GM, Ford, Nikkei, Yield Curve & Market Deja Vu
February 2, 2000 the yield curve inverts. 5 weeks and 2 days later on March 10, 2000 the stock market bubble popped.
Today, the jury was selected for the Enron trial and Kraft announced 8000 layoffs. Recently, Ford announced 30,000 layoffs and 14 plant closures, GM 30,000 layoffs and 9 plant closures, Daimler Chrysler 8000 layoffs.
Ford had also announced on Jan. 20 that it intends to reduce its global suppliers list, who now do an estimated $70 billion work annually, from 2,500 today to 800 by 2008-09, a two-thirds elimination of suppliers.
On January 13 the Nikkei 225 hit a multi year high of 16,490, 3 days later it had lost 6.3% or 1,049 points to close at 15341. The Nikkei has since rebounded to 16551.
"Question: What does a 100 point market drop mean? Answer: We've seen unprecedented growth of the stock market in our recent history... Even 200-point moves are not uncommon for the Dow on any given day...
Yet if you listen to the cable business channel, you might think something big was happening. The broadcasters seem to be caught in a time warp." - excerpt from Motley Fool, Ask Fool U- November 10, 1999 (4 months before the crash).
Friday January 20, 2006 the Dow Jones Industrials dropped 213 points or 1.96%. That was the largest one-day decline since April 15, 2005 when the index slipped 1.9 percent. It was also the biggest one-day point drop since the Dow lost 307.29 on March 24, 2003.
Coming full circle... Tomorrow January 31, 2006 will be exactly 5 weeks since December 27, 2005, which is when the yield curve inverted for the first time since 2000. And for anyone who can remember click here for some real history. Those of you younger folks might want to click here as well.
Crashes don't happen directly from a peak. Crashes generally occur 5 to 8 weeks after the peak of a bubble. In 1929 the first crash day was 8 weeks after the top, in 1987 once again, about 8 weeks, and in the NASDAQ 2000 bubble about 5 weeks.
Today, the jury was selected for the Enron trial and Kraft announced 8000 layoffs. Recently, Ford announced 30,000 layoffs and 14 plant closures, GM 30,000 layoffs and 9 plant closures, Daimler Chrysler 8000 layoffs.
Ford had also announced on Jan. 20 that it intends to reduce its global suppliers list, who now do an estimated $70 billion work annually, from 2,500 today to 800 by 2008-09, a two-thirds elimination of suppliers.
On January 13 the Nikkei 225 hit a multi year high of 16,490, 3 days later it had lost 6.3% or 1,049 points to close at 15341. The Nikkei has since rebounded to 16551.
"Question: What does a 100 point market drop mean? Answer: We've seen unprecedented growth of the stock market in our recent history... Even 200-point moves are not uncommon for the Dow on any given day...
Yet if you listen to the cable business channel, you might think something big was happening. The broadcasters seem to be caught in a time warp." - excerpt from Motley Fool, Ask Fool U- November 10, 1999 (4 months before the crash).
Friday January 20, 2006 the Dow Jones Industrials dropped 213 points or 1.96%. That was the largest one-day decline since April 15, 2005 when the index slipped 1.9 percent. It was also the biggest one-day point drop since the Dow lost 307.29 on March 24, 2003.
Coming full circle... Tomorrow January 31, 2006 will be exactly 5 weeks since December 27, 2005, which is when the yield curve inverted for the first time since 2000. And for anyone who can remember click here for some real history. Those of you younger folks might want to click here as well.
Crashes don't happen directly from a peak. Crashes generally occur 5 to 8 weeks after the peak of a bubble. In 1929 the first crash day was 8 weeks after the top, in 1987 once again, about 8 weeks, and in the NASDAQ 2000 bubble about 5 weeks.
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