Thursday, Aug 16, 2007
FTSE nosedives and breaches 6000 mark
FT: European shares suffer heavy falls at open
European equity markets suffered sharp falls this morning with the FTSE dropping 2% soon after opening.
Of note Northern Rock which relies heavily on the wholesale money market for financing fell another 6% today in addition to the 5% it lost yesterday. Overall Northern Rock is down 40% since the start of this year
Posted by denzil @ 09:03 AM (407 views) Add Comment
31 Comments
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1. Alan said...
As I said over the week-end, intervention by the Fed with an IR cut is predictable.
US house prices will then go up again........ (just don't mention inflation).
2. inbreda said...
David - do you still think this is a blip that might sort itself out shortly or is it turning into a more serious thing?
Particularly considering that the housing slump in US is apparently worsening considerably.
And all downward pressures on inflation have been exhausted - unless you can think of some others.
Does anyone have any opinion about the effect this might have on London? For a long time I get the impression that London is quoted in the house price figures for the sole reason that it has still been going up. If that is because of the effect of City bonuses, then a stock market tank will take out that section of society in one blow. No more yuppies with million pound bonuses buying any overpriced shed. No hedge fund managers with more money than sense. If London prices fall that will make headlines. Could cause a BTL rush for the exit.
3. mrmickey said...
If this is a credit crunch then the supply of £'s in the economy will start to decline, this will cause deflation in the property market as there won't be enough money in the economy to keep prices elevated. This won't happen has Gordo has now banished boom & bust.
4. Brightonrentfodder said...
it'll be interesting to see how Crash Gordon's popularity rides after all this is over.
5. Superruss said...
Everything is happening, exactly according to plan...MUHAHAHAHAA
6. M2 said...
Deflation is already occurring in stocks and will very likely spread to other markets that rose in concert, including UK housing.
But look on the bright side - deflation is actually good for the man on the street, so long as you keep your job (big caveat I know), as it increases real wages.
7. uncle chris said...
Ach, the city knew this was coming ... why do you think they took their bonuses early this year. That said, I suspect many of those who also took out mega-mortgages are seriously fearing for there jobs.
8. Orwell said...
There will be no credit crunch, as David Smith told us there won't.
Oh and the tide doesn't come in, it complies with my demands.....
Lol.
9. cyril said...
I wonder if this will be the point in history when the USA is officially knocked off its perch as the world's superpower? If so that will be some achievement for GW Bush.
10. Realist said...
David? David?
11. Orwell said...
Not a peep from our guru. In fact his site is noticeable by its lack of activity.
12. sold 2 rent 1 said...
The USA isn't going down without a fight - prepare for more wars
13. george monsoon said...
Well I am in the wrong job.. I predicted yesterday that FTSE would drop below 6000 and it has. Now I am no psychologist, but If I were a market trader I would be seriously considering selling all my risky stock before it drops any more... Anyone else think that this is going to snowball very quickly.
I think we may see a slight bounce back up today to level off where it started, but If human nature takes over, hold on to your hats..
14. george monsoon said...
I think the USA saw this comming and want to take control of world oil and stay at the top.
15. tyrellcorporation said...
We've yet to see the full impact on the US markets of the wobble from Countrywide yesterday (the largest US mortage lender). I think the US markets will nosedive today and like a bowlass, the other World markets will swing down further too. I predict another 200 point loss on the footsie today.
16. Orwell said...
I see that Northern Rock are 5% down.
That's what you get when you lend to people who can't pay I suppose. Only about a year ago they were crooning about how they would lend 6 times..........
17. Red Kharma said...
Falling much below 6,000 will knock out all the computerised "long" trades, which will only add to the sell-off. The big question is what happens end of September when the Hedge Funds have to repay all those rich punters wanting their money back. Deadline for giving notice was yesterday for September withdrawals. Can't see many market makers wanting to be holding stocks when that happens. There will be lots of pull-backs on the way down, but 5,500 is the next big round number target for bears to aim at. This now has nothing at all to do with US sub-prime. That was just the catalyst. This is all about massive excess liquidity being destroyed. UK housing market will get hammered along with everthing else. Cash is king.
18. mrmickey said...
I suppose a good war is another option to get liquidity flowing again.
19. Orwell said...
George,
I think a drop below 6000 was pretty much expected. The $64m question is how much.
Any body any views?
20. sovietuk said...
It's really funny to watch the basket case economy unwinding
21. sold 2 rent 1 said...
mrmickey,
The 2 previous debt bubbles of 1834 and 1933 lead to deflationary bust when they burst.
The wars that came after were the American Civil War (1860) and WWII (1939) which proved very inflationary.
If history is any guide we should expect a deflationary bust followed by wars and inflation.
The only difference now is nuclear weapons.
22. Darren70 said...
Well i'm addicted i just can't help clicking the refresh button on my browser for:
http://www.euroinvestor.co.uk/Stock/IndexInfo.aspx?Index=29880
Unravelling before our very eyes, there's not easy way back from losses like these. I hope it really hits these wankers sorry bankers where it hurts.
23. holding out said...
US Civil war - That's stretching it a bit 1861-1865 (Surely a K-spring)
24. hedger said...
Any monkey can run a 200%+ long only fund and make money in a rising market.
My hedge fund is up. Because we HEDGE out our risk.
25. inbreda said...
Yes Hedger - that's the theory. Never been put into practise though has it.
Do you know exactly what your hedge fund does?
Or is it quite secretive and offshored?
Is the only performance measure that you get to see supplied by the people running the fund?
26. Red Kharma said...
Which way the DOW this afternoon? Another tanking? or will the FED be out again in the futures market trying to stem the tide?
Who needs Bin Laden when you've got the Fed destroying your economy for you huh?
27. sold 2 rent 1 said...
holding out,
I differ from standard k-theory which is based on price data and work on k-cycles that follow the debt bubble.
See graph
http://www.thelongwaveanalyst.ca/downloads/Kondrairff_gold.doc
The debt destruction went from 1834 to 1864 (includes 2 wars; American-Mexican War and American Civil War)
The following k-spring then went from 1865-1906.
K-cycle number 2 is not a proper k-cycle.
My debt bubble theory apportions off k-cycle 2 into cycles 1 and 3
My new debt theory maps to the DJIA stocks graph very well
28. Sold Out said...
where is David-2004? He was being all smug on monday when the ftse went back up ("just like i predicted ho hum"). we are all still waiting for your wise words.David....DAVID where are u?
29. Stoatgobbler said...
I'd like to know why there's a general feeling here that this is going to be good for anyone? This is going to hurt the man in the street (Darren70) far more than your average banker, hedge fund manager, trader, etc, etc. It's real pension and savings getting trashed, your money...
30. _woody said...
Carnage!!!
Cash is King!
31. sold 2 rent 1 said...
Stoatgobbler,
Most people on here want a 30% correction in HP and keep their job.
In reality unemployment will rocket and HPs will correct 50% in real terms.
Only those who invest in gold will be spared the hardship of the k-winter