Beware Relief Rallies - Eric Janszen

[FRED]

Re: Beware Relief Rallies

If there's a lesson to be learned, it's that the Truth is in the credit markets more than equity markets.

Credit markets are still a disaster => keep away.

LIBOR is a fraud.

Here we call it LIE-BOR.

[SBell]

Re: Beware Relief Rallies

It strikes me that the discussion is so focused on stocks. I am interested in protecting and creating wealth, but I am more concerned with keeping my lively hood and business going. No investment has performed better than putting my capital into my business. So stocks are a concern but macroeconomics are paramount.

I can definitely relate to this sentiment. I've been following iTulip and others for a while and doing what I can to protect my personal wealth, but when it comes to protecting your business it's a whole other ball game.

I've got an aerospace defense business that employs 48 people. I worry that none of the employees really grasp how dire the situation is and aren't personally prepared with their finances. Luckily we've positioned the company to do well through what's coming, and hopefully can at least survive without major cuts.

The most difficult task at the moment is that we supply the major prime aircraft manufacturers and have to negotiate contracts that can stretch over 5 year periods. Trying to negotiate inflation escalation clauses in this environment is next to impossible. Unfortunately B*#ing won't buy it when I tell them that the PPI index is BS and I'm basing the the escalation on iTulip's Ka Poom theory:rolleyes:

[D-Mack]

Re: Beware Relief Rallies

The most difficult task at the moment is that we supply the major prime aircraft manufacturers and have to negotiate contracts that can stretch over 5 year periods. Trying to negotiate inflation escalation clauses in this environment is next to impossible. Unfortunately B*#ing won't buy it when I tell them that the PPI index is BS and I'm basing the the escalation on iTulip's Ka Poom theory:rolleyes:

The airlines shot themselves in the foot with their fuel assumptions based on Goldman's 200 $ oil prediction, I wonder if they will be able to buy new planes in the future.

Is the worst over for the airlines?

But the spike in oil prices has been the biggest problem.

The rise started in December 2006 and only stopped in June this year when a barrel of oil had topped $140.

It has now dropped like a stone to just above $60 a barrel.

That won't help many airlines just yet.

They are still paying more for their fuel under 'hedging' deals, in which they set a fixed price months into the future. United Airlines, for example, has said it is around $230m out of pocket as a result of its hedging deals.

Just this week Cathay Pacific has admitted its hedging will result in poor results by the end of this financial year.

....

http://news.bbc.co.uk/1/hi/business/7711353.stm

[cobben]

Re: Beware Relief Rallies

I haven't paid attention to a potential wild card, the IMF, obviously should have.
Maybe they have, or at least think they have the supertanker for inflight refueling?

They have an agenda all laid out, and apparently have a lot of support going into the G20 meeting.
And historically the have had "Volcker" tendencies.
Could get interesting in new & hitherto unimagined ways . . .

IMF may need to "print money" as crisis spreads
http://www.telegraph.co.uk/finance/c...s-spreads.html

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing 'AAA' bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

"The IMF can in theory create liquidity like a central bank," said an informed source. "There are a lot of ideas kicking around."

______________________________________________

What if the world's creditor nations, including OPEC, take control over the IMF away from the US?

British leader asks Saudis to help fund IMF
http://biz.yahoo.com/ap/081102/ml_gulf_brown.html

[we_are_toast]

Re: Beware Relief Rallies

Here we call it LIE-BOR.

Credit markets are still a disaster => keep away.

Hang on here! What do you mean? I thought the credit markets were recovering? What can we use as a measure of the health of these markets?

Many of the people who chided me for selling real estate and buying gold are now bullish on real estate again!!! I can't believe it... one of the largest panics in US history just took place and they got BULLISH. My neighbors just bought a resort property with gas station and food mart on 7 acres up in the mountains thinking we are out of the woods! Nope... they're in the woods again in more ways than one

A while back there was a thread full of anecdotal stories of friends and family who refused to head the warnings of people on this forum. It would be nice to continue these stories. What are these same people doing now? It could be a good measure of where the economy is now, and it might be a good contrarian tool.

Yesterday, a bunch of people who think oil is produced by morlocks in little factories deep under the ground, all said they thought gas prices were about to go through the roof. Hmmm.

[SBell]

Re: Beware Relief Rallies

I should have specified that we're military aerospace and space and have very little commercial content.

I agree that the airlines shot themselves in the foot with the fuel assumptions. I also think the economic downturn is going to lead to a lot of canceled orders for commercial aircraft.

For my business we're anticipating defense spending cuts, but we're well positioned to support older aircraft if newer ones are cut. We're also positioned to do a lot of nuclear and space/satellite work.

I also believe that aircraft and military hardware are some the last things that America actually manufactures and can export for cold hard cash when things get tough.

[goadam1]

Re: Beware Relief Rallies

People here seem to be on as much a rush on the downside as those who want to rush to the upside. Meanwhile, everything seems to be playing out like the script.

let's enjoy the ride.

[FRED]

Re: Beware Relief Rallies

People here seem to be on as much a rush on the downside as those who want to rush to the upside. Meanwhile, everything seems to be playing out like the script.

let's enjoy the ride.

Indeed it is.

[santafe2]

Re: Beware Relief Rallies

Once the din of cheers over the hopes for a quick injection of credit subsides, the passengers will turn their focus to the banging and crunching of the economy trimming the tree tops.

So far, 900 pts. down in two days since this warning...do you ever get the feeling more people are lurking here than we know about?

The DOW feels like the pink sheets, or is that roulette? I've been invested in the market for a long time and this does not feel like fear, it feels like professionals fleecing amateurs.

[friendly_jacek]

Re: Beware Relief Rallies

The DOW feels like the pink sheets, or is that roulette? I've been invested in the market for a long time and this does not feel like fear, it feels like professionals fleecing amateurs.

This is exactly my take. Day traders sucking blood from long term holders. This is a hay day for daytraders with all that volatility, both ways actually, up and down. I have been resisting a temptation to daytrade for a while but it is probably the only way to preserve wealth.

[phirang]

Re: Beware Relief Rallies

In this market, you need really bullet-proof valuations and watch out for gov sponsored takeouts etc.

As much as I'd like to short GS into oblivion, I am aware that people are eyeing it...

As such, small option positions are the way to go, but have to be nimble and follow economic calendar etc.

[FRED]

Re: Beware Relief Rallies

So far, 900 pts. down in two days since this warning...do you ever get the feeling more people are lurking here than we know about?

The DOW feels like the pink sheets, or is that roulette? I've been invested in the market for a long time and this does not feel like fear, it feels like professionals fleecing amateurs.

[grapejelly]

Re: Beware Relief Rallies

or the market is discounting the next Depression. Which is the simple explanation.

[friendly_jacek]

Re: Beware Relief Rallies

or the market is discounting the next Depression. Which is the simple explanation.

What are you talking about? There is not supposed to be depression or deflation! ;)

[metalman]

Re: Beware Relief Rallies

What are you talking about? There is not supposed to be depression or deflation! ;)

depression, yes. debt deflation, yes. monetary disinflation, yes. monetary deflation, no.

so far so good. housing off. stocks off. oil? what the hell is oil doing over $60 when car sales are off 45%? hmmmmm.