The Next Big Crash - Are You Prepared?

Quote:tapering off is not the same as unwinding, am i rite?

The markets will react or pre-empt this that's why I think we are seeing all the market craziness now. The feds will taper, the traders will unwind ahead. You read the news Pimco staring at 41 billion loss, If giants are bleeding everybody will lock in and head for cover.

(09-09-2013, 11:48 AM)pianist Wrote: tapering off is not the same as unwinding, am i rite?

currently the Fed is buying 85bio a mth - roughly half in Treasuries (UST) and half in mortage-backed securities (MBS)

the projected steps going fwd will be:
1) reduce the pace of buying i.e. they will buy less each mth, but buying a lesser amt is still equivalent to pumping cash into the system
- the Fed's balance sheet will expand at a slower pace.

2) the reduced pace will eventual lead to a halt of buying. Currently the stance is for them to not sell the assets i.e. they will re-invest the coupons+matured principal of the bonds into new bonds - the Fed's balance sheet will stop expanding.

3) the Fed starts to sell the MBS+UST - this has the effect of draining liquidity from the system - this is unwinding and the Fed's balance sheet will start to shrink.

4) Fed raises Fed fund rates which should lead to a rise of all short term rates e.g. ois, libor etc - This is tightening.

but of cos this is the current plan - no guarantees for whoever is going to be the next chairman and whether he can convince the Fed voting members to change the plan.

(09-09-2013, 11:48 AM)pianist Wrote: tapering off is not the same as unwinding, am i rite?

My post a few months ago on this topic:
http://www.valuebuddies.com/thread-3311-...l#pid50273

But sgd is right that the market is expecting unwinding, which should not be a big disruption as per my post. Just as market is expecting interest rates to go higher though technically quantity of money is related but not the same as cost of money. Sometimes markets run ahead of themselves

(09-09-2013, 12:55 PM)specuvestor Wrote:

(09-09-2013, 11:48 AM)pianist Wrote: tapering off is not the same as unwinding, am i rite?

My post a few months ago on this topic:
http://www.valuebuddies.com/thread-3311-...l#pid50273

But sgd is right that the market is expecting unwinding, which should not be a big disruption as per my post. Just as market is expecting interest rates to go higher though technically quantity of money is related but not the same as cost of money. Sometimes markets run ahead of themselves

Maybe the next financial crisis will be triggered by the default of municipal and sovereign bonds as central banks start to taper their QE and raise interest rates.

(09-09-2013, 12:16 PM)AlphaQuant Wrote:

(09-09-2013, 11:48 AM)pianist Wrote: tapering off is not the same as unwinding, am i rite?

currently the Fed is buying 85bio a mth - roughly half in Treasuries (UST) and half in mortage-backed securities (MBS)

the projected steps going fwd will be:
1) reduce the pace of buying i.e. they will buy less each mth, but buying a lesser amt is still equivalent to pumping cash into the system
- the Fed's balance sheet will expand at a slower pace.

2) the reduced pace will eventual lead to a halt of buying. Currently the stance is for them to not sell the assets i.e. they will re-invest the coupons+matured principal of the bonds into new bonds - the Fed's balance sheet will stop expanding.

3) the Fed starts to sell the MBS+UST - this has the effect of draining liquidity from the system - this is unwinding and the Fed's balance sheet will start to shrink.

4) Fed raises Fed fund rates which should lead to a rise of all short term rates e.g. ois, libor etc - This is tightening.

but of cos this is the current plan - no guarantees for whoever is going to be the next chairman and whether he can convince the Fed voting members to change the plan.

based on what U said, seems like the world is far away from stage three or four

(09-09-2013, 08:23 PM)pianist Wrote:

(09-09-2013, 12:16 PM)AlphaQuant Wrote:

(09-09-2013, 11:48 AM)pianist Wrote: tapering off is not the same as unwinding, am i rite?

currently the Fed is buying 85bio a mth - roughly half in Treasuries (UST) and half in mortage-backed securities (MBS)

the projected steps going fwd will be:
1) reduce the pace of buying i.e. they will buy less each mth, but buying a lesser amt is still equivalent to pumping cash into the system
- the Fed's balance sheet will expand at a slower pace.

2) the reduced pace will eventual lead to a halt of buying. Currently the stance is for them to not sell the assets i.e. they will re-invest the coupons+matured principal of the bonds into new bonds - the Fed's balance sheet will stop expanding.

3) the Fed starts to sell the MBS+UST - this has the effect of draining liquidity from the system - this is unwinding and the Fed's balance sheet will start to shrink.

4) Fed raises Fed fund rates which should lead to a rise of all short term rates e.g. ois, libor etc - This is tightening.

but of cos this is the current plan - no guarantees for whoever is going to be the next chairman and whether he can convince the Fed voting members to change the plan.

based on what U said, seems like the world is far away from stage three or four

3) The Fed is likely to just let MBS and UST matures without reinvesting the coupons, excluding UST OMO for point 4). This is not the same as selling in the market though theoretically they have the same aggregate impact but different signalling and market impact.

4) They will only tighten if unemployment rate goes below 6.5%. If anything they will tighten once before Bernanke leaves as signalling. Bond yield and yield stocks peaked in Apr/May 2013 is probably market saying 2H14 will roughly be the time for more interest rate hikes.

The market knows that callous money is over and pricing in risk premia. Logically we should see 1) in Sept 2) in Oct and maybe a 25bps hike in December as January would be too sensitive when Bernanke retires.

Caution is the keyword in investing.

For those who had experienced painful humongous loss, you will not even consider dabbling in business with no underlying fundamentals for quick profit.

NOTABLE SHARE TRANSACTIONS
Lim & Tan Securities 17 September 2013

- Gary Loh (the Deputy Chairman of Sunmoon Food) has been selling shares in the company in the since 10 Sept’13. Between 10 Sept till yesterday 16 Sept he sold a total of 21,313,182,000 shares at an average price of S$0.0015 a share, reducing his holding to 15,184,022,258 shares or 47.63% of the company.

- Value Capital Asset Management sold off ALL their shares (309,023,828 or 16.1%) in M Development yesterday.

- Albedo, which has seen several insider sales in the past 2 weeks saw Lim Soon Fang sell 75 mln shares on 12 Sept’13 at 7.1 cents a share, reducing his stake to 80mln shares or 5.46% of the company.

- China Environment’s Chairman and CEO (Huang Min) who had sold 10mln shares at 12.5 cents on 7 June’13 sold another 25mln shares on 13 Sept’13 at 33 cents, reducing his holdings to 28.49% or 200,728,000 shares.

Another substantial shareholder Ma Ong Kee had similarly sold 10mln shares on 7 June’13 at 12.5 cents, and also sold another 25mln shares at 33 cents on 13 Sept’13, reducing his holdings to 16.39% or 115,467,100.

- Europtronic’s CEO Huang Chuang Shueh Ou sold 5mln shares on 13 Sept’13 at 5.1 cents, reducing his holding to 39.43% or 305,214,658 shares.

-A substantial shareholder (Goh Siok Kuan) of Ntegrator sold 3mln shares at 7.5 cents each, reducing his holding to 35,390,640 or 4.8%, thereby going below the 5% disclosure level

[Image: jbaEt5Cdr0O2k7.png]

(04-09-2013, 02:00 PM)candy188 Wrote: Lim & Tan Securities, 4 Sep 2013

While Singapore’s STI index’s 13% decline has almost matched its average decline of about 14% in the past 3 years, we note that investor sentiments in the local market have turned speculative in recent times with SGX having queried Rowsley and Informatics as their share prices were chased up on higher than normal volumes.

- Speculators have also been lapping up on obscure names such as Albedo, China Environment, Tritech and CNA.

- This is despite key insider selling shares in these companies.

- This is what famous investor Jeremy Grantham has
termed “dash for thrash”.

- We are thus turning cautious on the Singapore market, notwithstanding that the index having already declined 13% from its Aug’13 peak.

]FINANCIAL MARKETS
Lim & Tan Securities, 30 Sep 2013

Meanwhile, the continued feverish punting of penny (low priced) stocks

[Image: jbkzVn4mIoe5uD.png]

have seen continued sales by company insiders / major shareholders.

[Image: j9nNEkT6CaIAS.png]

~ Edward Lee who is a substantial shareholder of IPCO and has been a consistent buyer of the stock since Jan’13 (low of 2.4 cents and high of 3.3 cents) has turned seller for the first time this year.

He sold 73.216mln shares last Friday between 3.6-4.1 cents a share, reducing his holding to 462.381mln shares or 9.065% of the company. IPCO has done well this year, rising from around 2 cents at the beginning of the year to last Wed’s high of 4.4 cents before correcting to 3.7 cents last Friday.

~~ Gary Loh, the Deputy Chairman of Sunmoon Food continued to reduce his holding in the company with last Friday’s sale of 1.3bln shares at 0.001 Singapore cents a share, reducing his holding to 12,464,482,258 or 39.1% of the company. The stock has been stuck between 0.001 and 0.004 cents this year.

~~~ Ms Doris Chung Gim Lian (the second largest shareholder after Chairman Quek SP) continued to reduce her stake in ACMA Ltd. Last Thursday she sold 30mln shares at 3.2 cents, reducing her stake to 554,212,750 shares or 13.188% of the company. Since peaking at 5.2 cents in Feb’13, the stock has been declining and hit 3.1 cents last Friday. Doris last sold close to 10mln shares at 3.2 cents in Mar’13. This nevertheless is still higher than the 2.1-2.6 cents range it was trading at in Jan’13.

~~~~ The Deputy Chairman and Executive Director of Ntegrator International Han Meng Siew sold 2mln share at 7.6 cents, reducing his stake in the company to 33.391mln shares or 4.52% of the company. Han MS’s share sale is notable as he last sold 3.44mln shares at 12.1 cents in Mar’13 and his latest share sale was done at 7.6 cents, significantly lower than his last sale.

~~~~~ The Chairman and CEO of Asia-Pacific Strategic Investments Ltd Choo Yew Ming sold 3.66 mln shares between 43-47 cents each, reducing his holding in the company to 27,500,804 or 22.4% of the company.


Ipco leads charge of low-priced stocks
Blue chips flounder on Wall Street's continued slide, a weak HK and Europe's flaccid opening
Business Times, PUBLISHED SEPTEMBER 26, 2013

PENNY stock fever ran high yesterday as nine billion units worth just $1.5 billion were traded for an average of just 17 cents per unit.

Blue chips, in the meantime, sagged in line with a fourth consecutive drop on Wall Street overnight, weakness in Hong Kong and a soft opening in Europe in the late afternoon. After rising 20 points in the morning, the Straits Times Index eventually sank to a net loss of 3.17 points at 3,208.58.

For most analysts the main topic of conversation was when the US Federal Reserve might start tapering its monetary stimulus but this appears to be of only passing interest to punters in penny stocks, such as Ipco, SingHaiyi, HanKore and Albedo.

Ipco, in particular, stood out with a one-cent or 29 per cent jump to 4.4 cents on an astonishing volume of 2.1 billion, which alone was about one quarter of the entire market's unit business. Turnover in the 30 STI components was $514 million or about one-third of dollar volume.

Brokers noted that interest in low-priced issues - many of which are loss-making hock: - has been building for a while on the back of rumours of reverse takeovers, the participation of influential and well-connected persons and various other speculative reasons.

USA is shutting down. Politicians bickering like those in Greece. Greece had germany to take care of them, who will take care of the USA?

Kicking the can down the road is not sustainable.

Gamen shutdown happened on Bill Clinton's watch, it can happen again. Anyone still remember 1997 financial crisis, it was preceded by US gamen shutdown in 1996...

Only thing is information flows much faster now, markets react so much quicker.

We shall find out tonight what happened.

(30-09-2013, 02:58 PM)BlueKelah Wrote: USA is shutting down. Politicians bickering like those in Greece. Greece had germany to take care of them, who will take care of the USA?

Kicking the can down the road is not sustainable.

Gamen shutdown happened on Bill Clinton's watch, it can happen again. Anyone still remember 1997 financial crisis, it was preceded by US gamen shutdown in 1996...

Only thing is information flows much faster now, markets react so much quicker.

We shall find out tonight what happened.

Can anyone enlighten me what is this US shutdown? Trying to read on Yahoo, but the bits and pieces make little sense to me.

Thanks.