Bloomberg headlines look less than cheerful as another wicked day lining up in the markets:
Look Out Below
July 1, 2008 6:21am by Barry Ritholtz
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Same As It Ever Was
the latest pmi indices signal contraction in uk, very low growth in europe and
sharp slowing in china.
given the recent price shocks from oil, gas and steel in june, the tipping point of the global economy might already be behind us and we´re headed for a worldwide recession.
Such a typical pattern, isn’t it? In the last two trading days, the Dow traded below the 11,331 “bear market” level (20% down from its 14,164 record close) intraday, but managed on both occasions to eke out a close above it. Now, overnight, Dow futures have decisively plunged through 11,331 and the 11,300 round number besides. If you weren’t awake at 3 a.m., you missed it.
Probably the most poignant angle in Bloomberg’s reporting is the story about Europe’s junk bond market being essentially closed down. Naturally junk-rated companies who need to borrow would then turn to banks. But banks themselves have a full plate just taking back failed special-purpose vehicles onto their balance sheets, and writing down their crumbling CDO holdings. They have little appetite or capacity to make new commercial loans.
So once again — as in previous deleveraging episodes — the assumption of continuous liquidity has failed, at the worst possible moment. The assumed worst case was that a few issuers would fail, in uncorrelated fashion. But no one thought that the entire junk bond market AND much of banks’ commercial lending would shut down simultaenously, starving borrowers and banks alike for capital.
The Maestro may be gone, but his inimitable “reverse Midas touch” is still turning our world to sh!t. And we haven’t even STARTED stress-testing the unregulated, OTC market for Credit Default Swaps. Hank and the Fedguvs say a clearing house will be set up by September. Capital! But what about today and tomorrow? When in doubt, sell ’em out!
Will today VIX spike to high 30s and transform to capi mode? Time to buy for sure this time.
The US economy on the verge of REALLY tipping…if Fedex’s head and shoulder breaks (a massive 5 year topping) it is going from 80 to around 40. China already tipped…Shanghai market down 60% this year. China built up quite a bit for the Olympics…sure enough, their stocks tanked 6 months prior to the end of Olympics. Stocks DO look ahead after all!
Covering some things today, just to be smart and keep some good gains. Anything could bounce us 600 sticks on the Dow.
Buy Now and Save.
I can’t understand what all the fuss is about. What on earth else are you going to do with those worthless dollars than buy stocks? So let’s say they go down another 20%, so? That will be handily beat those greenbacks sitting in a CD at a soon-to-be-nationalized bank.
I *heart* mike bloomberg and his terminal.
Ideally my uber-bearish book will bank me the money to setup my own home bloomberg terminal for life.
who cares about global armageddon as long as I get a bloomberg out of it.
good luck all, this might be the summer of black swans that catch mainstream media by surprise but which were harped on endlessly by the blogosphere periphery.
Today’s mumbo jumbo explanation for it all. Watch you don’t get caught in the crossfire in the technical war between the bulls and bears. Are there any tradeable predictions in this interview?
Talking Technicals
I thought not. If this, if that, if the other thing.
Turkish police are arresting retired generals? That’s a tad disturbing.
You have to wonder why would Paul Volcker be friendly with such a man as Blackstone Group (BX) CEO Stephan Schwarzman. Who is just one more robber baron that has torn the savings out of the pensions plans by going public and running off with the American Capital. The man who said private equity is better then public, and made much of his wealth by selling stock to the less informed public. As did Bill Gates. These corrupted minds think they are better than they are. A delusion.
Rona:
I think you are way off comparing Schwarzmann with Bill Gates. Gates was the driving force in creating and running a huge company that still generates tons of profit every quarter. People love to dump on it, it’s not glamorous, and the PE isn’t wonderful, but it will keep cranking out the money. Schwarzmann has simply constructed ways to make a commission off of deals that don’t benefit anyone but the middlemen like him in the long run.
Query: Oil run up today based on war rumors citing unnamed source in the pentagon. You think he might have been long oil?
There’s a great deal of opportunity for market manipulation there.
Don’t you mean TIMBER!! rather than look out below…
I mean Bloomberg reports that the Lumberjack tenor Simon Rattle has triumphed.
Query: Oil run up today based on war rumors citing unnamed source in the pentagon. You think he might have been long oil?
There’s a great deal of opportunity for market manipulation there.
Posted by: Mike in Nola | Jul 1, 2008 11:29:58 AM
***************
IF the source is genuine, the source was an ‘authorized’ leak by those rational generals in the military who absolutely know that there are no physical bodies in the army left to throw into a protracted conflict with Iran, barring a draft.
VennData:
I think you’re being sarcastic, but you do know that there’s other options besides long equities and bank CD’s, yes?
I’m lovin’ my double short ETFs.
>> there are no physical bodies in the army left to throw into a protracted conflict with Iran, barring a draft.
The neocons won’t occupy Iran. They’ll instead kill haphazardly from the air.
Do the neocons possess the military “toys” to do it? Yes.
Mike in Nola,
Thanks for your comment and I agree with the first part Schwartzman, right on, he has a big ego and not a big intellect. My problem with Bill Gates is he is not such a value maker as you might believe. My point and where I am truly deeply disturbed is by reading all the SEC fillings for many years each week, day, month, I saw where bill gates was selling shares that he printed for himself. Billions of these shares and someone had to buy them and who was the someone? Mutual Fund managers, Index Managers, Pension Fund Managers these are mostly people who don’t purchase for the good of society. Bill Gates took advantage of this situation. Billions upon Billions he removed from the market and that is why I am upset. The elderly pensions could have a higher value. The public has been taken advantage of. That’s my point although something is legal it can still be very immoral. I agree he could have been paid well for running MSFT but not to the tune of 50 billion dollars. That should be in the hand of our public society. On top of that he was taxed at low rates….