Sandwichman to Wall Street: Jump, you leeches! On Thu, Sep 22, 2011 at 6:53 AM, Louis Proyect <[email protected]> wrote:
> NY Times September 21, 2011 > Wall Street Joins Global Stock Plunge After Fed Move > By MATTHEW SALTMARSH > > Global stock markets tumbled Thursday as investor pessimism about > the outlook for the United States and European economies was > deepened by weak data for the euro zone and a grim assessment from > the Federal Reserve. > > “Today, we really seem to be stuck in a negative spiral,” said > Matthias Jasper, head of equities at WGZ Bank in Düsseldorf. > “Investors just want to keep their exposure low and watch from the > sidelines.” > > In the opening minutes of Wall Street trading, the Dow Jones > industrial average was down 301.06, or 2.7 percent, 10.823.78. The > Standard & Poor’s 500-stock index lost 2.6 percent, and the Nasdaq > composite was down 2.7 percent. > > In afternoon trading Thursday in Europe, the benchmark Euro Stoxx > 50 index, the FTSE 100 in London and the CAC-40 in Paris were all > down between 4 and 5 percent. > > As well as fears about the economic outlook on both sides of the > Atlantic, investors have been unnerved by the failure of policy > makers in the 17-nation euro zone to resolve the region’s debt crisis. > > On Wednesday, the Fed said a complete economic recovery was still > years away, adding that the United States economy has “significant > downside risks to the economic outlook, including strains in > global financial markets.” > > It also said it would buy long-term Treasury bonds and sell > short-term bonds to help stimulate lending and growth. > > Meanwhile, a closely watched economic report from the euro zone — > the composite purchasing managers’ index — fell to 49.2 in > September from 50.7 in August, according to Markit, a financial > data provider. The reading, released Thursday, was below the > consensus forecast of 49.8. Both the manufacturing and services > indexes declined. > > “The initial and follow-up reaction from the equity market is > likely the realization that the Fed has little left to offer, that > Washington is a mess, and their only hope is to “ride it out” over > a long period of time,” said Kevin H. Giddis, the executive > managing director and president for fixed-income capital markets > at Morgan Keegan & Company. > > “This is about to get ugly and there is very little anyone can do > about it,” he added in a research note. > > Stocks had fallen in the United States 2 percent or more on > Wednesday after the Federal Reserve announcement. > > On Thursday, the yield on 10-year United States Treasury > securities hit a new low of 1.76 percent in London. After the > markets opened in the United States, the benchmark bond yield was > 1.77 percent. > > Commodities fell. Comex gold futures were down nearly 4 percent at > about $1,737 just before Wall Street opened, while crude oil > futures traded in New York were down more than 6 percent at $80.57 > a barrel. > > The Fed pointed to a number of long-term problems in the American > economy, including high unemployment and a depressed housing > market. In addition Moody’s Investors Service downgraded ratings > on three big American banks — Bank of America, Wells Fargo and > Citigroup — saying government support had become less likely in > the event of financial trouble. > > The Fed’s statement “continued to suggest that the Fed funds rate > will remain on hold until at least mid-2013,” said Rob Carnell, an > analyst at ING in London. He added that quantitative easing could > be introduced as early as November. > > Analysts said the fall in the euro-area index reflected a > combination of slowing global growth, significant belt-tightening > in the euro area and growing concern about the escalating > sovereign debt crisis. > > “Whether or not the economy dips into another recession largely > depends on whether governments move to contain the crisis,” said > Nick Kounis, head of research at ABN AMRO in Amsterdam. “These > surveys suggest that the window of opportunity is closing fast.” > > “Clearly the risks of recession are elevated,” he added. > > The weak economic backdrop appeared to give added importance to a > series of meetings in Washington in coming days at the > International Monetary Fund and World Bank. > > Mr. Jasper of WGZ Bank said the gloomy economic backdrop belied > the fact that many companies in Europe are in fact in a positive > position in terms of their order books, profit margins and cash > positions. > > “We’re in a politics-driven market, and it’s hard to see light at > the end of the tunnel until we have a workable solution for Greece > and stabilization of the situation in Italy and Spain,” he said > > In Europe there was still uncertainty about the fiscal outlook for > Greece and Italy. > > Greece announced a new set of austerity measures Wednesday, aiming > to convince international creditors to release a tranche of €8 > billion in loans needed by mid-October to avoid bankruptcy. > > The measures included cuts in civil servants’ wages, lower > pensions and a broader tax base. But before releasing the > payments, the creditors will probably want to see the measures > approved by Parliament and to know more about a new set of > privatizations, the details of which are still to be spelled out > by the government. According to local media, a parliamentary vote > will be held in the next few days. > > Speaking to reporters on Thursday, the Finance Minister Evangelos > Venizelos said the government’s priority was to keep its > commitments to foreign creditors to avoid a similar experience to > that of Argentina, which defaulted on its debt in 2001-2. > > “The crisis is not what we are living today, namely cuts to wages, > pensions and income,” he said. “That is our effort to avert the > crisis. The real crisis will be like that of Argentina’s in 2000 – > a total collapse of the economy, of institutions, of the social > fabric and productive forces of the country.” > > Noting that situation “is critical,” he stressed the importance of > “being absolutely consistent in fulfilling our obligations so that > no arguments or excuses can be used against us.” > > In Italy, the government lowered its forecasts for economic growth > Thursday but stuck to its goal of balancing the budget in 2013, > amid local media reports that the government is moving toward > announcing yet another batch of austerity measures. > > Economists at Barclays Capital said the government would have to > find additional savings of 9 billion to 10 billion euros “to > increase the chances of reaching a budget that is close to > balanced by 2013.” > > Analysts said the declines in Asia on Thursday showed that > investors were unsure that the Fed’s action would fully address > the economic slowdown in the United States. > > The Hang Seng index in Hong Kong led declines in Asia, diving 4.8 > percent. The Nikkei 225 index in Tokyo closed 2.1 percent lower, > the Kospi in South Korea fell 2.9 percent and the S.&P./ASX 200 in > Australia dropped 2.6 percent. > > The export-driven economies in Asia, such as South Korea, are most > vulnerable to the European and American economic challenges, said > Tim Condon, head of Asia research at ING Group in Hong Kong. > Durable goods like automobiles and ships will be hurt most, he said. > > Additionally, investors were beginning to worry that China’s rate > of growth may slow, said Dariusz Kowalczyk, senior economist and > strategist at Crédit Agricole CIB in Hong Kong. > > The aversion to riskier assets helped prop up the dollar in > foreign exchange markets on Thursday. The euro was trading at > $1.3477, down from $1.3573 late New York trading. > > “It really comes down to political immaturity in both the U.S. and > Europe,” said Stephen Davies, chief executive of Javelin Wealth > Management in Singapore. “The increasing chance of a U.S. > recession and European implosion has shortened the odds of an > overall second recession.” > > Christine Hauser, Niki Kitsantonis, Elisabetta Povoledo, Kevin > Drew, Robert Pear and Jennifer Steinhauer contributed reporting. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Sandwichman
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