Market Carnage Day 2
Here's your sign... Fri: "Fitch downgrade of guarantor Ambac could be the straw that broke the camels back."
Mr. Bad Bearfoot... In the last 2 days, 50% of the world's biggest stock indexes (43 of 80) fell into a bear market.
Benchmarks in France, Mexico, Italy and 35 other countries are at least 20% below their recent highs.
Declines today turned Greece, India, Indonesia, the Philippines, Saudi Arabia, Slovenia, South Korea, Taiwan and Thailand into bear markets as well.
The MSCI World Index of 23 developed markets is down 18% from its Oct. 31 record.
The S&P 500 fell 9.8% in the first 13 trading days of this year for the worst start since the index's inception in 1957.
Last week, the worst week in 5 years, January 08 shaping up to be the worst month in stock market history.
Since mid Oct peak...Banks and brokerages in the S&P 500, last year's worst- performing industry with a 21% decline...
have dropped another 13% in 2008. Nasdaq -20%; SP500 -17%; DJIA -16%
It is different this time... Equities are the cheapest relative to bonds since 1974, and still investors are shifting funds to fixed income.
As opposed to 2003 when economies "exited" a recession, we are heading into a recession or worse.
Monday Unwind...
Oil -2%; Gold -2%; Euro 2 year low vs Yen; dollar plunges under 106 Yen, as higher yielding investments funded with cheap loans from Japan got liquidated.
Monday Day 1... Asia; Nikkei 225 -3.86%, a 2 year low; Hang Seng -5.49%;
Europe; CAC -6.83%; FTSE -5.48%; DAX -7.16%; MEXICO -4.41%; Brazil -6.33%; MSCI World Index -3%, largest decline since 2002.
Tuesday Day 2...Asia; Nikkei 225 -5.7% (worst 2 day drop in 17 years); Hang Seng -8.65%; SP/ASX -7%; India Sensex -12%;
Europe; CAC +2%; FTSE +3%; DAX Flat; DJStoxx 600 +2.4%; MSCI World Index -1%.
Tuesday US Market Open... DJIA -466; SP500 -50 (1050 DMA 1275); NAZ -120, NDX -105 (700DMA 1740) OUCH!!!
Dead Cat Cut Bounce... Markets bounced back after...
The Bank of Canada cut its key overnight interest rate by a quarter percentage point to 4 percent and said further cuts were likely to be needed.
The Fed held an emergency meeting last night, this morning...
1st intermeeting cut since 2001, the largest cut since 1984, 75 bps cut for Fed Funds to 3.5% & discount rate to 4%.
Depending on market reaction, the Fed may cut again at its regularly scheduled meeting Jan 30th.
St. Louis Fed Head William Poole dissented, as he did not believe current conditions justified action before the Jan. 30 meeting.
"Appreciable downside risks to growth remain. Incoming data indicates a deepening of the housing contraction as well as some softening in labor markets."
Mr. Bad Bearfoot... In the last 2 days, 50% of the world's biggest stock indexes (43 of 80) fell into a bear market.
Benchmarks in France, Mexico, Italy and 35 other countries are at least 20% below their recent highs.
Declines today turned Greece, India, Indonesia, the Philippines, Saudi Arabia, Slovenia, South Korea, Taiwan and Thailand into bear markets as well.
The MSCI World Index of 23 developed markets is down 18% from its Oct. 31 record.
The S&P 500 fell 9.8% in the first 13 trading days of this year for the worst start since the index's inception in 1957.
Last week, the worst week in 5 years, January 08 shaping up to be the worst month in stock market history.
Since mid Oct peak...Banks and brokerages in the S&P 500, last year's worst- performing industry with a 21% decline...
have dropped another 13% in 2008. Nasdaq -20%; SP500 -17%; DJIA -16%
It is different this time... Equities are the cheapest relative to bonds since 1974, and still investors are shifting funds to fixed income.
As opposed to 2003 when economies "exited" a recession, we are heading into a recession or worse.
Monday Unwind...
Oil -2%; Gold -2%; Euro 2 year low vs Yen; dollar plunges under 106 Yen, as higher yielding investments funded with cheap loans from Japan got liquidated.
Monday Day 1... Asia; Nikkei 225 -3.86%, a 2 year low; Hang Seng -5.49%;
Europe; CAC -6.83%; FTSE -5.48%; DAX -7.16%; MEXICO -4.41%; Brazil -6.33%; MSCI World Index -3%, largest decline since 2002.
Tuesday Day 2...Asia; Nikkei 225 -5.7% (worst 2 day drop in 17 years); Hang Seng -8.65%; SP/ASX -7%; India Sensex -12%;
Europe; CAC +2%; FTSE +3%; DAX Flat; DJStoxx 600 +2.4%; MSCI World Index -1%.
Tuesday US Market Open... DJIA -466; SP500 -50 (1050 DMA 1275); NAZ -120, NDX -105 (700DMA 1740) OUCH!!!
Dead Cat Cut Bounce... Markets bounced back after...
The Bank of Canada cut its key overnight interest rate by a quarter percentage point to 4 percent and said further cuts were likely to be needed.
The Fed held an emergency meeting last night, this morning...
1st intermeeting cut since 2001, the largest cut since 1984, 75 bps cut for Fed Funds to 3.5% & discount rate to 4%.
Depending on market reaction, the Fed may cut again at its regularly scheduled meeting Jan 30th.
St. Louis Fed Head William Poole dissented, as he did not believe current conditions justified action before the Jan. 30 meeting.
"Appreciable downside risks to growth remain. Incoming data indicates a deepening of the housing contraction as well as some softening in labor markets."
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