Cue the plague of locusts and the rain of frogs.
The market has had just about everything else thrown at it today. And at the close the Standard & Poor’s 500 has held at its 20-day moving average of 1195 or so.
Want a list of what hit the fan today?
- The leaders of the world’s 20 biggest economies failed to reach agreement on how to fix the global economy.
- Rumors swirled through China that yesterday’s inflation number would force the People’s Bank to raise interest rates again—as early as this weekend.
- A euro debt crisis in Ireland, Portugal, and Greece that refuses to take comfort from anything European politicians promise.
- Yet more strength in the dollar.
All that set everybody to profit taking.
Gold fell. Copper fell, Sugar prices saw their biggest drop in 30 years.
Stock markets in China, the United States, Europe, Brazil—well just about everywhere fell.
What interests me is that despite a plague of bad news of Biblical proportions, the decline in everything has been orderly. At the close the S&P was down 1.18%. The NASDAQ Composite Index was down 1.46%. The Dow Jones Industrial Average is off .8%
And those are among the deepest losses on global stock markets.
This should remind us the biggest force in the global financial markets isn’t news good or bad but that flood of money coming from the Federal Reserve and from China’s monetary policy.
Paulson got out of US banks including GS. I started selling US banks about a month ago and 2 or 3 weeks ago, I was completely out of US banks.
http://www.bloomberg.com/news/2010-11-16/paulson-trims-bank-of-america-sells-entire-goldman-sachs-stake-in-quarter.html
samba, as the rate of interest Ireland has got to pay on its new issues, the value of existing Irish bonds goes down: the bond holders do not lose on interests but on their capital, and can only hope the country will not default.
Hi Jim, dont you think that the drops in Gold, silver and Sugar were associated with the raising of Margin requirements by the IntercontinentalExchange?
https://www.theice.com/publicdocs/clear_us/notices/10-148_%20MarginChanges.pdf
Would love to hear more thoughts on Europe, CDS spreads are up a lot, however what does that really mean? CDS werent even around 15 years ago and since Ireland is fully funded for the next six months, i’m really not suire what to make of this
Can wide CDS by itself cause Ireland to need a bailout? As long as panic selling doesnt happen amongst Irish bondholders as a result of widening spreads, i cant see how it would
And in the it’s-about-time category, INTEL finally did something good for shareholders! And the stock reacted nicely.
Jim,
On Nov. 1 you mentioned buying BBD on a dip if it got to $20. It looks like it closed today at $20.89 and the intra day low was $20.67. Would you recommend putting in a buy at $20 for Monday in case it dips down to $20?
Jim – that last sentence is pretty telling. I’ve been learning a lot reading your astute analysis and clear explanations. Still have a question though: How much of a factor are hedge fund trading and large programmed trades like the one computerized trade that plunged the Dow down into the black hole in a matter of minutes earlier this year? Seems to me these factors rank up there in influence as well.