Posted on 02/28/2007 7:27:05 AM PST by shrinkermd
Any equity selloff as large as yesterday's will produce a multitude of explanations. Among other culprits, we heard about "overbought" Chinese stocks that were due for a correction, a weak durable goods report, the Kabul explosion aimed at Vice President Dick Cheney (see below), and former Federal Reserve Chairman Alan Greenspan for declaring Monday that a "recession" was possible later this year.
Our own "whodunit" contribution would point to the mortgage-related markets, which sold off nearly as much as stocks. This reflects the cracks appearing in the housing credit markets, especially in subprime loans but with some damage up the income chain as well. Along with emerging markets such as China, this is where the excesses have been most notable. And when Adam Smith does a house cleaning like yesterday's, he sweeps the dirtiest corners first.
... The bigger risks continue to be political and monetary. The era of tax cutting has ended with the arrival of the Democratic Congress, and other policy errors are possible (see further below). As for the Fed, we'd feel better if current Chairman Ben Bernanke had been running a tighter monetary policy for the last year; it might have left him with more policy room if the economy does turn sour. As it is, any easing now runs the risk of a dollar rout, which could lead to an even larger loss of confidence and selloff.
(Excerpt) Read more at online.wsj.com ...
In 1987 the market was about 1900 and it sold off 287 about 15%.
Yesterday the market was 12700 and it sold off 500 about 3%.
Chicken little the sky is falling the sky is falling the sky is falling....ya da, ya da ,ya da........
bttt
rIGHT. aND WE'RE UP 105 POINTS NOW.
Sorry, my "Caps Lock" was on. Plus, by the time I posted we were up 125 points.
Yesterday offered a nice bargain for those of us who buy in the dips.
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