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Reason For The Market Swoon - Realistic Testimony By The Fed's Jon Greenlee
A few misplaced words is all it takes to scare the market into submission. The proposed reason for today's impressive market reversal from up over one percent, to negative now, has been attributed to testimony by the Fed's Jon Greenlee, Associate Director, Division of Banking
Supervision and Regulation, before the Subcommittee on Domestic Policy, Committee on Oversight and Government Reform, U.S. House of Representatives, Atlanta, Georgia. Mr. Greenless strays from the party line and dares to say (the truth) things that his associates at the secretive Federal Reserve would never willingly share with the market for fear of just the kind of reaction that we have seen in past hour. Case in point:
"The condition of the banking system is far from robust. Two years into a substantial economic downturn, loan quality is poor across many asset classes and, as noted earlier, continues to deteriorate as weakness in housing markets affects the performance of residential mortgages and construction loans. Higher loan losses are depleting loan loss reserves at many banking organizations, necessitating large new provisions that are producing net losses or low earnings. In addition, although capital ratios are considerably higher than they were at the start of the crisis for many banking organizations, poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions. Diminished loan demand, more-conservative underwriting standards in the wake of the crisis, recessionary economic conditions, and a focus on working out problem loans have also limited the degree to which banks have added high-quality loans to their portfolios, an essential step to expanding profitable assets and thus restoring earnings performance."
One wonders what would happen, and whether the S&P would be in the double digits, if the Fed were to disclose all it knew about the real state of the economy. And just in case you were wondering if the Fed is really focused on the recently disclosed mandate of forcing banks to lend horded capital, instead of collecting interest in excess depository reserves, read this:
We want banks to deploy capital and liquidity, but in a responsible way
that avoids past mistakes and does not create new ones. The Federal
Reserve is committed to working with other banking agencies and the
Congress to promote the concurrent goals of fostering credit
availability and a safe and sound banking system.
Thus if you are expecting excess reserves with the Fed, which recently hit $1 trillion to decline any time soon, do so but don't hold your breath.
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I thought the reason that the market tanked was because I was just building up long positions in names like AMZN, AAPL, GS thanks to Cramer's advice....etc. Good to know that its not clueless investors like me getting the wrong end of the stick again.
I thought it tanked after everyone realized that th early morning boost was just the PPT buying futures to limit any negative impact from the CIT bankruptcy.
The fed wants them to deploy capital into treasury debt to keep the rinse wash repeat cycle alive - or is it the fed itself? Caught in a vicious vortex the fed is
I've got whiplash...
Question to Elliot Wavers: Are we in wave c down?
Next week?
When?
Disclaimer: I'm agnostic about Elliot Wave.
Einstein never got that theory of everything worked out either.
Mchugh says yes.
McHugh says yes.
Daneric says bounce this week, wave c next week (sorry if I'm misreading).
Anybody else?
Have to be pretty specific about terminology in most things, even Elliot. Daneric has our top in, for the year anyway. I don't think the next downslide would be a wave C, more like a wave 3 or iii. Big difference. His overall count would make this big move down P3 (I think).
Anyway you slice it, he & other EW Analysts have a big down move setting up next week, or later this week. Most have the current trend as down (in stocks). As with all technical analysis though, the situation can change in a hurry. Daneric provides an outstanding analysis though.
kenny just put up a nice chart.
GW, EW is a real tricky thing to apply at the hard right edge of a chart due to the fractal nature of markets. Trying to call big fractals is a tricky business at best, a fool's errand at worst. Suggest you do your analysis the old-fashioned way, a series of lower highs & lower lows. You will see the market rollover in the process. If the volume increases on the down days, you know there's distribution going on. I've read many a Prechtor report and many have been incorrect or too soon, too late. That's why I use the tried & true, time tested method. Good luck.
TD, I appreciate your work.
hmm...i think the market swooned because the hft algos decided it was a good time to sell.
when was the last time anyone gave a shit about fundamentals before buying equities?
So did the taxpayers get a good deal on CIT ? And how much money did the big banks actually MAKE from this sweet deal ?
No, no no! It's supposed to go like this:
"Uhhh, ahem, er..."
(lawyer whispering in ear)
"These aren't the garbage barges you're looking for...there's no place like home...Wonder Asset Powers, Activate! Can I have my cookie now please?"
The Federal Reserve is usually very secretive. Is it possible this guy isn't a boy scout? Perhaps there is some really bad news right around the corner and the Fed wants to pretend that they are out in front of it instead of getting ambushed like last September.
+100
Elliot wavers are in the know on this one, get ready...the most violent move to date if not mistaken.
S&P - 400 ish?
Soon it will be .."Plunge protection team...where are you...we got some markets crashing...We can count on you yeah PPT, you're ready and you're buying!"(scooby doo tune) The poor longs first thinking the supposed "dip buyers" and then desperately hoping the ppt will will save their option calls!!
Turns out the PPT is SOL!!!!
Yes, SOL was the PPT today. Who's gonna be the bitch tomorrow?
Not to worry computers don't have memories and will get the buy progs ready for the dips and push the dollar down, problem solved..
move on, nothing to see or hear... market only goes up
No memories?
FLASH, ROM, RAM...whatzzat, chicken livers?
Just look out if the unemployment figures on friday are not so bad or better but I doubt it.
OK, at 2:08p buy any and all companies that are solvent. Since the list is small this should create a good impression on index observers.
The happiest, fattest, sunniest, rosiest V-recovery in the
world (Goldman, Bofa, and other extreme bulls?) has an
historical fair value of 900 SPX. So where are we if that's
not what this is going to look like? LOL
Anyone notice YRCW today? Move along, nothing to see here.
Daneric, Kenny, all those eliot wavers have been SO wrong for SO long now that it just defies the imagination. Wave C? You guys are tripping if you think they're gonna let a wave C go down after they threw all that cheddar at the market.
Good luck waiting for that Wave C.
The thing that the Fed and the banksters do NOT want to admit is that the deterioration we have experienced in RMBS and CMBS in the South and West has now begun to show up in the MidWest and Northeast formerly thought to be immune from the problems highlighted in this testimony and amplified by his comments about the problems in Metro Atlanta. The next bailouts are obvious: FHA and Farmer Mac. Once 95% of the housing finance industry is under government control, an expansion of bank regulatory authority is a given when the next down draft hits hard during the first period of major Option ARM resets in 2010.
This ball game is a long, long way from being over and until the banks that need to recognize losses are forced to do so and if need be, liquidate as a result, we are simply building cause for a larger and more dramatic collapse.
He was right "on-message" his job was to scare money away from stocks into "safe" treasuries - we have alot to sell!
Regarding Elliot Wave C? If it's not then it's still wave 5 or to paraphrase Prechter, "if it's not this then it's that" .... substitute wave counts and go to the top of the page again.
Remember, using this philosophy, you are always right at some point. You just don't reflect on the 99.9% error calls.