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TOPWRAP 3-European data grim, Toyota to halt output in Japan - Reuters
Obama Said to Favor $775 Billion for Stimulus Plan - Bloomberg
Italy Not Concerned About Russia-Ukraine Gas Dispute - CNNMoney.com
European Inflation Rate Drops to Lowest in Two Years - Bloomberg
Bid to Revoke Madoff’s Bail Cites His Gifts - New York Times
![Freakonomics[Revised and Expanded]](/images/21xRHBWYYML.jpg "Freakonomics[Revised and Expanded]")
“The money markets have completely broken down, with no trading taking place at all. There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.'’
-Christoph Rieger, a fixed- income strategist, Dresdner Kleinwort.
Courtesy: Bloomberg
$700 Billion Rejection = 777 points down in DOW
The picture says it all..
Some of the headlines that are rocking the Wall street today
On the lighter side
Sep 18 - Update to our yesterday’s posting.
I guess I nailed this one. I called the short term bottom yesterday. It turned out to be true. Both Longs and Shorts battled out today in this historic trading day, which only made the investors on the sidelines even more nervous. In the final hours of the day, market breadth turned extremely positive pushing all major indices 4-5% greener and higher. Volatility Index, VIX surpassed 42 to end at 34. Usually a spike in VIX followed by a reversal means a short term bottom is in. It will be interesting to see if market actions today will initiate a short term bear market rally.
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Sep 17 - Wall Street plunged again in a crisis of confidence Wednesday as anxieties about the financial system still ran high after the government’s bailout of insurer American International Group Inc. The Dow Jones industrial average dropped about 450 points, and investors seeking the safety of hard assets and government debt sent gold, oil and short-term Treasurys soaring…. » read more
I can’t believe I am saying this, but is this a near bottom? VIX touched Jan, mid March lows again.
The much anticipated Google Android phone will be released next week. T-Mobile will be the first company to announce a mobile phone with Android OS platform.
Read more on The Registrar http://www.theregister.co.uk/2008/09/17/android_launch_next_week/
J.P. Morgan Chase & Co. is seen as a likely suitor for Washington Mutual, which is staggering under huge mortgage losses.
More to come soon
http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=452146&in_page_id=3&ito=1565
Executives from AIG, bankers and Treasury and Federal Reserve officials are meeting today on the company’s situation at the New York Fed. A number of options are under being discussed to fill a shortfall of $75 billion to $100 billion in funding, one of the people said.
On my way to a client meeting in Times Square, I passed a bunch of people gathered around something. I peeked to see what was happening. There was the picture of the infamous Annotated Fuld, the guy who brought down the venerable investment bank Lehman Brothers.
The Annotated Dick Fuld
Barclays has circled back to pick up the pieces of Lehman Brothers Holdings, agreeing to acquire business operations and real estate holdings from the bankrupt investment bank for about $1.75 billion.
The British bank will buy Lehman’s North American investment banking and capital markets operations, with a 10,000-strong staff, for the fire-sale price of $250 million, Barclays said in a statement Tuesday.
http://www.forbes.com/2008/09/16/barclays-lehman-update-markets-equity-cx_tw_0916markets52.html?partner=yahootix
We at VitalTrends.info applaud the FED decision in leaving the Fed Funds rates intact at 2 percent.
The U.S. central bank’s unanimous decision leaves the interbank overnight federal funds rate at 2 percent, where it has been since April. It said “downside risks to growth and the upside risks to inflation are both of significant concern,” surprising many in financial markets who had expected the Fed to signal greater worries on growth.
http://biz.yahoo.com/rb/080916/fed_rates_decision.html
Hasn’t our Government done enough to amplify the current credit crisis? I just read on Marketwatch.com that market increased the bets on a rate cut tomorrow when Federal Reserve board members meet. This will be the stupidest thing to do in this ever-sensitive market environment. I strongly believe that this is not a prudent way to resolve the current situation. Politicians and Govt officials alike are really good in putting band-aids (short term solutions) to issues. This is more than likely not going to work in the longer term. Japan was a case in point. In the midst of a post-real estate bubble burst in Japan in the mid 80s, Japan cut the rates aggressively which they thought at that time will pull the economy back from the doldrums. And we learned from the history that was a huge mistake. Japan has been in Deflationary mode in the last decade or so.
Interest-rate futures have jumped as the market showed signs it expects the Federal Reserve to reduce its benchmark rate at its meeting to 1.75% from 2%.
If we want a full recovery, Fed or Treasury should avoid intervening the markets on a daily basis. Let the market figure it out. It will take time but eventually things will return to norm. We have accumulated ton of toxic debts in the last few years. It can’t be cleared out over night. Fed’s actions will only guarantee to make the markets more volatile, reduces further confidence in managing this global crisis and in our free market capitalism.
Currently, Dow and S&P futures are indicating a much lower opening tomorrow. If Fed cuts the rates before the bell, buckle-up we are in for another wild ride.
Bloomberg.com (c) Futures Data
Finally WSJ nailed it.
Of the five major independent investment banks that existed a year ago, only two — Goldman Sachs Group Inc. and Morgan Stanley — remain standing. Two others, Merrill and Bear Stearns, have been acquired by big deposit-taking institutions, Bank of America Corp. and J.P. Morgan Chase & Co. Other giant commercial-banking players, such as Wells Fargo & Co. in the U.S., as well as Germany’s Deutsche Bank AG and Spain’s Banco Santander SA, have emerged as some of the most powerful players in an industry that is likely to be safer but less lucrative for shareholders.
Banks are heading “back to basics — to, if you like, the core purpose of the system with less bells and whistles,” says Douglas Flint, finance chief at HSBC Holdings PLC and co-chair of the Counterparty Risk Management Policy Group, a task force of finance executives working on a framework to prevent systemic financial shocks. “There is a recognition that when the dust settles…the construct of the industry will be different.”
http://online.wsj.com/article/SB122151242235938477.html?mod=yahoo_hs&ru=yahoo
Here is our major Financial stocks closed today
Market Summary from Marketwatch(c)
Lehman Brothers -95%
Bank of America -21.31%
Merrill Lynch +0.06%
American Insurance Group -60.79%
Washington Mutual -26.74%
Citigroup -15.14%
Goldman Sachs -18.71%
FINANCIAL SEL SPDR -9.74%
NYSE experienced record volume 7.9B shares. Dow closed at 10917 just shy of 186 points from 1 year low. I wouldn’t be surprised if we hit that tomorrow?
VIX jumped up to 32 above mid-July levels.
Here are some interesting reads for today
1) NY allows AIG to borrow from subsidiaries.
2) Feds ask Goldman, JPMorgan Chase to lead AIG lending: report.
3) S&P Downgrades Washington Mutual Bank rating to BBB-/A-3 from BBB/A-2. Outlook negative.
4) EA pulls out of Take-two takeover bid.
5) Lehman, Bear Sterns Financial woes will affect New York Real Estate market.
More to come soon…
I have been following Roubini since he predicted the housing & credit crisis 2 years ago. Here are some interesting interviews of him on Yahoo Finance Tech Ticker.
I am apolitical. But I thought this picture was funny and at the same time true. Thanks to my friend John for sending over this.
Read and laugh at this idiot
September 11, 2008, 3:18 pm
Why Lehman Brothers Is Not Bear Stearns
Posted by David Gaffen
Richard Fuld Rob Curran reports:
Despite similarities in equity and credit markets’ perceptions of Lehman Brothers Holdings this week with views of Bear Stearns in its crisis of confidence during the week ended March 14, there are some glimmers of hope for Lehman in the differences.
http://blogs.wsj.com/marketbeat/2008/09/11/why-lehman-brothers-is-not-bear-stearns/