JPM says ‘something’ right – Paulson completely changes the TARP again

Still they produced some interesting stats – but thats all they got right as they were pretty bullish a year ago. SPX is just testing the crucial triangle support and if he would understand tech analysis he might notice that we need to make new lows to get a low – but thats a differnt issue and not our concern. We might bounce of from here a bit but we need to test the OCT low of 2002 still – more on that in a bit.

S&P 500 `Almost Certain’ to Revisit October Low, JPMorgan Says

By Elizabeth Stanton

Nov. 12 (Bloomberg) — U.S. stocks are “almost certain” to revisit the five-year low reached Oct. 10, according to an analysis of historical trading patterns by JPMorgan Chase & Co.

The Standard & Poor’s 500 Index fell at least 20 percent on 21 occasions since 1900, and “retested” the level, or fell back to it after a rally, all but three of those times, JPMorgan U.S. equity strategists led by Thomas J. Lee wrote in a report.

“If Oct. 10 indeed proves to be the low, a retest is almost a certainty,” the report said. “Retests are the norm, occurring 86 percent of the time.”

The S&P 500 will probably retreat to the 839.80 it reached during trading on Oct. 10 by mid-November, based on past intervals, the report said. Just 25 percent took longer than 44 days to decline back to the lows, the report said. The longest interval between a trough and a retest was 104 days following the October 2002 slump.

Other factors that argue against a retest before mid- November include still-elevated intraday volatility, a condition that “sidelines major institutional investors,” and the Nov. 15 deadline for investors in some hedge funds to request redemptions at year-end, the report said.

Lee maintained his forecast that the S&P 500, which fell as much as 46 percent from its Oct. 9, 2007, peak and lost 3.2 percent to 869.9 at 1:45 p.m. today in New York, will end the year at 1,125, representing a 29 percent advance.

“A 42 percent decline in equities since their 2007 peak means a substantial recession has been discounted,” he wrote.

JPMorgan’s list of S&P 500 bottoms and retest intervals in days since 1900 follows:

12/19/1917      0
04/28/1942      0
06/13/1949      0
10/15/1903     16
03/27/1980     16
08/31/1998     22
02/28/1978     23
08/29/1966     28
05/26/1970     29
10/19/1987     33
10/22/1957     38
06/18/1982     38
12/24/1914     40
03/31/1938     41
10/04/1974     44
06/20/1921     47
10/11/1990     61
11/15/1907     63
06/16/1953     63
06/26/1962     83
10/09/2002    104

Excerpt Bloomberg
Paulson Shifts Focus of Rescue to Consumer Lending (Update4) 

By John Brinsley and Robert Schmidt

Nov. 12 (Bloomberg) — U.S. Treasury Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

“Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,” Paulson said today in a speech at the Treasury in Washington. “This is creating a heavy burden on the American people and reducing the number of jobs in our economy.”

Paulson’s remarks are an acknowledgement that the pitch he made to Congress for the bailout hasn’t delivered what was promised. Paulson sold the Troubled Asset Relief Program as a way to rid bank balance sheets of illiquid mortgage assets, and he may encounter resistance from Congress for the remaining $350 billion after using most of the first half to buy bank stakes.

Lawmakers will “put his feet to the fire,” said Kevin Petrasic, a former official at the Office of Thrift Supervision, now an attorney with the Paul, Hastings, Janofsky & Walker law firm in Washington. “I’m not sure how you get around dealing with what is clearly the congressional intent.”

Paulson said he has no regrets for the revised plan. “I will never apologize for changing a strategy or an approach if the facts change,” he said.

Treasury and Federal Reserve officials are exploring a new “facility” to bolster the market for securities backed by assets, Paulson said, adding that the program would be “significant in size.” Officials are considering using a portion of the bailout money to “encourage private investors to come back to this troubled market,” he said.

Paulson is amazing, he changes the whole TARP program on his own gusto – that did Dems and Reps negotiated for and wrote a 72 page law, and then this guy does whatever he is pleases with it. Unfortunetly that proves just that these guys have no grip on the situation which is bad news after all.

~ by behindthematrix on November 12, 2008.

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