Meltdown Warnings Are Accelerating from Months to Weeks to only a Few Days!

June 18, 2008 via nc: RBS (Royal Bank of Scotland) sends out a red alert, warning private clients to prepare themselves for a full fledged rout in equities and bond markets in the next three months, with the S&P losing 300 points, or nearly a quarter of its value, by September. Also: iTraxx index of high-grade corporate bonds could soar to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700
Source: RBS Publishes Global Stock and Bond Crash Alert


June 26, 2008 Fleckenstein Capital "It's About to Blow!"
"...[B]ehind the scenes, many parts of the credit/mortgage market were "offered only." He said it had nothing to do with month-end or quarter-end. Instead, he believed it had to do with the enormous amount of inventory that would be looking for a home in the next quarter. He believed that the equity market was "miles behind what was occurring in the mortgage-backed/credit markets." Though he noted that he'd said it before, he repeated: "It's never been this bad."

CR: And I heard confirmation from a bond shop today that "liquidity is getting worse and worse". Here we go again? Source


June 27, 2008 At 10:02 AM EST today

Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth." Source


June 28, 2008 "Fortis predicts US financial meltdown within weeks"

American 'meltdown' reason for money injection Fortis.
28th of June, 9:10 (GMT+1)
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. "We have been saved just in time. The situation in the US is much worse than we thought", says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US" Source in English Source in Dutch


June 29, 2008 Back to the Great Depression?

Few are gloomier about that prospect than Albert Edwards, strategist at Société Générale in London. “America is leading the way, diving into deep recession as a collapse in consumer confidence induces the great unwind,” he said. Edwards compares the economy with a pyramid scheme that is poised to crash to earth and interest-rate changes can do nothing to avert it.

He thinks Wall Street and the other main markets have a lot further to drop, and will end up 70% below the peaks of last year. That would imply a level of just 500 for the S&P 500, which was at 1,280 on Friday, and 4,500 for the Dow, compared with Friday’s closing level of 11,346.

The FTSE 100, which closed at 5,530 on Friday, will plunge to 3,000, he predicts. The good news is that he expects the oil price, which was above $142 on Friday, to slump to $60 a barrel. The bad news is that he sees this occurring as a result of “deep” recession in the advanced economies and a sharp slowdown in emerging markets. Source

June 29, 2008 What we can do in this dangerous moment-Larry Summers

It is quite possible that we are now at the most dangerous moment since the American financial crisis began last August. Staggering increases in the prices of oil and other commodities have brought American consumer confidence to new lows and raised serious concerns about inflation, thereby limiting the capacity of monetary policy to respond to a financial sector which – judging by equity values – is at its weakest point since the crisis began. With housing values still falling and growing evidence that problems are spreading to the construction and consumer credit sectors, there is a possibility that a faltering economy damages the financial system, which weakens the economy further.


June 30, 2008 Global economy faces deep slowdown, warns central bankers' club

The global economy may be heading for a far deeper crisis than is expected and a bout of deflation in the world's biggest economies is now a possibility, according to one of the world's most highly regarded economic institutions.

The Bank for International Settlements has warned that many in the City and elsewhere may have underestimated the scale of the coming economic downturn in one of its most sombre portraits yet of the international financial system. The report draws stark comparisons between the current crisis and a variety of others including the Great Depression. Most sobering is the report's warning that developed economies including the US and Britain could face deflation.

Is there an Apple without Steve Jobs?

In Lehman Fallout, Two Stars Are Given Lesser Roles

Now, it will fall to Mr. Fuld to persuade both investors and employees that Lehman is sound. He plans to meet with the managing directors in New York and London next week to try to improve morale. Lehman may yet sell part of itself to a strategic investor in South Korea, which would most likely buy the stake in the open market, said a person close to the talks.

If this happens the open market purchase of $5 billion of common stock at $20/share would require 250 Million shares or about 2 days volume which would drive the price up to over $30.

Apple has "No Comment" on Steve Jobs Health Rumors (Barrons) at 2:57 PM PST

A spokeswoman for Apple (AAPL) today said the company was not going to respond to rumors and speculation about the health of CEO Steve Jobs. Four years ago, Jobs had surgery for pancreatic cancer. The spokeswoman would not discuss speculation that he may have had a recurrence.

Concerns about Jobs cropped up on Monday following his keynote address at the company’s Worldwide Developers Conference in San Francisco. As I noted in a post on Tuesday, Jobs looked to some observers to be unusually thin. Apple on Tuesday said that Jobs had recently had a “common bug” that was treated with antibiotics, which the spokeswoman noted again today.

But rumors about his health have persisted over the last several trading days, and are weighing heavily on Apple shares today. AAPL is off $7.73, or 4.3%, at $173.08.

Jobs' health questioned again

At its Worldwide Developers Conference on Monday, the company announced a new 3G version of the iPhone in a push to target mainstream consumers. But a strong undercurrent at the event focused on the emaciated appearance of co-founder and CEO Steve Jobs. While Jobs looked especially gaunt in his trademark black turtleneck and faded jeans, other Apple executives spent more time on the stage during his keynote address -- a notable move for an executive who typically spends much of his speech rallying the Mac faithful and introducing many products himself.

The press is so far treading with caution. The first observations on Jobs' health came from the blogosphere. Sites such as Silicon Valley gossip blog ValleyWag and Silicon Alley Insider initially braved the touchy topic. Henry Blodget at Silicon Alley Insider apologized upfront for bringing up the personal subject, before wondering if Jobs has had a recurrence of the cancer that he successfully fought but kept hidden from investors until after his surgery.

The mainstream media has been somewhat more cautious. Dow Jones Newswires and New York City's favorite tabloid, the New York Post, have run stories on Jobs' appearance, as well as a technology blog by The Wall Street Journal. (the Journal, Dow Jones Newswires, the New York Post and MarketWatch are all owned by News Corp

Investors did not learn of Jobs' last bout with cancer until after his surgery. Fortune reported earlier this year that Jobs was diagnosed with a rare but treatable form of pancreatic cancer in 2003 and avoided surgery for nine months while he tried alternative remedies. Apple's board of directors sat on the news the entire time after consulting with attorneys, who reportedly advised the company that they could remain silent on the issue to investors.
Katie Cotton, an Apple spokeswoman, told reporters who inquired that Jobs was hit with a common bug two weeks ago and he's been on antibiotics, getting better day by day and didn't want to miss WWDC. "That's all there is to it," she told Dow Jones Newswires on Tuesday.

In the comparison with Warren Buffet, it should be noted that the billionaire investor -- also not known for showcasing details of his private life -- took pains to send out a press release before going into surgery to remove a benign growth in his colon in 2000.

Scathing comments on the posts and stories on this topic have accused the bloggers and writers of National Enquirer-like tactics and invading Jobs' personal privacy, showing how touchy the subject is. This column will also be surely attacked by Apple fanboys. But many investors, corporate governance experts and others consider news about a CEO's health material to the company's livelihood.
"For any firm, the health of the CEO is a material subject," said Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University. "For Apple, Steve Jobs' health and well-being are more central to the stock price -- and probably to the future of the company than any other single thing."

"It reminds me of the Kremlin watchers during the Communist era," Roger Kay, president of Endpoint Technologies, said of the recent chatter over Jobs' health. "Did Stalin sneeze?... So people have made the comparison with the control that Apple exerts. As a result people find themselves parsing everything."

Stalin, of course, did not live forever. If Jobs were to ever become ill again, I hope that Apple would disclose the news in a timelier manner to investors, who need the company to be more forthcoming and not a version of the Kremlin in Silicon Valley.

Source

A Sinking Feeling About Lehman

How low can Lehman Brothers go?

The brokerage's shares fell for the fourth day in a row Wednesday, in the wake of Monday's announcement of a quarterly loss of $2.8 billion and plans to raise $6 billion of capital. Lehman shares slid 13.6%, or $3.75, to close at $23.75. It has fallen 26.5% so far this week. The real decay in the stock began when Merrill lowered its rating on the stock. The week before, it had taken a neutral rating to a buy, and has now reversed itself. Source

"They diluted the shareholders that much, and now they may need more capital? There's a real crisis of confidence in management here," Bill Smith, chief executive officer of Smith Asset Management, told Reuters. Smith Asset Management sold its Lehman shares at the open Wednesday morning.

Its $6 billion fundraising plan comes after numerous rumors that the company was strapped for cash, which had been met by denials. (See: "Lehman Doesn't Need The Money")

Wednesday also brought a slew of analyst commentary predicting smaller profits for years due to the dilution from its plan to raise $6 billion in new capital. Wachovia's Douglas Sipkin said the plan dilutes profits by more than 20%, and its effects will be felt for a long time. He was also critical of the company's timing, arguing that it could have raised equity at higher prices had it offered the new shares in April. Merrill Lynch also downgraded the company after giving it a "buy" rating on June 4.

Options volatility in Lehman shot through the roof, with two times as many bets against the stock as bets that it will gain. There was unusual activity in July put options. More than 43,000 contracts traded hands at a $15 strike price. Before today, this particular contract had volume in the 9,000 range. Rebecca Engmann Darst, an analyst at Interactive Brokers, said the activity is split between buyers of puts and sellers, which suggests some of the volume was short-sellers hedging their positions.

See also Fed Discount Window Mixed Blessing for Lehman

Future of Financials - Meredith Whitney

CNBC Video Link
June 11, 2008 at 12:12 EDT (8:24)
With Comments on Lehman Brothers