Monday, January 21, 2008 3 comments ++[ CLICK TO COMMENT ]++

Talk About a Sea of Red

Americans taking the day off will be welcomed with a sea of red across all the major stock markets of the world... Practically everything is red. Check it out (source is Wall Street Journal Markets Data Center--a very good overview of all things financial):

(note that some of the markets were closed so some numbers are from Friday; coincidentally, my former home country, Sri Lanka is the only one green in the pics below ;) Trust me, nothing good is happening in that country :( ).

Major World Markets

Selling Started Off in Asia...

Infected Europe...

And Clobbered the Americas...

Commodities were also down but the US markets were closed so US commodity prices aren't available. One of my calls was for the Japanese Yen to strengthen and it looks like it is happening. There is also a possibility of US$ strengthening if the sell off continues.

The performance of US markets tomorrow will set the mood for all the other markets. One of the big events tomorrow is the Bank of America conference call. Any bad news from them and watch out. As for me, the Ambac conference is what I'll be watching.


3 Response to Talk About a Sea of Red

January 21, 2008 at 5:09 PM

The BoA call tomorrow is huge, whats worse is that because of Martin Luther King day today hardly any 4q preview notes were released by the analysts!

January 21, 2008 at 7:24 PM

Early indications put the Dow down 500 points+ on the open, the S+P down 4 -4 1/2%. The Fed will really be in the cross hairs now. I'm not saying they are the cure but, unfortunately, they've become part of the problem. Indecisive, lack of focus, bumbling PR, too many voices in the wilderness or as Paul Volcker stated "too democratic".

Now facing another potential massive credit squeeze they have no choice. They have to cut, and soon. Ironically, rates may have to fall to the same level that Greenspan dropped them to 4,5 years ago which, according to some, precipitated the housing bubble.

Personally, I'm thinking they may cut tomorrow. We'll see.

January 21, 2008 at 7:42 PM

I don`t think the rate cuts are going to save anyone. If the economy is actually facing problems, stock market will likely decline more. Staying cautious or on the sidelines is probably the best thing now (or look for a beaten down stock--but don`t end up with my Ambac situation ;) )...

Having said that, rate cuts will help the homeowners. A lot of ARM mortgages reset this year and some bears were predicting huge defaults. But if rates reset to similar or even slightly lower rates, home default rates won`t be so bad...

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