The ongoing financial turmoil and financial discussion thread

[mykalberta]

If the bailouts proposed are for other companies to take over struggling ones, I am all for it.

If its meant to prop up banks and investment houses who made poor choices, I am against it.

[Slava]

Originally Posted by SportsJunky

This just in from the McCain camp: "The economy is fundamentally strong".

He's not the only one though. Dianne Francis said when they dropped the writ that there was nothing wrong with the economy here in Canada. While that might be true, we are obviously along for the ride here.

[V]

So what happens tomorrow on Ruby Tuesday?? Bounce back, or another pounding??

Oil's back up to 97.69, and the TSX is down less than 300 points, so it's less carnage than I had hoped for. Any guesses on where oil bottoms out at?

[llama64]

Originally Posted by HotHotHeat

This will sound like I'm up on my high horse, but are people really surprised by any of this? Economists have been warning of the financials sector 'shakeup' for weeks, months, and even years. So many fundamental problems with the US economy...

But it's alright...Bernie boy over at the Fed will wake up tomorrow morning and turn that knob that says 'interest rates' down a bit. Not that he has any clue what it does.

Should be interesting to watch how the Republicans handle the coming weeks.

I think only the people who view the market with blind faith are surprised by this. American policies have been trying to stave off a recession for decades now and the cycle is finally punishing them for it. Were we not taught this in Econ 201? We can probably prevent a depression, but recessions are unavoidable.

Hopefully Calgary's realty market finally gets an adjustment and I can finally buy in. I kinda feel sorry for people who bought a condo in the last year and a half. That's one market that's not gonna improve for years to come. Looking forward to a decent condo in the beltline for under $200k!

All in all, this is pretty good news for Harper (and the "Harper Party"). There isn't any other viable party that could possibly sell a message of economic security right now.

In the states, I'm not sure how either party will be read. Palin's economic record is astonishingly abysmal and Obama/Biden don't have any experience themselves. Even McCain himself isn't known as a strong economic candidate.

[Shazam]

Originally Posted by I-Hate-Hulse

Oil at $95. Anyone know what economics are on all these tight formation plays like Montney and Bakken? Can they be profitable at $90 oil? This is getting into provincial budget estimates range methinks.

I learned yesterday that there has been considerable movement of capital from energy to financials last week in the market. I don't understand how a bailout of Freddie Mac and Fannie May would persuade that argument...

This is pure scuttlebutt, but Shell will pull out of the oilsands if oil hits $85.

Total's oilsands play is priced for $90 oil, so they're getting awfully close...

[Finner]

Down 400 points now. Not a great trading day for sure. Financials/Energy/Metals Mining down big time.

Suprising because gold is up nearly $20.

Buy puts to protect your assets people!

[flamesaresmokin]

Originally Posted by Shazam

This is pure scuttlebutt, but Shell will pull out of the oilsands if oil hits $85.

Total's oilsands play is priced for $90 oil, so they're getting awfully close...

None of these giants will pull out becuase oil is down to $85....especially when the price of gas will never dip below .95/litre again no matter how low the oil goes. Bottom line is, the only thing affected by the drop is the multi billion dollar profits. They will just start turning multi million dollar profits if this trend continues.

[SeeGeeWhy]

If oil continues to slide, the "emerging" markets known as China and India will heat back up in no time.

The problem with the Bakken play is that there are no viable methods of secondary recovery proven up yet.

[Gundo]

I love days like this, the mark is having a bad day SELL SELL SELL!!!
That will help things bounce back

Just hold on to the reigns and ride out to downs and wait for the ups people.

[Shazam]

Originally Posted by flamesaresmokin

None of these giants will pull out becuase oil is down to $85....especially when the price of gas will never dip below .95/litre again no matter how low the oil goes. Bottom line is, the only thing affected by the drop is the multi billion dollar profits. They will just start turning multi million dollar profits if this trend continues.

What does the price of gas have to do with oil?

Multi-million dollar profits do not represent an adequate rate of return on the capital invested.

Shell is going to completely pull out of the area if the price hits $85? After spending billions and billions they are just going to tuck tail and run. Maybe put a halt on expeansion or something like that, but I really doubt a complete pull out.

Shell's Albian project is break-even at $75. Let's say oil becomes $70. Why would you bother digging the stuff out, only to lose $5 on each barrel?

Again, it's about rate of return. Break-even is useless to Shell's bottom line. So is anything that's below conventional oil rate of return.

[Phanuthier]

so uh, what are some good stocks to buy right now?

I feel like a shopping mood.

[Bertuzzied]

Originally Posted by Phanuthier

so uh, what are some good stocks to buy right now?

I feel like a shopping mood.

I'm buying CCO Cameco. Uranium should make a comeback pretty quickly.

[Tron_fdc]

Yeah, I'd say any metal is going to be a bargain at some point. Being in the steel business I know what the appetite for steel alloy is, so any company supplying things like Nickel, Moly, gold or copper won't stay down too long. China will start buying like crazy if it gets low enough and drive the price up fairly quickly.

That being said, a lot of those companies had some pretty inflated stock values over the last 5 years.

[Cowboy89]

Originally Posted by Shazam

What does the price of gas have to do with oil?

Multi-million dollar profits do not represent an adequate rate of return on the capital invested.

Shell's Albian project is break-even at $75. Let's say oil becomes $70. Why would you bother digging the stuff out, only to lose $5 on each barrel?

Again, it's about rate of return. Break-even is useless to Shell's bottom line. So is anything that's below conventional oil rate of return.

Actually that's a break-even full-cycle cost. Meaning that in order to make a return on all the capital they have already spent they need about $75/bbl to make it go. However they have already spent all that capital and they make an operating profit at anything over $35-40/bbl. There's a real option in keeping it running because they still make money on their operating capital. So it's not like any of those mines are going to shut down anytime soon.

[Finner]

Bank of America looks like it might be a good buy if it falls a little more. They are in a pretty strong position and just bought Merrill Lynch at bargain basement prices. Might be a good long term hold.

I think these bankrupties in the banks are going to get worse and start extending outside the financials...ie. GM and Ford.

[Mccree]

Did not the Japaneses Banks for thru something like this a few year ago? I am wondering how that worked out for them now.

[Claeren]

So America has nationalized about 50% of the housing mortgage market correct?


So if to stabilize the finance industry they are forced to make a choice between nationalizing all of the banks or nationalize the rest of the mortgage market they obviously nationalize the mortgage market.

I wonder how that scenario plas through stock valuations?

That would have to kill the American Dollar, no?



Also debate about interest rates right now. Inflation is already strong yet even lower rates may be needed -- could mean a countering huge run-up in interest rates in a year or two??



Starting to make Japan's last 10-20 years look good by comparison.



Claeren.

[Claeren]

Originally Posted by Mccree

Did not the Japaneses Banks for thru something like this a few year ago? I am wondering how that worked out for them now.

Well there was the 1997 Asian Financial Crisis:
http://en.wikipedia.org/wiki/Asian_financial_crisis


But Japan itself had (has?) its own problems before that after its own famous housing bubble, The Japanese Asset Price Bubble:
http://en.wikipedia.org/wiki/Japanes...t_price_bubble

(^ One of the most famous bubble/busts in modern financial history, until now at least.)



In some ways this is a combination of both, at the same time, involving far far more money.


The Japanese market parallel is a scenario I mentioned in the Real Estate Prediction Thread a couple months ago.



Oh, and it has yet to REALLY work itself out in Japan either, although obviously some balance/bottom was found in those markets. The problem is that they have been waiting 19 years for inflation to slowly eat away from the markets what the initial crisis was prevented from doing so.


Claeren.

[Slava]

Well the nationalisation of an institution similar to Fannie and Freddie has happened before. In the early 1990's the Norwegian government was "forced" to take similar steps. They bought up a huge bank there and then gradually sold it off. Over the long term the stock price of that bank recovered very well.

As far as buying the Bank of America I'm not going to give any advice one way or another (I'm not a single stock guy yet, and in any event I would never give advice to people I don't know on the internet!). That being said you should be careful with US financials. (A) Make sure the bleeding is done before you dive in and (B) US banking has not always been a great investment. In fact before this latest run you were underwater more than positive as an investor. Unfortunately I don't have time to dig out the chart and scan it in here to show everyone, but suffice it to say that US financials are not the fantastic bargain that they may appear to be at this point.

[Flames in 07]

Originally Posted by Shazam

This is pure scuttlebutt, but Shell will pull out of the oilsands if oil hits $85.

Total's oilsands play is priced for $90 oil, so they're getting awfully close...

hilarious. So ... just hanging out in a shell board room?

All existing oilsands projects work at 45 dollar oil. How did we get to a point that people are worried about 85 freaking dollar oil?