Skip to comments.Stocks nosedive after Fed's gloomy assessment
Posted on 09/22/2011 4:47:50 AM PDT by mylife
The U.S. Federal Reserve's tacit acknowledgment that America's economic slowdown is likely to persist for quite a while sent global stock markets skidding Thursday as investors brushed off the central bank's efforts to spur growth and focused instead on its gloomy assessment. Oil tumbled too but the dollar held its own against the euro, which has been weighed down in recent weeks over concerns that Greece might go bankrupt. Hong Kong's Hang Seng led stock markets lower, with a near 5 percent dive.
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Euro Markets are down 5%
More Choke and Change
Futures down 229 right now.
I dont know, but things sure are ugly.
Everything is down.
Fantastic buys in all markets.
They don’t blow a horn when the bottom is reached, so you’ll have to judge for yourself.
Perhaps more important the U.S. 10 yr. bond, which closed at a new low yesterday, of 1.88%, is now trading at 1.79%.
Was 2.2% 2 months ago!
Ever the optimist eh?
The twist is working!
Pretty sure this qualifies as falling from the sidewalk, into the gutter.
(assumes a prone, passed out drunk posture, as a starting point)
(it may not hurt much, but you can’t get much lower)
Buy low, sell high, right? The only question is how low is low.
I’ll take 7-8 times trailing earnings with a 5-6% dividend. Don’t see that yet.
Here’s hoping the trashing of paper metal prices continues until my next payday. Maybe I can get some silver at 36/oz.
I used to wonder if the Fed could ever get more stupid. But they never seem to disappoint. Taking long rates down just digs a deeper hole. We are never ever ever going to pay back those 10 years (never mind 30 years) with paper worth anything close to today’s. The buyers will be lucky if we simply don’t default. So this bubble in long bond prices will certainly pop and the bigger the bubble the worse will be the effects of the pop.
twist of the knife.
Does anyone have a record of stock performance on days that TOTUS delivers speeches?
Wall Street expectations were not met as they expected the Fed might offer a glimmer of a hint they might fire up the printing press with another round of QE3 pump and dump to move stocks up. The Feds unwritten mission has always been to push up stocks and the hxll with the dollar. Problem is the stock market is not now and never has been 100% correlated and representative of the economy and the fundamentals favor the bear not the bull. The market is about expectations.
It was baby boomer demographics and new IRA/401K retirement plans that pushed the stock market up during the 80s and 90s and since then, it has essentially been dead money for buy and holders. The overhead is about demographics. Americans that are now in or approaching retirement want yield and secure returns and are not as interested in a Ponzi scheme or playing musical chairs where as demonstrated repeatedly, the casino and insiders control the music.
The dream of Wall St insiders (after they got IRAs and 401Ks) has been to capture the cash flow and a cut from Social Security taxes, and that inflow to market will offset the downward bias from boomers liquidating equity to live on. It will transfer from a government Ponzi scheme to a Wall St Ponzi scheme. Different players same outcome except Wall St banks will get their greedy corrupt paws on a significant cut just like the Fed Reserve.
By reducing savings rates to almost zero the Fed is pushing money towards their NYC money people cronies and limiting options on interest returns for average savers. Buy into the stock market at your own risk. Expect another major hit before the end of the year exacerbated by declining global earnings and US tax selling. Nothing will be fixed in DC this year or even later because politicians are inherently corrupt and interested only in getting reelected and helping those who feed them - big donors, and not at all interested in fixing our nation.
It seems almost everyone in a position of leadership in this nation is trying to push the coming disaster on beyond their time of service. But, as I wrote our governor when he declined to run for president due to “family issues”, when this blows, all their families are going down right along with mine.
But with negative real interest rates, and the market still overinflated, what’s a saver to do?
Buy physical silver and gold, as well as making the usual domestic preparations.
Wish I knew. I’m retired and facing the same dilemma as everyone. I’ve been involved with the markets since the early 70s.
Been bearish on the financial markets for some time due to 1- US boomer demographics (i.e IRAs/401Ks hoping to retire boomers drove it up, and retired boomers will crash it) and, 2- a belief that the system is being gamed at all levels from banks to politics (both aisles) to CEOs. Crony capitalism doesn’t work. We need capitalists and business taking risk and they alone paying the price if they fail (not taxpayers). Kickbacks and govt connections are subsidizing every level of business.
We are still in a period of fraudulent accounting driven by excessive greed from those at the top. Corporate CEO compensation is tied to manipulable short term changes in stock prices. To be honest my market skepticism began when Ken Lay and others were able to easily scam the system. Except for a small 10-15% allocation I was out of the financial equity markets even before 2008.
Diversification is a must in asset investment classes including prec metals and real estate, and among those institutions where you hold your nest egg. i.e. Not only have many different colored eggs but keep them in different refrigerators. Twenty years ago the market “gurus” were claiming 10% annually could be attainable into the future with minimal risk. They lied. Everything we are told by the financial media is to benefit a certain segment and it is generally not Joe average. The Central Banks as usual are working against you.
Today we need to be in defensive mode and scale back everything from expected returns to expenditures and expect minimal returns on fixed income. If you stretch for yield by increasing risk you risk losing it all at these levels. This gradual perception that consumers must scale back in demand is killing the economy too and feeding into the hunkering in psyche.
But this is about catch up time from the debt driven excessive bubble good times during the 80s, 90s and some of 2000s. The credit card was an illusion of wealth that the US government and consumers used and now the debt is coming due. We used it for foolish wars and to cover up for the fact that Congress gave away our economy to China, etc.
Take care and at some point we’ll look forward to good times. Sorry for my blabbering. What are your thoughts?
...twisting in the breeze.........
I’ve got 2 banks battling for my Refi and when I asked them what today’s rates were, given the 11 basis point drop in the 10 year bond, they said “no change from yesterday”!!
A very interesting take on IRA/401Ks.
You’re doing the right thing. Borrowing is free right now.
I agree with you completely.
Regarding the market, I think there’s been a side effect to everyone getting into it too. I call it the socialization of business. Back when few played the market, a greater percentage of investors were more savvy. They were closer to the facts of each business, and more likely to vote their shares.
That situation kept a bit of a lid on business in terms of corporate governance.
But now that all us “great unwahsed” are “investors”, we are more ripe for a good scamming. Hence corporate governance acts in colusion with the investment industry, with us “investors” left as the suckers at the table.
Netiher the CEOS nor their boards have any real skin in the game. The practice of using grants and options as incentives is laughable. Giving those away as freely as they are given does not incur any real personal risk on the recipient.
Bottom line? The market is done as a means of actual “investment” in any capitalistic sense. Now it’s a gambling game for fools; trying t forsee the next handout, but all the while playing without the whole deck of cards.
Back in reality though, we are still faced with a “what now?” situation.
Returns? What are those? :) The real interest rate has been negative for a while now. Recently, even the nominal rate has gone negative from time to time.
My wife is in accounting, as are a lot of her friedns. Just this weekend she told me of one friend who parked corporate money in T bills selling at a premium which was higher than the return. Literally a negative reutrn. A storage fee, if you will.
I read the other day some banks were offering negative interest on selected large deposits too. They simply don’t want the money, and are essentially charging a storage fee or handling charge.
In my opinion, the economy is at as close to a standstill as I’ve ever seen in my life.
If there’s a bright side, I guess it’s this: The major brake on business right now is uncertainty regarding the government. Any change on that front (and no, I don’t think we’ll ever actually turn right anymore, but we may well return to our more palatable, mainstream leftist slide) will probably relase some amount of pent up demand.
Here’s hoping we live to see it!