measure in the new budget to forgo corp tax on new businesses for the first 3 years is going to have a massive imputus to create indiginous industry. its a great and imaginative move (assuming i read it correctly!).

looks nice Zalakwe - but in reality means and changes very little - very few start-up companies will generate any profit at all in the first 3 years of existence - if they do it will be minimal and wouldn't be taxed anyway and if their accountants are any good at all - their corporate taxation will be minimal regardless - trust me I work for one of said companies.

Its a nice bit of smoke and mirrors to get around the fact that he has increased the potential grants and capital investment into new export and hi-tech business by a measly 2.5% up to roughly 150 million - fuck all if you have any ambition to build the kind of industrial and technological clusters that we need seriously upgrade our economy and society - and it will scattered over 300 -500 companies in such small amounts to be irrelevant - might pay the forklift drivers wages for six months- and thats if the cretins in Enterprise Ireland can actually distribute and target it properly - one fecking big "if"

zakalwe wrote:

tax is levied on cash received basis. hence addback of non cash items such as depreciation and mark to market revaluations when working out taxable profit.

accounting profit before tax (on accruals basis) is much different to taxable profit for the revenue purposes.

the measure in the new budget to forgo corp tax on new businesses for the first 3 years is going to have a massive imputus to create indigenous industry. its a great and imaginative move (assuming i read it correctly!).

Sorry we are at cross purposes I was not thinking of income tax but other duties that are levied say on import of materials and goods.

Good to see the tax break for new business, most failures are in the first few years. Abuse possible but I am sure that could be considered in the next 3 years.

Edo wrote:

looks nice Zalakwe - but in reality means and changes very little - very few start-up companies will generate any profit at all in the first 3 years of existence - if they do it will be minimal and wouldn't be taxed anyway and if their accountants are any good at all - their corporate taxation will be minimal regardless - trust me I work for one of said companies.

Its a nice bit of smoke and mirrors to get around the fact that he has increased the potential grants and capital investment into new export and hi-tech business by a measly 2.5% up to roughly 150 million - fuck all if you have any ambition to build the kind of industrial and technological clusters that we need seriously upgrade our economy and society - and it will scattered over 300 -500 companies in such small amounts to be irrelevant - might pay the forklift drivers wages for six months- and thats if the cretins in Enterprise Ireland can actually distribute and target it properly - one fecking big "if"

Whilst I agree that many new businesses do not generate much income for some this could mean the difference between surviving and not. I wouldn't neglect small business. It is surprising what Ireland imports and not necessarily from low wage economies. I have seen container loads of galvanised wrought iron, lead lights and purpose made furniture brought in from England! Someone needs to look at the cost of freight that arrives across the Irish Sea. Why are our costs so high?

However I do agree that there needs to be some focus on what we want to encourage. Energy production would be an easy one but how do you target other areas without ending up spreading largess to wide?


DOW about 1% up looks like the rally is losing steam.

Interesting article on the Euro. Overvalued? Is it single currency without a coordinated system behind it? Is the European financial system going to be stress tested? Perhaps wishful thinking by Americans, but certainly coordination and dealing with abuse by member states does need further consideration.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aulSB8yvkwXg&refer=exclusive

EDIT

DOW down nearly 3% so suppose that is the end of the rally.

Most of Asia down last night. Europe opening in the red. ISEQ heading straight down. ISEQ Financials down nearly 200 points.

Gives a fair indication of just how strong this bear market is. Rally lasts less than 2 days despite massive intervention (or perhaps because of it).

The American put quarter of a trillion in and promise another half a trillion, the Europeans promise to put 1.8 trillion into the banking system and the market is still contracting as you say Squire ...

Is this what investors here think of the state of our economy after the budget?

I think the clue lies in the Shanghai Composite. Two nights ago when everyone else was bullish it fell quite sharply. To me that was a clear indication of falling order books in China and the looming recession. I can't think of anything else it could have been. If there are any other theories I would like to hear them.

I do not for one minute believe that co-ordinated government action was meant to boost stock markets around the world. The stock market (collective) is a side-show with little or no relevance to the motives behind the governments' actions.

Billions and now trillions in capital has been pouring into capital markets through various govt schemes across the West for a couple of months now. It seems the liquidity crisis has been averted by the sheer volume of new money govts are printing. Yet, the markets, after their initial exuberant realisation that credit stability has been restored, now have to contend with economic reality. For many companies credit wasn't a concern until short term facilities dried up but once this has been restored they are still faced with a recession which they have to trade their way out of.

There's trillions in various asset classes that have to be revalued, and much of these assets are used for collateral against loans. The whole game has changed. While the financial system is still on life-support, we shouldn't expect miracles.

As for the Irish Exchange, its response this week has been tepid to say the least. The IFIN (financial index) actually lost ground on Mon and Tue. Today's numbers, imo, aren't impacted by the budget either favourably or unfavourably. The market's number reflect the state of the economy.

Usually we get some decent buying by mutual and hedge funds as they clean up their positions for the new tax season in the US. However, it seems that redemptions by average punters from the funds will dilute the seasonal effect this year, and I'm guessing that alot of private investors will stay in cash. Also, many US municipalities won't be socking away pensions in stocks anytime too soon.

Still, the markets are fickle and we could see the year end surge. This will take some doing with a strong story line and some added sex-appeal. Personally, I don't find anything alluring about any market right now.

This is the problem as I see it.

http://www.gold-eagle.com/editorials_08/demeritt061608.html

Interesting article Slim and a bit frightening. However, their analytical insights rely on quotes from sources without examining or citing specific faults in the system. I'm trying to make heads or tails of Lehman's CDS auction last Thursday, and when if I can I might have a better handle on the derivatives market. Leverage seems to be the weak point but trying to unwind any given derivative in relation to a particular bank's balance sheet just might be impossible given the lack of information. Therefore, the immediate impact is the creation of uncertainty and the attendant increased transaction costs for the time being.

Btw, I'm not sure about the gold sales pitch. Those who keep gold as a hedge against inflation have already bought, and anyway the proportion of gold in any savvy investor's portfolio tends to be a very small percentage of the portfolio's total value. In order for gold to increase in price, we'll have to see some pretty steep inflationary numbers according to classical asset analysis.

Slim Buddha wrote:

This is the problem as I see it.

http://www.gold-eagle.com/editorials_08/demeritt061608.html

Derivatives and Hedge Funds do need to be regulated as a matter of urgency. If they do that then they will have drawn a line under the whole sorry business and with each week that passes then the problem will reduce. If they do that and there is some sort of property market and not utter seizure which is what we have now then many of these contracts will pass without harm. However don't see a lot of progress on the regulation end and that is needed for both confidence to return and to prevent further abuse.

Whilst I agree the money markets are crucial, the stock markets are the place where companies fortunes rise and fall.


rockyracoon

Like yourself I find the current markets totally unappealing. I have bought, and sold quickly, but it has been very short commitments and hardly worth the effort or risk. It is really not my cup of tea anyway. It is a symptom of not being able to make sensible decisions elsewhere because of the uncertainty.


EDIT
On gold some businesses that I have an interest in have found a need to receive payment and pay in Gold. It was as a direct result of the Banking crisis and an utter pain. So by default some have ended up with more of it than they want. To me Gold is money tied up unproductively. It is the insurance of last resort. If the value soars India will become the richest country in the world.

Squire I saw that post of yours about businesses wanting payment in gold - could this escalate? Are currencies that unstable? If enough businesses asked for that set up then that would change things, wouldn't it? Could there arise a system of moneys based on gold and based on fiat simultaneously- one for business, one for everything else? The price of gold is volatile enough though, unless those industries are deeply worried about what backs those dollars, pounds and euros.

http://www.gold-eagle.com/editorials_08/demeritt061608.html

This is bizarre stuff! Now, a couple of trillion of sub-prime mortgages I can imagine but this I haven't a clue where to start unless we're seeing mortgages at industrial scales where China or some other nation (America?) will end up working for 100 years to do such and such ???

Have we utterly mortgaged the future of the planet with figures like that?

Auditor #9 wrote:

Squire I saw that post of yours about businesses wanting payment in gold - could this escalate?

It was simply due to lack of confidence in the Banks and any credit notes. Was beginning to cease up. I hope that has now passed. Visions of employing lots of SAS types heavily armed to transport gold around so I can pay the wages pay suppliers. It would be like back in the times of my forefathers when ruling with an iron fist was literally just that. Armed retainers nasty thought.

Iceland is out of credit, currency is in toilet, there is stockpile food buying and the retailsers are set to run out of food in a couple of weeks.

I personally don't think these bail outs can hold. I really hope I'm wrong.

Squire wrote:

Auditor #9 wrote:

Squire I saw that post of yours about businesses wanting payment in gold - could this escalate?

It was simply due to lack of confidence in the Banks and any credit notes. Was beginning to cease up. I hope that has now passed. Visions of employing lots of SAS types heavily armed to transport gold around so I can pay the wages pay suppliers. It would be like back in the times of my forefathers when ruling with an iron fist was literally just that. Armed retainers nasty thought.

If Euribor is anything to go by, the rates have been decreasing which is good. However, they are still very high by historical standards and the spread between the near term rates and the ECB base rate very high. The correction to normality will take some time. Also, lest we forget, Trichet has stated for the record that the interest rate structure won't be returning to pre-2007 levels again. The cost of risk will rise even as the credit crunch abates. However, all that bullocks with gold should dissipate soon.

Re: the bit about uncertainty and volatility. Yeah, uncertainty is a function of volatility but not the whole equation. You have to take into account the antics of day traders who are moving large volumes on a daily basis and price movements dictated by seasonality at the very least. The VIX (a measure of volatility) is decreasing from its recent historical highs but the longer term contracts are staying stubbornly high in relation to the short term - ie expect more volatility although the daily price swings mightn't be as large as we've just experienced.

However, sentiment is a different beast. Sentiment is the longer term view that investors and traders take on the markets. This is virtually unquantifiable although the volatility indicies give us a wee glimpse into the collective mindset. Imo, given the huge price swings and large price drops, the small investor has taken a beating and won't be returning to the markets any time soon or in any great numbers.

Auditor #9 wrote:

Squire I saw that post of yours about businesses wanting payment in gold - could this escalate? Are currencies that unstable? If enough businesses asked for that set up then that would change things, wouldn't it? Could there arise a system of moneys based on gold and based on fiat simultaneously- one for business, one for everything else? The price of gold is volatile enough though, unless those industries are deeply worried about what backs those dollars, pounds and euros.

http://www.gold-eagle.com/editorials_08/demeritt061608.html

This is bizarre stuff! Now, a couple of trillion of sub-prime mortgages I can imagine but this I haven't a clue where to start unless we're seeing mortgages at industrial scales where China or some other nation (America?) will end up working for 100 years to do such and such ???

Have we utterly mortgaged the future of the planet with figures like that?

A significant amount of this is in Credit Default Swaps. THis can be managed iif the people in "control" of them know what they are doing. We are going to see an unwinding of CDS positions in large financial institutions which have gone bankrupt (Lehmann and Washington Mutual scheduled for Oct. 21st and 23rd respectively) or have been taken over in part by government. So the names to look for are AIG (remember , insurance companies are in this game, too) Freddie, Fannie, RBS, Fortis, Lloyds/TSB and HBOS.

Some figures:

JP Morgan Chase: Total derivatives: $77 trillion. CDS's: $7.9 trillion
Bear Stearns: Total derivatives: $13 trillion, making a total of $90 trillion
for the JP Morgan total derivative portfolio

Deutsche Bank: Total derivatives :$70 trillion CDS's: $ 5.16 trillion.

CDS's only
Bank of America: $ 1.6 trillion. Add to this whatever Merrill Lynch brings to the table
Citicorp: $ 3.1 trillion.

This is just a tiny sample of the type of dimensions and scale we are talking about. Most major banks are in this to a greater or lesser extent. If four or five banks fail catastrophically, they pull this entire mess down with them and as they are all interlinked, isolating the poison is impossible. The figures are too big for any government to deal with at this point. And it is for this reason that the government co-ordinated action took place. The entire derivative market is like a coachload of people balancing delicately at the edge of a cliff and we have no idea how long it will remain there. Oct 21st and 23rd will give us a clue as to where we are going with this.

Do they never learn.

http://www.bloomberg.com/apps/news?pid=20601109&sid=abFS7rDXxCcA&refer=exclusive