Right now the Dow is up 1.45%. Using basso logic, I guess yesterday's plunge was the last purge of W or perhaps the markets feel invigorated by all the cool balls last night or maybe they are inspired by this morning's National Prayer Service. Or something.
lol i was gonna start this thread just so one of u fools didn't do it but i forgot. the market sell off had just a little bit to do with state street announcing they had a 9 billion dollar unrealized loss which awakened people to the reality that these banks are holding A LOT of unrealized losses.
Does anybody know why DXO has declined between AM yesterday and today despite oil rising from 32$ early AM yesterday to 42 today?
I don't think oil actually had that 30% rise. I think the last month oil contract expired yesterday, so now they are quoting this month's oil contract price.
Let me educate you, SamFisher. You seem to be only noticing the front month oil price contract. DXO doesn't just track the front month, but it also incorporates movements in later month contracts. If you have been noticing, the contango is slowly coming out of the curve in the later months. This is especially important when you get closer to the end of the month YWIA
I like Basso threads. Being a liberal, misanthropic agnostic, I've always felt like an outsider (if a little bit superior). But when Basso posts and everyone jumps on him for being an insufferable ass, I feel a sense of kinship and camaraderie with a group of people supporting rational, realistic ideals. Kum Ba Yah, MF's.
So since Obama is president and the country is going to be over-run by terrorists and all....shouldn't you be planning on selling all of your assets and getting the heck out? I'll give you $5 for your house since under Obama that's what it will be worth right?
I'll cut and paste what I posted in the Inaugural thread. Lil' texxx, the big drop had nothing to do with Obama taking office. There was (and is) a strong rumor in the financial markets that Citicorp, and possibly another huge bank, is going to be "nationalized' in about a week. Nationalized for all practical purposes, even if the word isn't used. Is the rumor true? Who knows, but someone who makes his living, in part, playing the market told me flatly that that was the reason for the drop, and I believe him. The fuel is that the stock(s) would become worthless, or so the rumor goes.
BAC, down 28.9% Citigroup, down 20% Goldman Sachs, down 18.9% JP Morgan, down 20.7% Morgan Stanley, down 15.9% State Street, down 59% (!) Wells Fargo, down 23.8% Of course that's common stock. The Treasury got preferred stock. Still, I wonder what will happen to silly claims that the Treasury is going to make money off of this deal. I'll bet an ounce of silver that at least 3 of those companies are gone this time next year, despite every effort of the Treasury to prevent it.
I guess you should be loading up on shorts then, because if that happens, we are looking at DOW below 5000 maybe. At most couple of them gets pseudo nationalized.
It doesn't really change my argument at all. To clarify - I think the government will make a profit *if the bailout works* in preventing the economy from collapsing (it doesn't need to help it grow - just prevent it from coming apart at the seams). In that scenario, the banks will eventually recover to some extent - whether next year or 10 years from now - but even if they don't, they pay a nice dividend each year. The government can hold the stock as long as they need to, and in the meantime, they get a 8-10% dividend return on money they borrowed at 2-4%. So they make money on an annual basis just waiting for the stocks to recover. If the bailout *fails*, that's an entirely different issue. In that scenario, I don't think it matters because the US economy would be done in the form we currently know it. If the western financial system doesn't survive and/or the housing market collapses, a trillion dollar gov't loss would be fairly irrelevant compared to the rest of the damage that will be done. So the bailout is a relatively low-risk, high-reward proposition to me.
nah....i dunno what % of the dow they are but the financials are like 11% of the s&p. so i don't think the dow drops below 5k. i think 6k to 7k will form a base but we will wait and see how earnings and everything else develops. i think the market has already priced in a good amount of the banking sector collapse...maybe not a jpm collapse but i think people already realize the big banks are screwed and likely to become utility-like entities.
Wrong for the Dow. The Dow Jones Industrial Average is a Price Weighted Index. Financials in the Dow 30: American Express, Bank of America, Citigroup and JP Morgan Chase. If all the financial components in the dow 30 go to zero the index will lose around 350 points, or around 4.4%. That is less than the index lost yesterday. This can be reflective of a few items: A.) The diluted exposure of major indices to banks and financial stocks B.) The dilutive nature and market reactive component of index investing The S&P is market cap weighted which I believe financials now make up less than 10%. The better question is how will the lack of a credit market affect non-banking companies ability to perform their businesses.
I wasn't talking about just the financial component. If at least three of these companies disappear, we are probably looking at some disaster scenario, banking sector won't be the only one to collapse.
Wow - those 4 companies only combine for 4.4% of the index now? I knew they were price-weighted, but I'm amazed they came down that much. Do you have a list of all the companies and their values? I'm wondering what the biggest-weighted ones are.
Also worth noting that many of these companies (outside of State Street) are now trading above where they were before those declines yesterday.
Actually - I take that back. They are trading above where they opened yesterday before the during-the-day decline, but not from where they closed last week.
