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Global Stock Markets Drop Again on Economy Fears
Stock markets fell across the globe on Friday, as investors showed new concern about the struggling U.S. economy and the stability of the European banking system.
The three major U.S. stock indexes — the Dow Jones Industrial Average, S&P 500 and NASDAQ — all dropped more than one percent Friday, following their decline of four to five percent on Thursday.
Asian stock indexes dropped sharply Friday, and European markets retreated as well, although not as much as on Thursday.
Analysts said that fear had overtaken stock trading, with many investors worried that officials in Europe and the U.S. will not be able to solve vexing economic and government financing issues.
In Europe, the concern is that banks are not strong enough to handle the continent’s debt problem sweeping through its financially troubled governments. Investors are also worried that Read more…
Dow plunges 635 points as downgrade fuels market turmoil
The Dow Jones Industrial Average closed down 635 points Monday, dropping below 11,000 as the impact of an unprecedented downgrade to the U.S. credit rating reverberated through financial markets.
The downturn came on the heels of a brutal week for the market, capped off when the Dow lost 512 points on Thursday. That gave the blue-chip stock index two of its 10 biggest point losses in the last three trading days.
The S&P 500 and NASDAQ stock indices were both down nearly 7 percent at the close of Monday’s trading.
The dramatic point drops followed the first-ever downgrade of United States debt by Standard & Poor’s late Friday evening. The credit rating agency, citing increasing concern over the nation’s political infighting and the relatively small amount of deficit reduction included in the deal to raise the debt limit, knocked America down from its top rating for the first time, moving it down one notch to AA+.
In an ironic twist, the financial product that was downgraded reaped the Read more…
US stocks plunge, Dow falls more than 500 points
The Dow Jones Industrial Average plunged 4.3 percent Thursday, its worst one-day drop in more than two years, as global markets melted down over fears of another world economic downturn.
The Dow was down 512.76 points to 11,383.68; the broader S&P 500 lost 4.8 percent to 1,200.07, while the tech-heavy NASDAQ Composite plunged 5.1 percent to 2,556.39.
More turmoil over sovereign debt problems in Europe and feeble US economic data are stoking “fear that the economy is heading for a double-dip recession,” said Peter Cardillo of Rockwell Global Capital.
“The market is pricing that in,” he said.
Markets worldwide were on edge over fiscal weakness in Italy and Spain and the eurozone’s ability to contain more crisis, as the two countries’ borrowing costs surged in recent days.
Meanwhile the US Labor Department reported that weekly claims for unemployment benefits remained at a high 400,000 last week, as business and government layoffs persisted while new job creation remained sluggish.
All of the Dow’s 30 blue-chip stocks were hit by the sell-off, but losses were most pronounced in the basic materials sectors, energy and financial companies.
What happens if the U.S. defaults?
Blank U.S. Treasury cheques are run through a printer at the U.S. Treasury printing facility July 18 in Philadelphia.The first payments that stand to be affected if the U.S. government defaults on Aug. 2 would be some $23 billion US in Social Security benefit cheques. (William Thomas Cain/Getty)How a default would unfold immediately appears relatively straightforward. It’s the reaction that no one can predict, because it’s never happened before.
The first move will be made by the U.S. Federal Reserve. The Fed is the Treasury Department’s bank, handling government cheques and lending to banks which borrow using U.S. Treasury debt as collateral.
One day — the U.S. government has estimated it will be Aug. 2 — the Fed will serve notice on the government that its account at the Fed will be in overdraft by the end of the day, in violation of the Federal Reserve Act.
On Aug. 3, some Read more…
Poor Man’s Gold is Breaking Out — Sell Your House and Buy Silver?
Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.
Many people will tell you that silver and gold are in a bubble but the fact is that commodities in general are one of the only asset classes that work here because the consolidated banking system is holding our economy hostage and Bernanke is solely focused on saving the banks. Right now, shorting European banks and going long silver and gold looks to be about as good of a “trade” as possible — investors are essentially betting that Europe will face massive credit problems because of the obvious insolvency of Greece, Italy, Portugal, Spain, and Ireland.
The next shoe to drop is the US… We are facing the exact same issues as Read more…
If Central Banks Believe in Paper Money Why Are They Loading Up On Gold?
I’ve been warning for years that an inflationary storm was coming. I’ve recently tailored my forecast to allow for a resurgence in deflation based on QE 2 ending and the economy diving, but my long-term forecast remains the same: inflation WILL be exploding in the years to come.
Indeed, even the biggest proponents of paper money (central banks) have begun to realize that their grand experiment is coming to an end. Central banks officially became net buyers of Gold last year. And we now find that they have acquired the most Gold in over a decade.
The Financial Times reports:
Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade.
The move, disclosed in the BIS’s annual report, marks a sharp reversal from the previous year, when central banks added to deposits of gold at the Read more…
Nasdaq Is Close to Making Hostile Bid for NYSE
You are witnessing the global markets becoming consolidated into an eventual one mega world market. If you are wise as I am sure many of you are, get out of stocks and purchase gold and silver bullion. It will save you in the longrun short-run.
Nasdaq is moving closer to a hostile bid for NYSE Euronext, which could come as early as Tuesday, sources close to the matter told CNBC.
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AP
NASDAQ MarketSite Tower, Times Square, New York, NY
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Nasdaq [NDAQ 26.37 
-0.82 (-3.02%) 
] has nearly secured financing for the hostile bid [NYX 36.55 
1.28 (+3.63%) ], in an arrangement that could involve IntercontinentalExchange, also known as ICE [ICE 124.79 -1.28 (-1.02%) ], which operates a global futures exchange and over-the-counter (OTC) markets and derivatives clearing houses.
Questions remain on how financing would be structured, as well as what role ICE would play in the bid, as sources say that ICE will not use its stock in any deal. Instead, it appears ICE could commit to purchasing certain NYSE assets upon the closing of any deal.
Any Nasdaq bid would face significant obstacles, including the likelihood of strong antitrust scrutiny, as nearly every U.S.-listed stock sits on either the NYSE or Nasdaq exchanges.
Last month, Deutsche Boerse and NYSE Euronext announced they would merge to create the world’s largest exchange operator in a Read more…
US Treasurys Dumped, Pimco Sees Value In Emerging-Market Bonds
NEW YORK (Dow Jones)–The valuations on U.S. Treasurys are not attractive in a historical context and Pacific Investment Management Co. is moving money toward emerging-market debt, said the fund’s founder Bill Gross in an interview on Thursday with CNBC.
Reports came out on Thursday that the bond-fund giant had dumped all of its holdings of U.S. government bonds. Gross said better valuations can be found elsewhere, where yields are not artificially boost by Federal Reserve purchasing.
“The overvaluation [in Treasurys] has been dependent on the purchasing power of the Fed,” said Gross, who does not believe there will be a third round of “quantitative easing.”
Pimco did not participate in Thursday’s 30-year auction nor Wednesday’s 10-year auction, Gross said, though both were considered well-received.
The fund still owns about Read more…
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