678 points down
Honestly, I expected today to be up. In fact, it was a good day for much of the day. Overnight, the Hang Seng and the Straits Times were up over 3% in Asia. The European markets lost only a few percent. None of this prepared us for the carnage we witnessed in New York. As the market neared close, the bottom fell out again. The Dow fell a breathtaking 678 points.
Yet again, every component of the Dow was down, with GM at its lowest level since 1950. The broader market saw only 23 of 500 S&P 500 companies avoid a loss. We are witnessing a crash of historic proportions.
Source
S&P 500 Index Members – Bloomberg
Edward – this is seriously sobering and was not in the script! I guess I have underestimated the speed at which markets seem to want to get to some sort of end-game – and in their rush to get there, the end just seems to get further away…or in fact nearer depending on how one interprets “the end”…
Stevie, this is very sobering. I am no doomsdayer and Marshall Auerback and I were just chatting this morning about how we felt a break was coming — that we could see an intermediate bottom.
But, today confirmed that this is all out panic. This is a crash that just keeps on going. Every day we wake up and fear what is going to happen next.
The stewards of the economy have zero control over things. God help us.
Is there any mileage in the theory that the falls this week are down to forced sales of stock to raise cash for CDS settlements? I believe Fanny & Freddie CDS were due Monday, and Lehman tomorrow, with WaMu still to come. Icelandic banks and Hypo Real Estate in Germany have gone under recently so CDS for them will be up for settlement eventually too.
sobers, I am sure that’s part of the picture but this whole thing is so complex, it can’t be the full story The astonishing moves in currency markets is an example of what I mean.
Look at the Aussie dollar:
https://pro.creditwritedowns.com/2008/10/chart-of-day-aussie-dollar.html
I don’t think I have ever in all my years seen anything like it. 14 big figures in a single day and 11 on another.
I was just talking to someone about this and they were complaining that traders are staying up all night because half the action occurs while we sleep. As I write this, the Asian markets are ramping up.
The Japanese already saw a 10% down day this week. AT this rate, they’ll hit multi-decade lows before long.
Then, you’ve got the credit markets with Libor-OIS spreads and the TED spread way up.
https://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND
Treasuries had a massive sell-off as well.
Every asset class is getting hammered. So, the CDS market is a part of it, but can’t be the whole thing.
Quite frankly, this is the worst I’ve ever seen it. Everywhere markets are selling off. Everywhere.
Edward, good insightful comments. I’ve been meaning to write to you to ask why the quality of your reporting and analysis has declined so materially (since about the time of the site re-design). I used to love your blog and visited every day. Lately, most of the posts are brief 2 sentence summaries of outside articles, with no meaningful analysis.
Please bring back the excellent analysis I know you’re capable of!!
Keeping the faith, thanks for your comments. Feel free to drop me a line directly at [email protected]. I would be very happy to hear further what kind of insight you are looking for. I certainly want to know what you find interesting and what you DON’T.
As far as the articles with 2 lines of summary goes, sometimes the articles speak for themselves. I have been trying to put things like that in my round-up or on My RSS feed exclusively. But there are times when I feel it needs a wider view and I post it directly to the blog.
Then, when it comes to politics, I try to stay a little light on the analysis because, for some, politics and finance don’t mix.
But, thanks again, and I look forward to your further comments in my inbox.
Cheers.
Edward
Sobers you may have seen, I had three posts from others about the Lehman CDS situation in today’s round up. Ther is a heck of a lot of chatter about this. I can’t dismiss it entirely although I think it’s more than that. Here is another post of that genre from Market Movers.
Basically, we’ll see what the result is this afternoon. I hope it leads to a higher close.