Share Sale Knocks Chinese Market - Global Stocks Down

[NickCole]

Source: BBC News 26.02.2007

Posting this because it's fairly major news. Pretty much every single market in the globe is down tonight...

It's major news.

In part it's a correction.

But it's more than that.

The situation in China obviously affects the US and global markets. Also in the US there was a weak report on durable goods. Also defaults have been rising with sub-prime borrowers. Oil's up, the dollar and gold is down. Housing market remains essentially flat.

Worst day on Wall Street since Sept 11, 2001.

 

[NickCole]

Exactly, the US economy is tanking:

I didn't say that.


Then there's what you linked:

http://www.breitbart.com/news/2007/02/27/D8NI4NIG0.html

"The median price of an existing home sold in January dropped to $210,600, a decline of 3.1 percent from a year ago. It marked the sixth straight month that the median price has been down compared with a year ago. The January decline was the third-biggest drop in history. "

 

[opinterph]

Following a 130% increase in the Shanghai Composite Index during 2006, Chinese legislators are worried that a rush to “get a piece of the action” may contribute to an artificial bubble that would eventually burst and thereby hurt Chinese investors. (Foreign investors are mostly locked out of the country's equity markets.) As a consequence, legislators have hinted that they may impose new taxes or tighten margin requirements at their upcoming annual session. On this news, (after closing at its highest level ever yesterday,) the Shanghai Composite Index fell 8.8%. This represents its steepest plunge in ten years.

Meanwhile, US markets had just learned yesterday from former Fed chief Alan Greenspan that investors are probably not sufficiently prepared for the possibility of a recession later this year in America. US manufacturing has cooled considerably in the last 6 months and durable-goods orders dropped 7.8% last month alone. US investors were already skittish, prior to the dramatic drop in China. According to a report aired on NPR today, much of the sudden US drop can be attributed to sell orders generated by computer programs. Nonetheless, today’s drop in US markets represents the “deepest intraday swoon since the markets reopened after days of inactivity following the Sept. 11, 2001 terrorist attacks.”

Source: WSJ (dynamic link – subscription required)



Summary of today’s US market closings (amid record trading volume on the Big Board):

Dow Jones Industrial Average – down 3.3%
Nasdaq Composite Index – down 3.9%
Standard & Poor's 500 Index – down 3.5%​

 

[Centexfarmer]

Uh, could some of you stop the partisan bullshit long enough to explain what all of this means?

“deepest intraday swoon since the markets reopened after days of inactivity following the Sept. 11, 2001 terrorist attacks.”

That sounds pretty serious to me.

Is it just an "adjustment" as some have suggested, or is it something more ominious?

IOW

 

[NickCole]

Haha, you give yourself away, Nicole, as an anti-American, looney, left-wingnut pessimist when, in an article entitled "Sales of Existing Homes Jump in January", you pick out negative information. You make it so easy I really don't need to say anymore.

It's "anti-American" to read the whole article, not only selected portions, to look at the whole picture rather than the narrow vision BushRepublicans point to with blinders on?

More than half the article is negative news about the economy; I picked out only one paragraph. Did you fail to read the rest?

The median price of an existing home sold in January dropped to $210,600, a decline of 3.1 percent from a year ago. It marked the sixth straight month that the median price has been down compared with a year ago. The January decline was the third-biggest drop in history. ...


But he cautioned that the warm weather in December boosted home closing in January, the activity that is tracked in the Realtors report. He said there could be a bit of a payback in coming months. ...


In other economic news, the Commerce Department reported that orders to factories for big-ticket manufactured goods plunged 7.8 percent in January, the largest decline since October and more than double what analysts had been expecting.


The decline in durable goods was led by an 18 percent plunge in transportation orders, reflecting a big decline in orders for commercial jetliners and continued weakness in auto manufacturing. ...


But there also was weakness in a number of other areas from heavy machinery to computers. Demand for motor vehicles and parts falling by 5.1 percent. The auto sector has been particularly hard hit as American car manufacturers are struggling to compete with foreign rivals.


Demand for non-defense capital goods orders fell by a record 19.9 percent in January. This category is closely watched for signals it can send about the plans businesses have to expand and modernize their operations. Business investment has been slowing in recent months.

The 7.8 percent January overall decline left orders at $203.9 billion on a seasonally adjusted basis. Analysts had been expecting a much smaller drop of around 3 percent.

You say I'm "Anti-American" for noticing the majority of the article is negative news about the economy. I didn't make the news, I didn't write that article and I didn't even post a link to it, I took it from your post. What'd you do, read the headline and stop there? I won't sink to your smarmy level and call that "anti-American," but is sure isn't very bright.

 

[NickCole]

More grim news that supports my concerns about our economy and our markets. I mentioned these problems about subprime mortgages in this thread last month.

A national survey showing that a soaring number of homeowners failed to make their mortgage payments in the last quarter of 2006 rattled lawmakers in Washington and the markets in New York yesterday, as the Dow Jones industrial average plummeted 2 percent, or nearly 243 points.

The report, which sent every major stock market indicator tumbling when it was released at noon, revealed that the problems in the market for "subprime" mortgages -- loans made to home buyers with blemished credit histories -- might be spilling over to the broader mortgage industry, analysts said. ...

The survey was released as the market for high-risk mortgages is collapsing. Over the past few years, highflying lenders of these loans helped millions of Americans buy homes they otherwise could not afford. The firms have seen their businesses unravel as these homeowners could not make their monthly payments. ...

The consequences of the subprime mortgage meltdown now are extending beyond those lenders. ...

"It's pretty clear that the fear is the increase in delinquencies in the subprime market will work its way through the entire financial systems," said Alan Kral, managing director of Trevor Stewart Burton & Jacobsen. ...

"People are concerned that the subprime problems are going to infect all of housing and the rest of the economy," said Donald H. Straszheim, an economist at Roth Capital Partners.

Federal and state investigators are looking at what has been going on in the mortgage industry. New Century, one of the largest subprime mortgage lenders, said yesterday it had received a federal grand jury subpoena for its trading and accounting practices. New Century, which stopped making loans last week, was delisted by the New York Stock Exchange yesterday.

Massachusetts' top securities regulator, Secretary of State William Galvin, said yesterday that he issued subpoenas to two Wall Street investment banks, UBS Securities and Bear Stearns, as part of a probe into whether the firms' researchers ignored the mounting problems among subprime lenders. ...

http://www.washingtonpost.com/wp-dyn/content/article/2007/03/13/AR2007031300505.html

 

[NickCole]

As I was saying last month ...

Weak Housing Report Sends Stock Down

March 27, 2007, 12:38PM
NEW YORK — Stocks stumbled Tuesday as new data stirred up worries that the nation's housing market may be slowing sharply enough to seep into the broader economy and crimp consumer spending.

A housing index released Tuesday by Standard & Poor's showed that prices of single-family homes across the nation fell in January compared to a year ago, registering the lowest growth since January 2004. Also causing concern for investors, Lennar Corp., one of the nation's largest homebuilders, said its first-quarter profit tumbled 73 percent and warned that it doesn't expect to meet its 2007 earnings guidance.

The market has been nervous lately that a drop in housing values will further weaken subprime mortgage lenders, who make loans to people with poor credit. Investors are also bracing themselves for falling home prices to cause consumers, who account for about two-thirds of economic activity, to feel less wealthy and rein in their spending.