Fear is in the air

The Fed with its loud message in inflation is intervening in market. This looks like planned jawboning of inflation expectations and signal to inflation based speculators. Clear proof of this is in the Novak Column. This guy is old hand and is being used to signal Fed intent to markets.

Robert Navak sums up the Fed game very well.

When the newly installed Federal Reserve Chairman Ben S. Bernanke sent stocks plunging 200 points Monday with his latest inflationary warning, this was not another case of the rookie central banker shooting off his mouth. Rather, this was a carefully calculated message to lessen inflationary expectations in markets and the real economy.

''This is theater,'' said one longtime Fed-watcher, meaning that Bernanke is playing a role in hopes that words will make action unnecessary. A more apt metaphor might be that Bernanke is the aviator flying the Federal Reserve monetary airplane, seeking a soft landing from the growth economy without crashing into a recession.

This is the test for America's central banker, at the controls of the global as well as the U.S. economy. Monetary aviation is difficult and risky. Alan Greenspan, Bernanke's predecessor at the Fed for more than 18 years, was renowned for his mastery there. In fact, the man now referred to on Wall Street as ''The Legend,'' out of three attempted soft landings, crashed and burned two times -- a poor average for central bankers. One such crash in 1992 contributed to the defeat for re-election of President George H.W. Bush.

Stocks with all time high volume

ALOG,Analogic Corp
AMWD,American Woodmark Corp
AUY,Yamana Gold Inc
CBD,Companhia Brasiliera De
CRB,Courtside Acquisition Corp
CRL,Charles River Labs Intl
LINTA,Liberty Media Interactive Class A
SPSX,Superior Essex Inc
TRY.B,Triarc Co Cl B
VIA.B,Viacom Inc Class B

There is clear hint of panic now. The Asian and Europe markets are in free fall. This kind of action is always in the later stage of correction. Today is also triple witching, so volatility will be high.

So time to watch the panic at open.




Get ready for avalanche of private equity deals
With current market weakness, many companies are priced for picking and the money waiting on sideline for private equity deals will get good bargains.

GOLDMAN SACHS, the Wall Street investment bank, is to start raising billions of dollars for a new private equity fund within weeks, despite the recent furore over conflicts of interest between the bankÂ’s private equity division and its corporate clients, The Times has learnt.
It is expected that Goldman is seeking to raise at least $10 billion.

Market commentators expect 2006 to be another record year for fundraising. The biggest firms — including Texas Pacific, KKR, Blackstone, Permira and Apollo — are are on target to raise more than $50 billion.

Who is buying the gold

I am sure the Gold bugs will be very happy with this.

Oil states armed with an estimated current account surplus of $480bn in 2006 are thought to be feeding the "stealth demand" for bullion, led by Russia.

President Vladimir Putin, a frequent critic of dollar hegemony, has ordered the Russian central bank to raise the gold share of foreign reserves from 5pc to 10pc.

Russia's reserves have surged to $237bn - the world's fourth biggest - after rising 61pc in 2004 and 40pc in 2005. With a current account surplus of 10pc of GDP, it must sweep up a big chunk of global gold output just to stop its bullion share of reserves from falling.

In China, monetary committee member Yu Yongding last week issued the most explicit call to date for Beijing to diversify its $875bn reserves into gold to protect against a tumbling dollar. "We need to use some of the reserves to buy other assets such as gold and strategic resources such as oil," he said.