Is the stock market going to tank?

[Spats]

It is rather amazing how its held up so far. I would be interested to know the breakdown of 401K money that just sits there, vs foreign cash vs big players/gov trying to keep it from flying apart.

I don't see the fundementals other than a printing press.

With the printing presses running full time and no money going into the frozen debt market, such liquidity as exists is all going into stocks and hard assets.

Also, it's the classic end stages of a bull market -- all the money is piling into the remaining few companies that still have a good growth story (GOOG, etc.), which keeps the indices up, but there is little breadth to the market. Most people and funds aren't even matching the indices because of this.

401Ks are tough, and people are going to lose a lot of their savings this year because they have no options but to go long or sit in cash that's being inflated away. At least with an IRA you've got plenty of choices even if you can't short or buy options, such as commodity tracking ETFs and short ETFs.

[PTracy P1]

im bored.

[Tourette Dude]

Maybe the Fed wont drop the rate again, with the yesterday's and today's market drops even with the hint of interest rate cuts. Might be too little reward market-wise at the expense of inflation/value of the dollar? If the market responded I think theyd go ahead with another cut- but why bother at this point?

Good point. Its seems wise to leave them as high as possible for now to support the dollar and in case something else were to happen(hedgefund implosion, CDS maket collapse, terrorist attack/oil spike etc). They need to leave as much back up as possible.

I would not want to be Bernanke, he is caught in a trap. I'm sure this whole episode will be taught in MBA programs in the future.

[Tourette Dude]

im bored.

Tracy please tell me that a picture of you. I'm willing to ignore the words on the sticker if it is!

[Tourette Dude]

With the printing presses running full time and no money going into the frozen debt market, such liquidity as exists is all going into stocks and hard assets.

Also, it's the classic end stages of a bull market -- all the money is piling into the remaining few companies that still have a good growth story (GOOG, etc.), which keeps the indices up, but there is little breadth to the market. Most people and funds aren't even matching the indices because of this.

401Ks are tough, and people are going to lose a lot of their savings this year because they have no options but to go long or sit in cash that's being inflated away. At least with an IRA you've got plenty of choices even if you can't short or buy options, such as commodity tracking ETFs and short ETFs.

Yea surprise, surprise they don't offer short funds in 401K plans, huh! Its a brilliant game.

[PTracy P1]

Tracy please tell me that a picture of you. I'm willing to ignore the words on the sticker if it is!

nope. ima dood.

Found it surfing porn.

i am bored shitless. time to drink.

[Tourette Dude]

Oh shit!!

[Toadman]

Wondered when this thread would get dredged up again. I remember watching a Mad Money episode with Cramer sometime in December and he was all bullish. At the time I thought he was crazy. Today , I KNOW he's crazy. Sure glad I moved some assets out of the market a few months back. Sucks for folks who just retired though.

[4matic]

With the printing presses running full time and no money going into the frozen debt market, such liquidity as exists is all going into stocks and hard assets.

Also, it's the classic end stages of a bull market -- all the money is piling into the remaining few companies that still have a good growth story (GOOG, etc.), which keeps the indices up, but there is little breadth to the market. Most people and funds aren't even matching the indices because of this.

401Ks are tough, and people are going to lose a lot of their savings this year because they have no options but to go long or sit in cash that's being inflated away. At least with an IRA you've got plenty of choices even if you can't short or buy options, such as commodity tracking ETFs and short ETFs.

Libertarians generally have limited financial assets other than gold and cash so they hope for asset deflation to get back in the game.

As far the market goes..

Is it the second or third test of of the August low? That's important..

The biggest positive is that we are still at or above the August low and pessimism is much higher.

Another 10% down from here buy growth.

[Spats]

Libertarians generally have limited financial assets other than gold and cash so they hope for asset deflation to get back in the game.

First, I'm not a libertarian. I support RP because I want to end the war in Iraq, end the "war on drugs", end illegal spying on Americans and the destruction of the rest of the Bill of Rights, and I want a functioning economy instead of total financial collapse due to Social Security and Medicare commitments we can't possibly meet. None of the other candidates are willing to support any of these things, and I'm not willing to trade them for vague handwaving at social programs which, however beneficial and well-intentioned, are completely moot because we have no money for them anyway.

Second, I'm not hoping for asset deflation, or anything else. I want a functioning US government and economy, unlike the neo-cons that have run this country since Reagan, and whose aim is to return this country to a feudal system run by the giant corporations who are their major campaign contributors, destroying the middle class in the process.

However, the market doesn't care what I want. If you invest based on hope you will lose all your money. I invest what little I have based on my best estimation of reality.

[Tuckerman]

Nothing a little tax rebate can't fix.

[CUBUCK]

Nothing a little tax rebate can't fix.

I would rather they use this opportunity to make the Bush tax cuts permanent or even eliminate the long term capital gains tax

[Speedfreak]

eliminate the long term capital gains tax

Bingo.


7890

[Benny Profane]

I would rather they use this opportunity to make the Bush tax cuts permanent or even eliminate the long term capital gains tax

Sure, why not. Didya happen to hear that we're fighting an expensive war? First time in our history we've cut taxes and sent an army off to fight.

[CUBUCK]

Sure, why not. Didya happen to hear that we're fighting an expensive war? First time in our history we've cut taxes and sent an army off to fight.

Give me a break. Corporate tax revenue would go through the roof if the capital gains tax was eliminated. Besides there is plenty of room to cut spending at the federal level and make up the difference anyway.

[Stu Gotz]

Give me a break. Corporate tax revenue would go through the roof if the capital gains tax was eliminated. Besides there is plenty of room to cut spending at the federal level and make up the difference anyway.

Tax cuts never pay for themselves. And the federal government will never shrink.

[Benny Profane]

Besides there is plenty of room to cut spending at the federal level

Sure, yeah, let's go back to a pre FDR world. No safety nets at all, dirt roads, only the rich are educated. That will help pay for Blackwater et all.

[Toadman]

Nothing a little tax rebate can't fix.

All GWB had to do was open his mouth and the market dropped. And a tax rebate isn't even a band-aid for a heart attack victim.

[Tourette Dude]

Give me a break. Corporate tax revenue would go through the roof if the capital gains tax was eliminated. Besides there is plenty of room to cut spending at the federal level and make up the difference anyway.

Cutting capital gains isn't going to fix this one.

Still going with trickle down, huh. Capital gains cuts will just further the economic stratification and fund the shifting of production oversees.

And this IS the only war we have been in while simultaneously cutting taxes. Notice the dollar devaluation. It will only accelerate import price inflation and further eat into the US populace pocket.(And its going to take a loooong time to rebuild US manufacturing- after the dollar has devauled enough- to encourage US production of goods for export.)

Yea that will help things.

[skibuminwyo]

i thought we learned earlier in our history that trickle down/supply side economics did not work? hmmm maybe i was just too hung over for economics classes i took in college. as much as i don't want to pay, we can't cut anymore taxes and afford to live the way we do. it's been pointed out. we are in a war, and not raising taxes. what the hell do we think is gonna happen. it's alright though. if we just keep telling ourselves that.

[WICS]

Stocks Plummet in Germany, Hong Kong, India, Brazil in Rout

By Sarah Thompson

Jan. 21 (Bloomberg) -- Stocks plunged in Germany, Hong Kong, India and Brazil, and U.S. index futures dropped on mounting speculation that the global economy is slowing and company defaults will rise.

Europe's Dow Jones Stoxx 600 Index fell the most since the Sept. 11 terrorist attacks and sank into a bear market, as Allianz SE and BNP Paribas SA slid. Hong Kong's Hang Seng Index had its biggest drop in six years after BNP Paribas said Bank of China Ltd. may write down overseas securities by $4.8 billion because of losses from U.S. subprime mortgages. Citigroup Inc. retreated in Frankfurt.

The MSCI World Index slipped 2.4 percent to 1,402.75 at 2:44 p.m. in London, extending its decline from an Oct. 31 record to 17 percent. India's Sensitive Index lost the most since 2004, while Germany's DAX slid the most since March 2003. Futures on the Standard & Poor's 500 Index sank 3.4 percent. Trading in the U.S. is closed today for Martin Luther King Day.

``It's the worst I've ever seen,'' said Johan Stein, who helps manage the equivalent of about $14 billion at Nordea Asset Management in Stockholm. ``The financial system is in terrible shape, and no one knows where this will end.''

Today's declines follow the worst week for U.S. stocks in five years after President George W. Bush's $150 billion plan to revive the economy and expectations of interest-rate cuts failed to allay recession concerns.

The risk of European companies defaulting soared to a record today on speculation credit-rating cuts at bond insurers including Ambac Financial Group Inc. may trigger forced asset sales. European Central Bank council member Nout Wellink said economic growth in the region may slow more than policy makers had expected.

Market Crisis

``This is a stock-market crisis,'' said Alberto Roldan, head of research at Inverseguros SVB in Madrid. ``Investors believe that neither a government package nor a huge rate cut is going to help evade a recession in the U.S.''

White House spokesman Tony Fratto said in Washington today the government doesn't comment on daily market moves.

``We're confident that the global economy will continue to grow, and that the U.S. economy will return to stronger growth,'' Fratto said in an e-mailed message.

The Stoxx 600 slid 4.1 percent, extending its drop from a 6 1/2-year high on June 1 to 22 percent. A decline of more than 20 percent is the common definition of a bear market. The gauge earlier fell as much as 5.8 percent, which would have been the biggest drop in six years. France's CAC 40 lost 4.9 percent. The U.K.'s FTSE 100 sank 3.6 percent, and Germany's DAX slid 6 percent.

Volatility Climbs

The VDAX-New Index, a benchmark gauge of European stock- market volatility, surged as much as 39 percent, the most since 2001. The measure of expected price swings for stocks is derived from prices paid for options on Germany's DAX.

The MSCI Asia Pacific Index lost 3.7 percent. Australia's S&P/ASX 200 Index slumped for an 11th day. Hong Kong's Hang Seng Index lost 5.5 percent. Japan's Nikkei 225 Stock Average dropped 3.9 percent as the Finance Ministry cut its evaluation of five of 11 regional economies as housing investment fell and employment worsened.

The MSCI Emerging Markets Index, a global benchmark, sank 5.4 percent, extending its retreat from an October record to 19.7 percent.

Brazil's Bovespa index slid 5.2 percent, the most since February 2007. Russia's Micex Index declined 7.5 percent, the biggest drop since June 2006.

Canada's Standard & Poor's/TSX Composite Index fell 4.1 percent.

Allianz, Europe's biggest insurer, tumbled 8.4 percent to 122.01 euros. BNP Paribas, France's second-biggest bank, sank 6.1 percent to 65.15 euros. ING Groep NV, the biggest Dutch investment bank, declined 7.6 percent to 21.66 euros.

`Sharp Contraction'

``The market is finally catching on to the fact that a recession will lead to a sharp contraction in earnings,'' said Jane Coffey, head of equities at Royal London Asset Management, where she helps oversee about $11 billion. ``We need to see more aggressive changes to forecasts before investors become more positive about looking through the downturn.''

Swiss Reinsurance Co. decreased 8.5 percent to 69.9 Swiss francs. UBS AG cut its share-price estimate for the world's largest reinsurer to 80 francs from 88, citing the probability of more investment losses related to credit-market problems.

``We see on-going downside risk to earnings and stock performance until we have better visibility,'' London-based analysts including Ben Cohen wrote in a report to investors.

Bank of China

Bank of China, which has the largest holdings among Asian banks of U.S. subprime mortgages, slid 4.7 percent to HK$3.43. The bank may write down 17.5 billion yuan ($2.4 billion) for the fourth quarter of 2007, and an equal amount for this year, Dorris Chen, a Shanghai-based analyst at BNP Paribas wrote in a note on Jan. 18.

Commonwealth Bank of Australia, the country's second largest, dropped 2.5 percent to A$51.89. National Australia Bank Ltd., the nation's largest, declined 2 percent to A$35.55.

Morgan Stanley raised its 2008 forecast for loan-loss charges at the country's major banks by 26 percent, analyst Richard Wiles wrote in a note today, citing a deteriorating global economy and ``the difficulty faced by some companies in refinancing maturing debt.''

Citigroup, the biggest U.S. bank by assets, dropped 3.6 percent to $23.56 in Frankfurt. JPMorgan Chase & Co., the second- largest U.S. bank by market value, slid 3.2 percent to $38.30 also in Frankfurt trading.

The slump has made stocks cheap by historical standards. Europe's Stoxx 600 is valued at 11.1 times its companies' profits, the lowest since at least 2002, according to data compiled by Bloomberg. The 1,953-member MSCI World has a price- earnings ratio of 14.3, the cheapest since at least 1998.

Rio Tinto

Rio Tinto Group, the world's third-biggest mining company, dropped after BHP Billiton Ltd. failed to make a new offer. Rio, defending a hostile $108 billion takeover bid from rival mining company BHP, fell 6.6 percent to 4,392 pence.

BHP may not make a new offer before the Feb. 6 deadline set by the U.K.'s Takeover Panel, the London-based Times newspaper reported. The BHP board has not met to discuss a new bid, the newspaper said, after its initial three-for-one all share offer in November was rejected.

Samantha Evans, a BHP spokeswoman in Melbourne, declined to comment. Rio spokeswoman Amanda Buckley also declined to comment.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net .

[mac19]

Stocks Plummet in Germany, Hong Kong, India, Brazil in Rout and CANADA

.

Tomorrow when the US markets reopen it will be interesting. I'm living the reality today on the TSX, it opened the bell nearly 6oo points lower.

[Toadman]

Well now that we know the U.S. market has tanked, what about the rest of the world? Seems like the worlds biggest debtor nation going into recession scares the crap out of the rest of the world.

LONDON — Stock markets across Europe and Asia plunged Monday on fears that President Bush's emergency economic stimulus plan won't ward off recession in the USA.
At one point during the day, stock indexes in London, Germany and France faced their biggest drops since the Sept. 11, 2001 terror attacks on the World Trade Center in New York.

Monday's sell-off, which started in Asia and spread to Europe, followed the worst week for U.S. stock markets in five years, as investors registered their forecast for the world's biggest economy.

The U.K. benchmark FTSE-100 dropped 5.5% Monday to 5578.20; France's CAC-40 Index plunged 6.8% to 4744.15, while Germany's blue-chip DAX 30 slumped 7.2% to 6790.19.

The losses on the blue-chip stock indexes of Germany, Britain and France alone amounted to more than $350 billion, or roughly the size of the combined economies of New Zealand, Hungary and Singapore.

Canadian stocks also fell, with the S&P/TSX composite index on the Toronto Stock Exchange down 4.8%. In Brazil, stocks plunged 6.9% on the main index of Sao Paulo's Bovespa exchange.

[SquawMan]

these are epic times and we've got all the makings for either a 1930's crash all over again, or a Fed bailout of unprecedented proportions to keep us out of the abyss

cash is king for the short term

at some point this year, it will be one of the best times ever to go long



comments about tomorrow:


"As of 8:10 p.m. eastern time, Japan is down 4.5%, which puts the Nikkei down 17% for the year, down 26% since October and down 30% since July. The S&P 500 and NASDAQ 100 futures are implying declines of 4.9%. The Dow Industrials futures are implying a 5.2% decline. In each case, cash would be 1259, 1761 and 11,468, respectively. Each index would be opening at a major support level.

The global Equity meltdown has two primary catalysts in the near term. The first is comments from China that they are not decoupled from the U.S. economy, specifically the U.S. consumer. The other prominent concern, specifically here in the U.S. is the counterparty situation regarding the monoline insurers. The securitization process which was supposed to help spread risk and make it more manageable has gone awry, and undermined confidence in U.S. financial institutions. This situation is grave and needs to be addressed immediately. According to the Bank for International Settlements, the notional outstanding value of OTC derivatives contracts was $680 Trillion and credit default swaps are approximately $42 Trillion of that number. The real risks are primarily in a small number of positions that will be measured in billions and not trillions. The primary problems right now are the credit default swaps on CDOs. If something is insured for a dollar and its value deteriorates to $0.30 cents, you can see where the problem would arise. The problem will worsen with respect to those credit default swaps issued by financial institutions that will not make it and the Market has already begun voting as to who it believes will survive."

[rideit]

Peru SM down 8.5% as a result of the US tank...