Weekend Thoughts …
My thoughts for the start of the first week of December …
Markets made an amazing recovery from the … technically spoken … point of no return … so the question remains, whether we face a correction of the correction … one more test (even successful?) to the downside … or more follow through to the upside.
In favor of the upmove …
- the FED will lower interest rates on Dec. 11th … as the markets have been “elbowed” to read that out of the FED talk last week (even 50bps seems possible)
- the Government is working on the FREEZE of mortgage rates
- Fed’s Poole hinted at a “Fed-Put” … hinting that Friday’s labor figures will be of most importance
- if home sales numbers, showing a 20+% fall and a 10+% decline don’t scare the markets … what could 
… by the way … sales of new single-family homes are down around 48 from their peak in July 2005.
- Citibank reduced SIV engagement by 17bln to 66bln$ in last 2 months
- Vivendi and Activision in 19bln$ deal
- Allianz’ s Achleitner sees prices beaten down way to far … sees opportunities “as in a supermarket” … thinks that more deals will be seen by Asian or Arab institutions … sees 50 to 66% recovery potential on CDO’s … says PIMCO started to invest in them …
- weak November leads statistically to a strong December (question … was November really weak?)
In favor of the downmove …
- inflation is strong, despite seeing some relief in grain prices as well as in oil
- housing sector stays weak, remarkably weak!!!
- short term rates still rising, pointing to a credit crunch … despite the billions of the cental banks
- after weak shorts shaken out of the market, it could be time to test the weak longs …
- today’s edition of BARRON’S highlightes the difference between now and 1990 and recommends NOT to buy financials already … sees the situation worsening.
- Moddy’s announced, it will cut ratings of Citibank’s SIV’s
- Despite the move of the Govt. to freeze mortgage rates … the problem (around 360bln$ subprime mortgages to reset) could be TOO BIG
- E+Trade firesale … Goldman is surprised as 73% of portfolio was PRIME … result was ONLY 11(!!!) cents on the dollar … AUTSCH
- Morgan Stanley rumoured to take a close to 6bln$ Q4 write down … Nov. ends their Q4 …
Many things to think about … So let’s wait and see, what Monday brings … and I personally will stick to my charts … they don’t lie 
Tags: Allianz, Citibank, FED, Morgan Stanley, outlook, subprime
