Global Equities Sell-Off

Discussion in 'Current Affairs, News and Analysis' started by Not_Whistlin_Dixie, May 22, 2006.

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  1. The whole business had gone too far too fast, in my opinion. Too many people had lost sight of the meaning of risk, especially with interest rates rising. My puts are in profit, which is a relief, as I thought I had got it wrong. It will be interesting to see if the hedge funds were, er, hedged!

    Interesting head and shoulders forming on the FTSE; might change my mind about how far it has to fall....

  2. Wow! I never thought the election in Montenegro would have had such an impact. Wow again!
  3. Litotes:

    If you are short UK equities or hold put options on them, you might take some cheer over the linked report.

    From a "technical analysis" standpoint, the FTSE looks vulnerable: it just punched through its 200 day moving average.

    "Billions wiped out as FTSE drops to 5-month low"
    By Friedel Rother 22 May 2006

    A ferocious struggle between the bulls and bears lies ahead.

    I predict that the bears will win:

    1. The USA property boom is slowing and reversing. This will eliminate home equity lines of credit as fuel for consumer spending.

    2. USA mortage defaults and delinquencies are going up.

    3. Fannie Mae, one of the twin pillars of the US secondary mortgage market, appears to be in quite bad shape. It is so far delinquent in filing financial statements that the fact that trading of its shares hasn't been suspended is scandalous.

    4. We seem to be teetering on the verge of a really big war in the middle east.

    5. Folks are starting to wake up to the fact that there isn't much congruity between official inflation statistics and the actual rate at which their cost of living increases.

    However, the bulls have powerful weapons at their disposal too. They enjoy the support of central banks and national treasuries which feel they have a vested interest in avoiding a collapse in financial asset prices.

    Should be a wild ride. Whatever happens, we aren't likely to die of boredom.
  4. "Should be a wild ride. Whatever happens, we aren't likely to die of boredom."
    For Sure.
  5. Equities sell-offs yesteday in Japan, India, S. Korea.

    S. Korean Kospi index at seven month low.

    Japanese Topix index saw largest slump of last 13 months.

    USA Dow Jones Industrial Average fell below 11,000 yesterday.

    The Bombay Stock Exchange Sensitive Index dropped 4.7% yesterday. The linked article describes that as yesterday's biggest drop on Asian bourses.

    The linked article ascribes these events to interest rate jitters.

    "Asian Stocks Posts Biggest Drop in 2 Years; Toyota Declines" 8 June 2006

    I've read elsewhere that today the European Central Bank announced a 25 basis point (one fourth of one percent) increase in its short term policy rate.

    The S. Korean central bank today raised its policy rate.

    There seems to be a consensus around the world that the US Federal Reserve System will once again raise the interbank overnight loan rate (known here as the federal funds rate) target another 25 basis points.
  6. this is most interesting, I know nothing of the markets, just building and selling companies privately, and the housing market, cos I invest there..., was going to plunge some money into the city, but will carry on following your posts with interest
  7. likewise
  8. June 8 (Bloomberg) -- U.S. stocks dropped for a fourth day, causing the Standard & Poor's 500 Index to erase its gain for the year, after speculation higher interest rates will snuff out economic growth set off a tumble in global equity markets.

    "U.S. Stocks Drop a Fourth Day; S&P 500 Erases Gain for Year" 8 June 2006
  9. The twenty worst-performing stock markets in terms of year to date average price declines.

    "Central Bankers of the World, Unite Again!" by John Mauldin 10 June 2006

    These range from Dubai (down 58.5% year to date) to Sweden (down 17.1% year to date).
  10. Principal bourses of the world are getting thumped again today. Red ink all around the world.



    UK and Europe:

    Cairo and Tel Aviv:

    What's noteworthy is that they are all going red simultaneously.

    This may have something to do with perceived tightening, or anticipated tightening, by the world's two principal liquidity factories, the Federal Reserve System and the Bank of Japan.
  11. I am no expert on Serious financial matters. At weekend I was reading an artical that expressed conncern that the US has stopped publishing figures for M3 money. This is the number of $ actually in circulation. With out this number Professionals cannot make a true estimate of US inflation. The artical was suggesting this was deliberate policy by Bush government.
  12. How tragic. My heart bleeds for those involved and I sincerely hope nobody jumps off any buildings this time around
  13. They suspended publication of the M3 figure effective March 23 of this year with a one sentence explanation that such was an "economy measure."

    The explanation was preposterous and widely interpreted as an attempt to hide something.