velox
Retired
anyone tell me why the banks inject money into the market? I know its to create liquidity, but isnt there enough in the market? And why does it boost the index?
thanks
thanks
stock market correction (1 Viewer)
- Thread starter velox
- Start date
onebytwo
Recession '08
well there may be enough, but the demand for cash at a time when the stock market plunges is too high, so to offset any interest rises (from high demand for cash) they try to increase supply, otherwise only the people willing to pay the highest rate of interest get the money. so overall you have upward pressure from the high demand side and downward pressure from increased supply, leading to a minimal net effect, that is if they get the the right amount of extra money. milton friedman reckoned the amount of money they decide to inject can never be right.velox said:anyone tell me why the banks inject money into the market? I know its to create liquidity, but isnt there enough in the market? And why does it boost the index?
thanks
im not sure thats the reasoning. someone else?
which index?
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onebytwo
Recession '08
Conspirocy
Member
HAHAHAHAHAAHHAA
you should see the follow up after, gold
http://www.youtube.com/watch?v=xzoYQ41Yd0Q&NR=1
you should see the follow up after, gold
http://www.youtube.com/watch?v=xzoYQ41Yd0Q&NR=1
onebytwo
Recession '08
haha...slaughtered again...the sea of red is back!
i feel sorry for those holding telstra stock. i have an eery feeling its going to go under $4 again, after it goes ex-divi next week. its gonna get dumped.
i feel sorry for those holding telstra stock. i have an eery feeling its going to go under $4 again, after it goes ex-divi next week. its gonna get dumped.
kokodamonkey
Active Member
yeah you gotta feel sorry for maquarie bank atm.. to think few months back it wasnt far off the $100 mark..
Conspirocy
Member
Omnidragon
Devil
Why are we so happy?
Conspirocy
Member
I'm happy because I don't own stocks, and am cash rich - just have to wait and pick the low for when I enter the stock market.Omnidragon said:
I'm not happy because by the time I graduate the economy will be in a recession or heading into one.
onebytwo
Recession '08
Mayday...mayday!
Damage Control!
Damage Control!
Conspirocy
Member
costello making a speech at 2:30 today after glenn steven talks
i wonder what the purpose is - maybe to stop a run on the banks
i wonder what the purpose is - maybe to stop a run on the banks
frinkanator
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they're injections into money markets to create liquidity, from all the sub-prime problems that have caused easy debt lenders to crack the shits in the structured debt markets. nothing directly to do with equity indices. the equities just fear the fallout on public companies, and the tightenting of credit that fund the purchase of stock.velox said:anyone tell me why the banks inject money into the market? I know its to create liquidity, but isnt there enough in the market? And why does it boost the index?
thanks
its been great watching you chumps calling for bargains every bounce, good luck bottom fishing. put your money where you mouth is.
on a serious note, for most, sidelines are best until the subprime/credit mess blows over. if you trade aggressive, keep positions small and stops tight. for the MBL bitches, expect it to reach 57ish. if that doesn't hold 50 is next.
have phun :wave:
velox
Retired
well today was good, fed bank cutting rates. Recovered a fair bit of equity losses on the spi cfd today. But havent take much shorts, too much volatility and 4 hours sleep + 8am starts suck.
frink : can you just not criticise others for once? Just take people for what they are.
Citi still have $122 target on mbl (what are they smoking?) and deutsche ~$100 iirc.
frink : can you just not criticise others for once? Just take people for what they are.
Citi still have $122 target on mbl (what are they smoking?) and deutsche ~$100 iirc.
frinkanator
Member
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well i did say 'on a serious note' after that. i know, my humour's gay.velox said:
those are medium/longer term targets based on good fundamentals. of course the banks have got the money and influence to send it back up there. short term, market fear has raped it. A fall to support levels to go sideways for a bit, and if the credit stuff goes down well then it should rally near end of year to next. I'm no oracle btw.
hi i'm frink. i believe we haven't met.geetarjoe said:
onebytwo
Recession '08
jim cramer got his wish. "open the darn fed window, he has no idea how bad it is out there, he has no idea!"velox said:
velox
Retired
Cramers a psycho. Most ppl are expecting another rate cut also, which is sorta scary....onebytwo said:
Cramer rekons dow will hit 14500 by end of year....
Thoughts?
Omnidragon
Devil
imo this rate cut shows the US are genuinely worried about a 'hard' landing. In any case, the rate cut doesn't mitigate the longer-term problem that all the lenders in the US will need to tighten credit in their own right to mitigate the riskier nature of the housing market.
Coupled with the fact that Greenspan has been calling for another 'hard' landing in China since January and ICBC trades at a P/E of 50 or something, I'm starting to believe we have entered Stage 3 of the Cycle and Shanghai/Shenzhen have entered Stage Tokyo 1970s of its cycle. What sort of blue-chip commercial bank faced with enormous competition in a risky market has a P/E of 50 and still goes up? China Insurance, the supposed ultra blue-chip insurance company in China that has gone up 3-4 fold in a year, apparently has a P/E of over 100.
Did we all see our resource specs get punished in these few weeks? What of all these companies such as AGS, which rides on quality mines down in Beverley Hills? Sure, there are other factors involved such as the retreat of commodity prices, which brings us to another point. How sustainable are these prices if we really believe, as Alan Greenspan does, China is headed for a mess?
Coupled with the fact that Greenspan has been calling for another 'hard' landing in China since January and ICBC trades at a P/E of 50 or something, I'm starting to believe we have entered Stage 3 of the Cycle and Shanghai/Shenzhen have entered Stage Tokyo 1970s of its cycle. What sort of blue-chip commercial bank faced with enormous competition in a risky market has a P/E of 50 and still goes up? China Insurance, the supposed ultra blue-chip insurance company in China that has gone up 3-4 fold in a year, apparently has a P/E of over 100.
Did we all see our resource specs get punished in these few weeks? What of all these companies such as AGS, which rides on quality mines down in Beverley Hills? Sure, there are other factors involved such as the retreat of commodity prices, which brings us to another point. How sustainable are these prices if we really believe, as Alan Greenspan does, China is headed for a mess?