Is the stock market going to tank?

[mcsquared]

Shit is wacky, thats for sure. Its like the bears come in early and the bulls stroll in after a late lunch.

[4matic]

Support was 11,300. The fact that we rallied away hard without a strong test of that price is positive. A move above 12,500 would turn back to neutral overall. Imo..

[Tourette Dude]

Shit is wacky, thats for sure. Its like the bears come in early and the bulls stroll in after a late lunch.

The confidence boost from this may be part of the reason. It will be interesting to see if this goes the way of the "super" SIV package that fell apart.
Whoever had the balls to buy Ambac call options became very rich today.



"Banks, New York Regulator Meet on Bond Insurer Rescue (Update4)

By Erik Holm and Jesse Westbrook

Jan. 23 (Bloomberg) -- New York State's insurance regulators met today with U.S. banks to discuss raising new capital for bond insurers, said a department spokesman.

Talks in New York with the unnamed banks are part of Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the market's finances, said agency spokesman Andrew Mais in an interview. Insurers MBIA Inc. gained 33 percent in New York trading and Ambac Financial Group Inc. soared 72 percent.

New capital may help preserve the top credit ratings for the bond guarantors such as MBIA, the industry's largest, and halt any erosion of investor confidence in the $2.4 trillion of assets they guarantee. Ambac, MBIA's biggest rival, lost its AAA grade from Fitch Ratings this month on concerns that losses tied to subprime mortgages may increase.

``The market is obviously viewing it as positive news,'' said Kathleen Shanley, an analyst with bond research firm Gimme Credit LLC in Chicago. ``Shareholders and holding company creditors should keep in mind, however, that the insurance department's primary mandate is to protect policyholders, not to boost the share price.''

Federal Reserve Bank of New York President Timothy Geithner has taken a central role among federal regulators monitoring the financial health of bond insurers since October, according to an official familiar with the matter. Geithner has been speaking frequently to bank executives who do business with the insurers and requesting government data on Wall Street's involvement, said the official, who wasn't authorized to speak publicly. New York Fed officials didn't participate in today's meeting.

Calvin Mitchell, a spokesman for the New York Fed, declined to comment.

Cash Infusion

The infusion may be as much as $15 billion, the Financial Times reported. MBIA rose $4.08 to $16.61 in New York Stock Exchange composite trading, while Ambac added $5.73 to $13.70.

News of the meeting helped spur a rally in U.S. stocks, which slid Jan. 18 after Fitch lowered the rating of Ambac. The Standard & Poor's 500 Index halted a five-day slide, rising 2.1 percent to 1,338.60 after losing as much as 3 percent earlier.

``Clearly the market likes it,'' said Gregory Peters, credit strategist at Morgan Stanley in New York. ``But it's not an easy situation to fix. The intent is good but we need the details; the details matter.''

Moody's Investors Service and Standard & Poor's are reviewing Ambac and MBIA, both based in New York state, for possible downgrades. Insured municipal bonds usually carry the debt rating of the insurer rather than the underlying debt.

Falling Values

Downgrades may force sales by investors who are required to hold only the highest-rated bonds and cut profit for banks that have already posted more than $130 billion of writedowns and credit losses tied to the falling value of mortgage securities.

Ambac and MBIA have suffered losses because of guarantees they sold for structured investments such as collateralized debt obligations backed by mortgages. The industry collectively guaranteed $127 billion of CDOs linked to mortgages that were given to borrowers with poor credit.

The securities have plunged in value as defaults by borrowers soared to a record in the third quarter of last year, according to the Mortgage Bankers Association.

A message for Ambac spokesman Peter Poillon wasn't immediately returned. An e-mail message sent to Michael Sitrick, spokesman for MBIA, wasn't immediately returned.

Paulson's Role

Treasury Secretary Henry Paulson this week said he's monitoring the situation, although he declined to characterize the role his department is playing.

``We obviously have been looking at the monoline insurers carefully for some time now and we're actively engaged in watching that sector and talking with other policy makers about that sector,'' Paulson said Jan. 22, when asked after a speech in Washington.

Ajit Jain, who heads a new bond insurer started last month by Warren Buffett's Berkshire Hathaway Inc. to compete with MBIA, Ambac and others, said in a Jan. 9 interview that Berkshire was ``looking at ways to support the existing insurers in terms of reinsurance and capital.''

Jain, who also heads up the units that sell coverage for catastrophes and other large risks, declined to comment today.

Credit-default swaps tied to the bonds of MBIA plunged to 825 basis points a year, down from 22 percent upfront and 500 basis points a year yesterday, according to CMA Datavision. That means the cost to protect $10 million in MBIA bonds for five years fell to $825,000 a year from $2.2 million upfront and $500,000 annually yesterday. Contracts on Ambac fell to 900 basis points from 22 percent upfront and 500 basis points a year, CMA prices show."

[Benny Profane]

Ha! You won't find too many in gov't that tell the truth. I mean, look at Greenspan. Everyone thought he was a genius. Turns out he was just an old man that was riding the coattails of a binge debt spending U.S. consumer economy. I'd love to hear Greenspans revisionist take (spin) on things now. Seeds sewn many years ago are blooming. They'll be nice in ripe by summer.

Uh, well, maybe, ....he seems to be the convenient whipping boy. But then, how do you explain the largest one day rate cut in history by his successor? Isn't that going to make matters worse in the long run? That's what the Euros think right now. But their just a bunch of socialist cheese eaters, right?

[4matic]

That's what the Euros think right now. But their just a bunch of socialist cheese eaters, right?

europe nations have typically tried to protect their currency(ies). I doubt holders of German and French equity are too happy with the ECB right now.

[Cono Este]

buy stock, sell calls, then go skiing.

[retirwntm]

sorry...translation = yes

nah...i dunno. i'm just the next dumbass watching things go a little sideways. a bit of a cryptic speculation, but if perception becomes reality (kind of a fear induced feed back loop) the economy as a whole could head towards recession. most likely calmer heads or a strong profit motive will prevail and the economy will limp along at around 2% GDP. fundamentalists seem to be sucking their thumbs and repeating in a mantra "valuations and multiples are still historically strong". from an equity standpoint this is true, but the problem in the credit markets could exacerbate and quell equity multiples/valuations pretty quickly.

pulse check from any of you insiders?

credit based recession on the way?

fed cuts haven't stimulated as planned--> banks aren't passing on savings to companies because they need to shore up their capital requirements and balance sheets. bond markets still calling for another 100bps stimulus cut by summer which will push real rates into negative territory. treasury buyers are starting to look for inflation recomp yields on the long end--> 2yr:10yr. spreads have widened. muni markets/student loan markets new offers are failing at market. everyone is actually thinking about counterparty risk for the first time in several years. CDS spreads are building in CP risk and requiring larger upfronts. crossover indices on CDS baskets have widened precipitously. things are definitely getting interesting. anyone starting to hear the flushing sound in NY and London?

anybody care to speculate on how bad this gets? 6 mo. recession with <1%GDP throughout 2009?

[Toadman]

Magic 8 ball says, ask again in 6 months.

[Brock Landers]

Is commercial paper going to die? Why even bother with it? Its not safe anymore, apparently. The rate will be high enough that firms wont issue it.
- just a random thought I had 5 minutes ago

[bucbanzai]

This shit is making my head hurt.

All I know is that I am trying to refi an expiring 3.4M conduit loan on an 8.5M office building and everyone is acting like I have three heads. Local banks won't touch it. There is no CMBS market anymore. Hard money guys are quoting 15&#37;. WTF.

[Brock Landers]

This shit is making my head hurt.

All I know is that I am trying to refi an expiring 3.4M conduit loan on an 8.5M office building and everyone is acting like I have three heads. Local banks won't touch it. There is no CMBS market anymore. Hard money guys are quoting 15%. WTF.

From what Ive read the commercial real estate industry is fucked even more than the subprime. Have fun with 15% and elevators that dont work

[Magic 8-Ball]

Magic 8 ball says, ask again in 6 months.

No I didn't.

[Toadman]

Is commercial paper going to die? Why even bother with it? Its not safe anymore, apparently. The rate will be high enough that firms wont issue it.
- just a random thought I had 5 minutes ago

Just look at what is/has happened in the re-insurance industry. Buffet the vulture coming in to pick over the dead. (they just don't know it yet.)

[pappag]

Little bit of a market scare this morning (check the lower right corner):

[ski_pdx]

I had been waiting for another Natalie Portman movie to come out. But, you are telling me Scarlet Johanson is in this one?

[Tap]

Bear Stearns down 40% today....fucking A what a shitshow.

They will be single digits soon enough.

[4matic]

Bear Stearns down 40% today....fucking A what a shitshow.

They will be single digits soon enough.

LTCM style bailout. Not good..

Fed announcement and expiration next week. Saddle up!

[Brock Landers]

Hop on Bear when it gets low? Is it going to tank for good?

[Toadman]

Hop on Bear when it gets low? Is it going to tank for good?

I think someone would buy 'em up before they got to single digit, or just let them go belly up and collect the left overs.

[4matic]

Someone bought 17,500 puts yesterday on BS. Went from .34 to $7.05 or more..

An easy $10 million.

[CUBUCK]

Someone bought 17,500 puts yesterday on BS. Went from .34 to $7.05 or more..

An easy $10 million.

Hedge fund collusion........

[Brock Landers]

Someone bought 17,500 puts yesterday on BS. Went from .34 to $7.05 or more..

I had some extra cash laying around....figured 'what the fuck...'

[4matic]

Hedge fund collusion........

Yep.. A large sum of money was taken out of BS which put them under the cap requirement.

[4matic]

Why not? I love this stuff..

Transportation average is on the verge of an all time high, Nasdaq broke above its 200 day moving average with INDU and SP00 not far behind. The SOX turned plus on the year too:

http://www.quote.com/us/stocks/chart...artUi.minutes=

I'm not wildly bullish and volume is light but a strong move up from here should get 500 Dow points in a hurry.

[Platinum Pete]

Resurrecting this thread to ask the finance Mags to help me understand Hindenburg Omens as mentioned here: http://seekingalpha.com/article/8218...a-market-crash

I looked up Hindenburg Omen on Wikipedia, but I am still not sure I am fully grasping the idea. Anybody got an easy way to translate this, a solid metaphor or a good example? Also - are these Hindenburg Omens for real or full of shit?