Will Wall st lay an egg tonight?

[kirky]

Wall Street up another 368 points overnight following on from Thursdays increase.

Markets have now been given some breathing space by the US Governments move. Not sure what the long term will bring but at least there is a circuit breaker which is what the markets needed. Big rise on the cards come Monday for the ASX - probably another 3-4%.

In these times, keep your nerve and ride it out if you can (unless of course you have a margin lend facility and then you are screwed). These times sort the men from the boys.

Oz$ jumped 3c overnight - now back above 0.83c (was in USA in May/June when was 96c - what a hoot that was - spend spend spend)

 

[kirky]

Ummmmm...what does that mean?

Does anybody have any real idea on what the aussie dollar will be doing in the next month? (USA trip next month)

Will probably trade in the 80c-85c range for the forseeable future (thats over the next 2-3 months but I offer no guarantees). The floor seems to around 80c.

 

[Chops_a_must]

How close did we get to financial oblivion?

ALMOST ARMAGEDDON

MARKETS WERE 500 TRADES FROM A MELTDOWN


By MICHAEL GRAY


Last updated: 6:20 am
September 21, 2008
Posted: 4:16 am
September 21, 2008
The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.



Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor.



According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.



The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value.



The Fed's dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.



While many depositors treat money market accounts as fancy savings accounts, they are different. Banks buy a variety of short-term debt, including commercial paper, with the assets. It is an important distinction because banks use the $1.7 trillion commercial-paper market to fund their credit card operations and car finance companies use it to move autos.
Without commercial paper, "factories would have to shut down, people would lose their jobs and there would be an effect on the real economy," Paul Schott Stevens, of the Investment Company Institute, told the Wall Street Journal.



Cracks started to show in money market accounts late Tuesday when shares in one fund, the Reserve Primary Fund - which touted itself as super safe - fell below the golden $1 a share level. It had purchased what it thought was safe Lehman bonds, never dreaming they could default - which they did 24 hours earlier when the 158-year-old investment bank filed Chapter 11.



By Wednesday, banks sensed a run on their accounts. They started stockpiling cash in anticipation of withdrawals.
Banks, which usually keep an average of $2 billion in excess reserves earmarked for withdrawals, pumped that up to an astounding $90 billion by Wednesday, Lou Crandall, chief economist at Wrighton ICAP, told The Journal.



And for good reason. By the close of business on Wednesday, $144.5 billion - a record - had been withdrawn. How much money was taken out of money market funds the prior week? Roughly $7.1 billion, according to AMG Data Services.



By Thursday, that level, fed by the incredible volume of sell orders pouring in from institutional investors like pension funds and sovereign funds, had grown to $100 billion. It was still not enough to stem the tidal wave.
The banks knew something drastic had to be done. So did Paulson.
The injection of capital into the market was followed up by calls from Treasury Secretary Hank Paulson to major money market players like Bank of New York Mellon and State Street in Boston informing them that federal money was in the market and they should tell their clients the Feds would be back with a plan to stem the constriction in the credit market.




Paulson knew the $105 billion injection was not a real solution. A broader, more radical answer was needed.



Hours after Paulson made his round of calls to calm the industry, word leaked out that an added $1 trillion bailout of banks was being readied. Investors cheered. At about 3 p.m., news of the plans was filtering up and down Wall Street, fueling a 700-point advance in the Dow Jones industrial average through 4 p.m. Friday.



By that time, Paulson had announced the plan. It included insurance on money market accounts, a move that started in quiet Thursday morning, when the former Goldman Sachs executive saved the country from a paralyzing meltdown.
mgray@nypost.com

http://www.nypost.com/seven/09212008/business/almost_armageddon_130110.htm

 

[James23]

Nothing but a short-lived bear markey rally.. alot of pain to come

 

[Chops_a_must]

Nothing but a short-lived bear markey rally.. alot of pain to come

Market down and no shorters to speak of.

Who are they going to blame next? The Jews?

 

[James23]

The mother of all crashes will be coming in the not too distant future. It will be sometime between the 2nd-8th of October

 

[Brad Goodman]

At 2:36.