Stock Market
Posted at 1:52pm on Jul. 7, 2008 Commodity Prices Are Falling Sharply
Unusual Market Action
By blackhedd
Remember a few days ago, I suggested here and here that: A) commodity prices worldwide are in a bubble; B) bubbles always burst; and C) when this one does it’ll be bad news because so many global investors have piled on?
As I write at about 1:45pm EDT, every major commodity that is traded on world markets is down sharply. It’s been a long time since I’ve seen anything like this.
Keep reading...
Posted in Bond market | commodity prices | Economy | inflation | Stock Market — Comments (29)/ Email this page » / Read More »
Posted at 11:19am on Jan. 23, 2008 Big Rotation in the Financial Markets This Morning
And the wild ride continues
By blackhedd
US stock markets plunged about 250 points (more than 2%) on the open this morning. This move was anticipated by futures markets, and follows sharp recoveries overnight in Asian stock markets. Major stock markets in Europe are down anywhere from 2 to 4 percent.
A few minutes ago, US stocks spiked upward and are down 100 points as I write this.
The mood is very busy, but not frantic or panicked as it was yesterday. The key thing that appears to be going on is rotation out of the stock market by some very large institutions. One externally-visible piece of evidence for this is the bond market, which is on an absolute monster of a rally, with the yield on the 10-year note down to 3.34%. (The 10-year rate is the one that has the most to say about how much you pay for your mortgage. Two weeks ago it was around 3.80%. A year ago it was nearly 5%.)
A fair interpretation of this morning's action is that the large professional money managers have decided to cut their exposure to US stocks. This may be an expectation of recession ahead, but it's more likely to be uncertainty about the outlook.
Two key pieces of the news background: late yesterday, Apple Computer announced a huge December quarter, with profits and revenues both up by tens of percent. But investors were disappointed that the company didn't do even better. Apple's guidance for the current quarter was perceived to be weak, but they reported no slowdown in sales. In this environment, all news is bad news.
Another negative factor occurred in Europe overnight, as European Central Bank president Jean-Claude Trichet commented that the ECB is still concerned about inflation. Market observers had been hoping for an interest-rate cut to follow the Federal Reserve's emergency cut yesterday. That was disappointing. But the dollar is stronger against the euro this morning, suggesting that the markets expect the ECB to throw in the towel soon enough.
Crude oil is down sharply again. It looks like a lot of money is going on temporary loan to the US government. And that is likely to be the story for the near-term and possibly longer.
In politics, Congress and the Administration have accelerated their work on a Keynesian stimulus plan, with Majority Leader Reid promising to have a bill completed by late February.
They needn't bother. I don't know a single serious observer who expects that the government has anything on the table that can help either the markets or the economy. It's almost ridiculous to see our elected officials running around like chickens without heads. (And they barely have brains to begin with.)
Posted in Economy | federal reserve | Interest rates | Stock Market — Comments (10)/ Email this page » / Read More »
