| USA/Canada: | (800) 454-9572 |  |
|
| International: | (310) 859-9572 |
| USA/Canada: | (800) 454-9572 | |
|
| International: | (310) 859-9572 |
| Sign up for Our Email Newsletter |
 |
In This Issue
Subprime's New Song: The Worst Is Yet To Come
Economic Reports and Expiration Notices
GOOD TRADING!
We are very interested to hear your feedback on our newsletter and website. We welcome any suggestions for improvement, different topics you would like us to discuss, or additional services you would like to see on our website. Let us know what you think and help us provide a better service.
Questions? Speak live with a broker.
1-800-454-9572
Newsletter Archives
December 30, 2008
*All times listed in Central Daylight Time
Friday, August 31
CBOT
Floor:
12:00 close: Financial contracts
Regular close: Equity, agricultural, and metals contracts
eCBOT:
1:00 close: Financial contracts
Regular close: Equity, agricultural, metals, and DOW-AIG contracts
CME
Floor:
12:00 close: Foreign exchange, interest rate, commodity, and GSCI contracts
12:02 close: Commodity options
Regular close: Equity contracts
GLOBEX:
12:00 close: Commodity, GSCI, and weather contracts
3:15 close: Foreign exchange and interest rate contracts
Regular close: Equity, NYMEX/COMEX, and housing contracts
NYMEX/COMEX
Floor:
Regular close
CME Globex and Clearport:
Regular close
NYBOT
12:00 close: Financial contracts
Regular close: Agricultural contracts
OneChicago
Regular close
NYSE
Regular close
Sunday, September 2
CBOT
Floor:
Closed
eCBOT:
Closed
CME
Floor:
Closed
GLOBEX:
Regular evening opening
NYMEX/COMEX
Floor:
Closed
CME Globex and Clearport:
Regular evening opening
NYBOT
Closed
OneChicago
Closed
NYSE
Closed
Monday, September 3
CBOT
Floor:
Closed
eCBOT:
Closed. Regular evening opening
CME
Floor:
Closed
GLOBEX:
10:30 AM close: Equity contracts
12:00 PM close: Foreign exchange, interest rates, and housing contracts
Evening opening at 5:00 PM
NYMEX/COMEX
Floor:
Closed
CME Globex and Clearport:
Regular close
NYBOT
Closed
OneChicago
Closed
NYSE
Closed
*All times listed in Central Daylight Time
Remember that catchy love song that Frank Sinatra made popular in the 1960s, "The Best Is Yet To Come"?
"The best is yet to come and, babe, won't that be fine?
You think you've seen the sun, but you ain't seen it shine."
At the risk of mixing musical metaphors and styles, it looks more like the sun has deserted us right now in the financial markets, and we're about to see "The Dark Side of the Moon," the title of Pink Floyd's 1973 smash album. With the subprime mortgage problems reaching farther and farther out to touch hedge funds, U.S. and European banks, mortgage companies and money-market funds, what we're going to experience sounds more like "The Worst is Yet To Come."
That's because the financial markets must contend not only with the credit crunch brought on by rising foreclosures now; they must also deal with the repercussions from more foreclosures over the next 18 months as more adjustable-rate mortgages (whether subprime or not) reset from low teaser rates to higher interest-rate levels.
How bad can it get? Investment adviser John Mauldin recently published a month-by-month account of the dollar amount of mortgages that will be reset through 2008, and the largest reset amounts pop up in the first six months of next year. In fact, as he points out, the $197 billion of mortgage resets so far this year is "less than we will see in two months (February and March) of next year. The first six months of next year will see more than the total for 2007, or $521 billion."
So, we haven't even begun to feel the pain yet. It's bad enough for the folks who will find that they can't keep up with the higher mortgage payments and will have to move out of their homes. But the financial markets won't be catching a break either. The antiseptic phrase used to describe the situation is "repricing risk." That means that investors have woken up to the fact that the AAA-rated mortgage-backed securities and derivatives they invested in look more like junk bonds now. This eye-opener causes them to want higher yields from what they now see as riskier vehicles.
That new investor caution plays out this way: investment banks, hedge funds and any other entity that bought securities backed by subprime loans now find it hard to sell the darn things. It's almost the same as homeowners trying to find buyers for their homes – nearly impossible in a market where home prices are falling. In the financial markets, it's nearly impossible because no one even wants to attach a price to a collateralized debt obligation today for fear that it will be priced much lower tomorrow.
The Fed can try to calm such fears all it wants by lowering the discount rate and giving banks more time to pay back loans (from overnight to 30 days), but the real problem can't be fixed with more access to credit. The fact is nobody wants any more of that. What they really want is cash to pay off their debts, be it a mortgage or an unwinding of a securities bet.
Wall Street's denizens are in the dark about how much their schemes depend on the ocean of liquidity created by the bull market, say Elliott Wave International's analysts, Steve Hochberg and Pete Kendall. They are particularly struck by the image of the Grim Reaper that Business Week magazine put on its cover recently with the headline, "Death Bonds:"
"The grim reaper is the perfect visage to welcome the arriving wave of liquidation; it will wreak havoc with their work. The field's dark fate is clear in one fund manager's description of what caused 'forced sales' at another fund: 'The models work when they look at history, but not when history is all new.' What's 'new' is that for the first time in the experience of many model makers, confidence is on the run. As they rob Peter to pay Paul, all assets will be impacted in negative ways that do not compute in their models." (The Elliott Wave Financial Forecast, August 2007)
And the bad news just keeps accumulating:
To top it off, Bloomberg reports that the subprime mess may
lead to lower bonuses for the first time in five years on
Wall Street, according to Options Group, a company that's
been tracking this kind of information for a decade.
Somewhere, the world's smallest violin is playing a sad song
for the fund managers and investment bankers who won't be
taking home that million-dollar-plus bonus this year. And
Frank Sinatra is singing a sad refrain… "The worst
is yet to come."
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
For more information on the housing market and the credit
crisis, access the free report, “The
Real State of Real Estate,” from Elliott Wave International.
The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained.
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
|---|---|---|
| 08/30 Thu |
7:30 AM CDT - GDP-Prel(Q2) 7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Initial Claims-Weekly 9:00 AM CDT - Help-Wanted Index(Jul) 9:30 AM CDT - EIA Gas Storage 3:30 PM CDT - Money Supply |
FN: Sep Natural Gas(NYM)
Sep US Bonds(CME) LT: Aug Feeder Cattle(CME) Aug Feeder Cattle Options(CME) |
| 08/31 Fri |
7:30 AM CDT - Personal Spending & Personal Income(Jul)
7:30 AM CDT - Core PCE Inflation(Jul) 8:45 AM CDT - Chicago PMI(Aug) 9:00 AM CDT - Factory Orders(Jul) 9:00 AM CDT - Michigan Sentiment(Aug) 2:00 PM CDT - Dairy Products Prices |
FN: Sep Wheat(CBT)
Sep Corn(CBT) Sep Oats(CBT) Sep Gold(CMX) Sep Silver(CMX) Sep Copper(CMX) Sep Platinum(NYM) Sep Palladium(NYM) LT: Aug Fed Funds(CBT) Aug Live Cattle(CME) Sep Heating Oil(NYM) Sep RB Gasoline(NYM) Sep Lumber Options(CME) |
| 09/03 Mon |
Labor Day Holiday
|
FN: Sep Soybeans(CBT)
Sep Soybean Meal(CBT) Sep Soybean Oil(CBT) Sep 2-5-10 Yr Notes(CBT) Sep 30 Yr Bonds(CBT) |
| 09/04 Tue |
9:00 AM CDT - Construction Spending(Jul)
9:00 AM CDT - ISM Index(Aug) |
FN: Sep Orange Juice(NYBOT)
|
| 09/05 Wed |
9:00 AM CDT - Pending Home Sales(Jul)
9:30 AM CDT - API & DOE Energy Stats 1:00 PM CDT - Fed's Beige Book 4:00 PM CDT - Auto & Truck Sales(Aug) |
FN: Sep Heating Oil(NYM)
Sep Gasoline(NYM) |
| 09/06 Thu |
7:30 AM CDT - Productivity-Rev(Q2)
7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Initial Claims-Weekly 9:00 AM CDT - ISM Services(Aug) 9:30 AM CDT - EIA Gas Storage 3:30 PM CDT - Money Supply |
|
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!