White Monday?

JP morgan is what will move the market. If something isn't done and they go the way of lehman watch out below, a few thousand points below. Those guys have a whole pile of bad stuff hiding in their closet.
 
Aussie market gapped up, rangebound and moving lower now but without conviction. Looks like the gap will be filled soon. If I didn't have a dinner appt I'd be looking to get long around then...
 
Quote from sumosam:

"It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well -- have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers. These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity. In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really set this market over the edge -- as the first notice of these calls were issued on October 2nd and 3rd. There was something of a grace period to meet the calls, but funds realized they weren't going to be able to meet them other than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.

There doesn't seem to be any reason for this increase in margin. The most benign one is that the banks became overly worried that their prime brokerage customers could cause problems with leverage. A more sinister reason revolves around the fact that the banks issuing the calls will likely wind up the owners of some excellent inventory (relatively illiquid preferreds, bonds, etc., which are being sold at prices well below theoretical value). They are in effect confiscating from their prime brokerage customers."

courtesy redoption/macmillan weekly...

any comments?

:eek:
More...


I couldn't agree more... and to take it a step further, I think the large banks are threatened by the uncertainty of insolvency. A relatively extreme request to increase margin across the board and a deadline to meet those requests is going to have a similar impact in all sectors; we all know how diverse some of the holdings can be. This is why you see some completely unrelated sectors all down (or up throughout the day) by the same percentage at the same time.

Well said and thought out.

B
 
Quote from sumosam:

"It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well -- have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers. These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity. In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really set this market over the edge -- as the first notice of these calls were issued on October 2nd and 3rd. There was something of a grace period to meet the calls, but funds realized they weren't going to be able to meet them other than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.

There doesn't seem to be any reason for this increase in margin. The most benign one is that the banks became overly worried that their prime brokerage customers could cause problems with leverage. A more sinister reason revolves around the fact that the banks issuing the calls will likely wind up the owners of some excellent inventory (relatively illiquid preferreds, bonds, etc., which are being sold at prices well below theoretical value). They are in effect confiscating from their prime brokerage customers."

courtesy redoption/macmillan weekly...

any comments?

:eek:
More...


:D

can you post a direct link to this commentary.

thanks, surf
 
If this is true then the banks have played everyone. They caused the crash that forced the government(s) to bail them out. They hold all the cards, this was their trump card, their ace in the hole. Flytrader, I hope you read this, Arab financial terrorism my arse. I hope they all get nationalized (maybe this is why, despite the intense lobbying by the banks against it, Paulson seems as though he is going to buy in to them, maybe he doesn't like that he got played too) and all their CEOs get the boot.

Glad I am not one of these bank executives. They have fucked with some ruthless people with massive resources.
 
MARGdebtSep08.JPG
 
Quote from Pekelo:

Interesting, but neither the first nor the second red hollow candle on the GE chart fits the description:
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you are right, they stockcharts messed up with GE example. Random.Capital's definition is correct.
 
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