Posted on 09/16/2001 4:38:45 PM PDT by RCW2001
Fed to prop up Wall St A secretive committee - the Working Group on Financial Markets, dubbed 'the plunge protection team' - includes bankers as well as representatives of the New York Stock Exchange, Nasdaq and the US Treasury. It is ready to co-ordinate intervention by the Federal Reserve on an unprecedented scale. The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers if there is evidence of panic selling in the wake of last week's carnage. The authorities are determined to avert a worldwide slump in share prices like the crashes of 1987 or 1929. Investment banks and their broking subsidiaries are to block short-selling by speculators and hedge funds by making it hard for them to obtain prices on favourable terms. 'Everyone is eager to avoid "contagion", where prices fall rapidly as investors react lemming-like to a falling index,' said one banker. In addition, US regulators are prepared to ease rules that prevent companies from buying their own stock. The 'plunge protection team' was established by a special executive order issued by former President Ronald Reagan in 1989. It is known to include senior bankers at leading Wall Street institutions such as Merrill Lynch and Goldman Sachs. It has acted before, in the early Nineties and during the 1998 LTCM hedge fund crisis. Whether coordinated action by the US authorities and banking institutions will be sufficient to avert a large-scale sell-off on Wall Street this week remains to be seen. Tony Jackson, director of UK equity strategy at investment bank ING Barings, believes there may be an emotional tide of support for Wall Street this week, but that it will be shortlived. He said: 'Some people are talking about a "patriotic rally" that could lift the Dow by 1,000 points on reopening. I don't think it will be that high, but it will certainly go up, perhaps several hundred points. 'But long term, the trend will still be down, perhaps 10 per cent from where it opens. Many companies will cut earnings forecasts now.' Khuram Chaudhry, equity strategist at Merrill Lynch, believes that Wall Street could fall by as much as 10 per cent. 'You have to remember that things did not look that good before the attack on the World Trade Centre. There were already signs that American consumer confidence was deteriorating. I don't think people are now going to rush out to take foreign holidays or crowd the shopping malls.' John Llewellyn, economist at Lehman Brothers, is worried that markets may prove disorderly, despite the best efforts of the authorities. 'There is a degree of synchronisation between the three major economies. The US and Europe are weaken ing in tandem, while Japan is in the doldrums. In the early Nineties Japan was in better shape. The global economy may end up in a worse condition than 10 years ago.' But there are optimists too. Sonja Gibbs, chief equity strategist at Nomura International, believes 'the economic fundamentals will take a turn for the better in 2002'. Robin Aspinall, equity analyst at broker Teather and Greenwood said: 'The Americans will want to show that the stars and stripes still fly over Wall Street.'
Shadowy committee ready to pour billions into stock markets to avert shares meltdown
Special report: Terrorism in the US
Richard Wachman and Jamie Doward
Sunday September 16, 2001
The Observer
The US Federal Reserve and Wall Street's powerful investment banks are preparing to spend billions of dollars to support the US stock market, which opens this week for the first time since last Tuesday's terrorist attacks on New York and Washington.
BTW, I just saw, a few minutes ago, that the Japanese market was up over 4%. Can anyone confirm?
We have had no sell calls, I have 725 clients.
The Mutual Fund industry was largely in cash before this, they may have some patriotic sense and do some buying. I noticed that Ame. Funds ICA had a 20% cash position due in December, maybe they put it to work? $50 billion fund, $10 billion of cash...
Furthermore, Van Guard and Invesco, both HUGE fund families reported EXTREMELY low call volumes and even less calls for selling. The stock market was already depressed, not as much downside as there may have been a year or more ago.
God bless you! I'm down $100,000 since January......and not as a result of "risky or high return" investments... I invest in America! I believe in America! .......and I will invest my last f__kin penny in America.
All...please buy.....do not panic, do not sell...you will greatly benefit....in the long run!
God Bless America!
With all due respect, if you are a "professional" Financial Consultant, you should know that Vanguard is one word. Makes me wonder how long you have been in the business.
No prognosticator knows what will happen. While historically, we may expect a one day to one-month downtick, typically, historically, out of seven (7) catastrphic events occuring over more than 100 years, including the JFK Assassination, U.S. equity markets recover from catastrophic events in anywhere from 1 day (at the onseet of the US entry into WWII following Pearl Harbor & after the JFK Assassination, the market was up afer ONE DAY) to 1 month (the steepest drop was in October '87 when the market dropped about 34% and had FULLY recovered 63 days later. The MEDIAN drop was about 6.3% and the mean drop was about 7.3% because Oct. '87 scewed the sample, with a disproportionately large drop.
Anyone arrogant or foolish enough to make a prediction is a fool.
Such a person is suffering from
"the juxtaposition of two parts of his anatomy."
(P.S. Recounting history is NOT (REPEAT not!) prognostication, so I am exempting myself from such foolhardiness!)
No prognosticator knows what will happen. While historically, we may expect a one day to one-month downtick, typically, historically, out of seven (7) catastrphic events occuring over more than 100 years, including the JFK Assassination, U.S. equity markets recover from catastrophic events in anywhere from 1 day (at the onseet of the US entry into WWII following Pearl Harbor & after the JFK Assassination, the market was up afer ONE DAY) to 1 month (the steepest drop was in October '87 when the market dropped about 34% and had FULLY recovered 63 days later. The MEDIAN drop was about 6.3% and the mean drop was about 7.3% because Oct. '87 scewed the sample, with a disproportionately large drop.
Anyone arrogant or foolish enough to make a prediction is a fool.
Such a person is suffering from
"the juxtaposition of two parts of his anatomy."
(P.S. Recounting history is NOT (REPEAT not!) prognostication, so I am exempting myself from such foolhardiness!)
It hasn't opened yet, according to Yahoo.
I guess I haven't been paying attention, but I didn't realize that Welch was such a Commie. Explains a lot. Buffett was a breath of fresh air tonight.
All this touchy feely crap about buying? Right.
There will be the typical run on gold.
Given the fact that we will need to fund a war, they can use my tax cut for that.
Well, friend, if you're selling short you're going to lose your ass.
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