Posted on 02/29/2008 3:21:52 PM PST by TigerLikesRooster
Stocks slide as investors scramble for safety
By Michael Mackenzie and Saskia Scholtes in New York
Published: February 29 2008 19:08 | Last updated: February 29 2008 21:10
Stock prices and bond yields tumbled on Friday as fears about the stability of the financial system sent investors scrambling for the safety of government debt.
The yield on the two-year Treasury note dropped to its lowest level in nearly four years, while the S&P 500 stock index fell 2.7 per cent and the Dow Jones Industrial Average lost 2.5 per cent.
Traders said sharp falls in the prices of mortgage bonds and municipal bonds this week led to margin calls for some investors, exacerbating volatility as traders closed their books for the month and several leading investment banks marked the end of their fiscal first quarter.
“No question, margin calls are driving prices lower and there is more to come,” said Tom di Galoma, head of Treasury trading at Jefferies & Co.
Investors also reacted to dismal US economic data, continuing worries about credit insurers, a UBS report predicting that losses from the credit squeeze could reach $600bn and $15bn in writedowns from insurer AIG after the close of trading on Thursday.
“We are in the middle of a financial crisis,” said Larry Kantor, head of research at Barclays Capital.
The search for safety sent the yield on the two-year Treasury from 2.12 per cent on Monday to 1.64 per cent on Friday – its lowest level since April 2004.
The difference between the yield on the three-month Treasury bill and three-month Libor, the rate banks charge each other, was about 1.2 percentage points. That is about five times its normal spread.
Investors cut “carry” trades that involve borrowing in lower-yielding currencies to invest in higher-yielding currencies, sending the dollar to less than Y104, a four-year low against the Japanese currency. Gold rose to nearly $1,000 an ounce.
“The credit markets do appear to be in the throes of another leg down into the abyss,” said Bill O’Donnell, UBS strategist.
There was good news for one credit insurer as Wilbur Ross, the distressed situations specialist, said he would invest as much as $1bn into Assured Guaranty.
Say goodbye to the yen carry trade and hello to the dollar carry trade.
I blame .gov
and propagandists who claim the elephant that’s in the room isn’t there.
Oh but the next rate cut to 1.0% will kiss and make it all better. I mean, the current borrowing rate of 3.0% is just so punitive. /sarc
Fine. Meanwhile, the rest of us will clean up. Good luck with those wise investments!
Sorry, but your snake oil selling ain’t working.
This market isn't for you. Get out and get out NOW! Sell everything. You just can't hack it. You simply don't have the nads. Pick something you can rely on - like BINGO. Again, good luck.
On the corporate side, he commented that the so-called housing bubble has resulted in a “credit crunch” that is having a significant impact on the national economy that is now affecting insurance companies.
“If you look at the domino effects of that, I think that’s going to be severe,” Studdert said.
He also said the nation’s ever-growing indebtedness to China is a disastrous situation waiting to happen unless its government is able to develop policies to help the country become more self-reliant.
Among the biggest threats to the U.S. is China’s exponential growth that he said has put that country in a position to replace America as the world’s foremost economic and industrial power. He stated that our “friends” in the Middle East are also of concern.
“Saudi Arabia has the potential to cause us an overnight economic calamity because our economy is literally dependent upon their supply of oil to us,” he said.
http://deseretnews.com/article/1,5143,695256995,00.html
I was thinking more on the lines of my local Native American Casino......or the lottery.......
I wish I had invested in negative opinions - like yours. I would've made a MINT!
On the other hand, I can continue investing in what works and make a MINT!
Roll them dice...
Sorry......no sale. Keep your used car.
Glenn Beck: Don’t follow herd on the economy
....following the herd is fine until they all run off the side of a cliff together.
Less than a year ago, a recession was the last thing on anyone’s mind. In fact, over the summer, as I was questioning the conventional wisdom, I read an article on my television show that quoted a financial expert as saying, “It is the strongest global market that we’ve seen in the history of measuring these things.”
That’s when I realized how fast the herd was approaching the cliff....
http://www.cnn.com/2008/US/02/28/beck.commentary/index.html
Great post. Then again, I like Glenn Beck anyway and think he has reasonable opinions.
It has been frustrating. Back in October I was almost screaming at the TV about the certain coming downturn in the economy due to the subprime mess and liquidity crisis. All the while — October, November, December — I had to endure reports that subprime was contained, the global economy would keep the USA out of recession, odds of recession were low, the banks were healty, housing was not in terrible shape — and worst of all — the consumer will continue their shopping binge no matter what happens.
Just infuriating.
Time for a quick lesson. The market isn't the economy. Lesson over.
Quick quiz - this is a 50/50 shot - is the market the economy? If you answered "YES", you have failed miserably. You don't deserve to be in this market. In fact, the faster you get out, the quicker your bitchin' will stop. Please, stop the bitchin'.
You have utterly failed to convince me that the elephant isn’t in the room.
And you will utterly continue to fail to sell me your used cars, or to purchase any snake oil.
: )
What is your definition of a 'USA recession'?
More than infuriating, actually, as they were all lies, and they knew they were telling lies then as now. It's disgusting, isn't it?
I can't emphasis enough - this market isn't for you. You have no idea how to invest. That is not my problem.
Sorry....you’re whining and crying still hasn’t convinced me that the elephant isn’t in the room, to buy from you a used car, or that snake oil.
And neither has the likes of Bush’s disclaimers, or Bernanke’s, or their cronies....as you do, they sound like the “utter geniuses” who made almost identical statements prior to the Great Crash.
You need to get out - and get out NOW! Otherwise, your paranoia will get the best of you. The rest of us will do just fine despite your dire predictions.
Thanks, but I think I’ll heed the advice of some others for whom I have respect.
But carry on!
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