The Ftse 250 Had The Worst Points Fall In Its History Yesterday

[Converted Lurker]

Not seen it put in such stark terms. I've always felt the 250 is a much better gauge of overall volatility/sentiment

John Stepek - Moneyweek. Up until last week, global stock markets had been ignoring the carnage in the credit markets...

Not anymore. Yesterday the FTSE 100 had its biggest single day points fall in five years. It dived more than 200 points - wiping out all the progress made since March. The FTSE 250 had the worst points fall in its history, slumping 382. And in the US, the Dow Jones Industrial Average lost more than 300 points - plunging by up to 440 points during the session.

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0

[libspero]

Just visited the FTSE web page, current news.. BRADFORD and BINGLEY to crash out of the FTSE 100 !!!

http://www.ftse.com/

Edited July 27, 2007 by libspero

[brainclamp]

This is caused by the low quality of loans which the rating agencies sold as good, is now not being confined - it applies to corporate bonds. The very low interest rates of corporate bonds, which enabled companies to sell debt and buy equity (sharebuy backs) pumped up the stock market.

This source of funds is responsible for up to 20% of many companies payback to investors. There is little room between the projected net yield on stocks and the net yield on the 10 year. As people balk at the magic mirrors of the rating companies and thier debt ratings on low quality debt, the end result is for credit to tighten, lowering the stock market by 20% or more. Also negative is the continuation of profits through globalisation, as Asia struggles to maintain inflation, they will now start exporting it as produce rises in price. So if profits have peaked, the market should move lower.

For example - IBM - Cash flow $59bln, Sharebuybacks $30.7bln (+ cap ex etc..) = 104% of operating revenue. All buy loading up on cheap debt.

"Take the practice of using borrowed money to buy back shares. Bet you thought all those buybacks that companies are announcing were funded out of current cash flow. Think again. Even big players such as IBM Corp. (IBM, news, msgs) are piling on debt to repurchase their own shares.

Since 2003, IBM has purchased 203 million of its own shares at a total cost of $30.7 billion. That's a huge percentage -- about 52% -- of the company's total operating cash flow of $59.5 billion during the period. It looms even larger if you add in the $17 billion IBM spent during this period on capital expenditures, the $8.8 billion it spent acquiring businesses and the $5.3 billion it spent paying dividends to investors. All that -- added to the spending on buying its own shares -- comes to 104% of operating revenue.

Or look at it another way. In 2006, IBM used the equivalent of 67% of its total net income to buy back shares. In 2005, the percentage was 82%. In the two years before that, 64% and 42%, respectively.

If you add in dividends, 2006 payouts to investors came to 85% of total net income at IBM.

That's the level of payout ratio that sends up a red flag to investors, I've been taught, because it's clearly not sustainable over the long run. In fact, from its financial statements it looks like IBM is borrowing to keep up this level of payout while keeping its business running as usual. Cheap money makes that possible. " Jim Jubak - MSN Money

Edited July 27, 2007 by brainclamp

[SHERWICK]

Just visited the FTSE web page, current news.. BRADFORD and BINGLEY to crash out of the FTSE 100 !!!

http://www.ftse.com/

FTSE Group confirms today that Bradford & Bingley will leave the FTSE 100 and be replaced by Barratt Developments. Bradford & Bingley leaves the FTSE 100 after rejoining in September 2006. In the mid cap FTSE 250 index, new listings Sports Direct International and business processing company Xchanging enter, while Domestic & General Group and ITE Group move up from the FTSE SmallCap to the FTSE 250. This means Woolworths Group, Helical Bar, Dunelm Group and Computacenter leave the FTSE 250 and go into the FTSE SmallCap.

What odds would you get right now that Barratt will also leave in the next year or so...?

Edited July 27, 2007 by SHERWICK

[littlepumpkin]

FTSE Group confirms today that Bradford & Bingley will leave the FTSE 100 and be replaced by Barratt Developments. Bradford & Bingley leaves the FTSE 100 after rejoining in September 2006. In the mid cap FTSE 250 index, new listings Sports Direct International and business processing company Xchanging enter, while Domestic & General Group and ITE Group move up from the FTSE SmallCap to the FTSE 250. This means Woolworths Group, Helical Bar, Dunelm Group and Computacenter leave the FTSE 250 and go into the FTSE SmallCap.

What odds would you get right now that Barratt will also leave in the next year or so...?

Property shares have been doing very well today, they're rising big time after the last few weeks falls - now represent good value!

thought this was going to be "black friday"?

[littlepumpkin]

FTSE Group confirms today that Bradford & Bingley will leave the FTSE 100 and be replaced by Barratt Developments. Bradford & Bingley leaves the FTSE 100 after rejoining in September 2006. In the mid cap FTSE 250 index, new listings Sports Direct International and business processing company Xchanging enter, while Domestic & General Group and ITE Group move up from the FTSE SmallCap to the FTSE 250. This means Woolworths Group, Helical Bar, Dunelm Group and Computacenter leave the FTSE 250 and go into the FTSE SmallCap.

What odds would you get right now that Barratt will also leave in the next year or so...?

Property shares have been doing very well today, they're rising big time after the last few weeks falls - now represent good value!

thought this was going to be "black friday"?

PS Helical Bar's boss won't be crying too much about leaving the FTSE 250 - he just got paid £9.7m in the last year. boo hoo black friday.....