Sorry about our slow start on the day. We've been busy this morning trying to gather up information about the who's and why's of this morning's equity crash. And, of course, trying to score twos for a pal of ours who recently got out of the hospital and has been having a rough time at work. The Dow went down 240 points after the open. That is to say, it has more or less shot down Bernanke's helicopter.
And, actually, that understates the breadth of the decline. On the New York Stock Exchange, less than four hundred stocks are up today. Decliners out-number gainers by 6:1.
There are various theories about today's plunge, almost all of them involving Citigroup in one way or another. Some say that Citigroup's Super SIV is not attracting investors, and that the entities failure could re-ignite the worst fears of a credit-market meltdown. But far more popular is the word from a CIBC analyst who says that Citi might have to cut its dividend and stop making acquisitions.
But when we call the so-called "experts" they keep asking us what we're hearing? "You got all those guys reading DealBreaker. What do you know?" one guy asked.
Fair enough. What are you hearing? Leave your ideas about today's stock market movements in comments below.
Posted by , Nov 01, 2007 10:41AM
twos?
Posted by , Nov 01, 2007 10:42AM
JP Morgan cam out and said they are calling BS on the Citi dividend cut. FYI
Posted by HoeMuffin , Nov 01, 2007 10:42AM
More sellers than buyers. Chuck Prince must have incriminating photos of the board and Alaweed blowing midget ponies covered in peanut butter. That's the only reason I can think of that he still has a job left.
Posted by , Nov 01, 2007 10:53AM
Crude oil's expensive, bro
Posted by , Nov 01, 2007 10:57AM
Stan caught in bathroom stall passin blunt to Cayne.
Posted by Dr. Evil , Nov 01, 2007 10:58AM
I stopped buying
Posted by Christopher , Nov 01, 2007 10:59AM
HoeMuffin nailed it. More sellers than buyers. The Halloween candy that Ben thought he was giving out had already been discounted. Today is just an illustration of the old principle, "buy on the rumor sell on the fact," in collective operation. No mystery.
Posted by iOil , Nov 01, 2007 11:02AM
Maybe it has something to do with the biggest company in the galaxy missing earnings. Hmmm, maybe.
Posted by AJ , Nov 01, 2007 11:06AM
Carney, can we focus on the important things... like Cayne's pot smoking... and also, when is the WSJ going to give you guys credit for breaking most of that story?
Posted by Dave Chappelle , Nov 01, 2007 11:06AM
In order:
1) Euro banks started puking overnight (~4am)
2) Citibank's trouble with SIVs and potential fundung issues (the CIBC report)
3) Fear of big losses at Rescap (which came true, although GMAC performed well)
5) Fear of really bad losses at mortagge insurer Radian (true)
6) Cuomo press conference re: mortgage malfeasance
bitches
Posted by , Nov 01, 2007 11:15AM
..."of this morning's equity crash"
Are you retarded? The market's down like 1.5%??
Posted by , Nov 01, 2007 11:20AM
Off topic
http://www.bloomberg.com/apps/news?pid=20601109&sid=apYzXCKprHpk&refer=home
anybody going?
Posted by Give-up Agreement , Nov 01, 2007 11:21AM
Why is Citi's Super-Duper SIV having trouble attracting investors? I bet they wouldn't have such a tough time if people knew Citi actually employs magic gnomes who can turn crappy ABS into something that actually makes money. I’ve heard the gnomes have a workshop in a corner of Chuck Prince’s fireplace.
Posted by anon anon anon , Nov 01, 2007 11:24AM
Yea, it's a sudden little dip. Will it dip more? It's just a lot of spooky news about things going south and commodities going north and the disappearance of confidence. FEAR is in the air. Buckle up.
Posted by WDE , Nov 01, 2007 11:25AM
I think you've got a few things that are acting as a catalyst here, and should continue to drive the market lower until something emerges to make us feel all warm and fuzzy about the U.S. economic picture:
(i) Oil IS expensive
(ii) Food is too
(iii) There is no longer an impending rate cut for the markets to price in
(iv) Maybe, just maybe people (re: equity investors) are starting to realize that this credit/liquidity crunch is far from over, and is more serious than they wanted to think
(v) GDP growth wasn't that great yesterday when you strip out all the non-recurring items
(vi) The credit crunch is 6 months old, the layoffs and beginnings of declining consumer sentiment are newer. Consumer spending will be affected by the thousands of people who are losing their jobs, profit margins will be squeezed, and future earnings will likely wind up a dissapointment (and when we buy an equity, we're buying future earnings).
(vii) Tim Sykes is coming back to the market to take some HUGE short positions
Posted by , Nov 01, 2007 11:34AM
log(today's price) = log(yesterday's price) + random shock
Posted by ANYC , Nov 01, 2007 11:39AM
WDE, great list. But, you also need to add to the billions upon billions of dollars being spent over in Iraq. If I recall correctly, this invasion was to ensure that (i) on your list wouldn't occur. Nevertheless, we need to get rid of this republican administration in 2008. Anyone long for the late 90s?
Posted by , Nov 01, 2007 11:43AM
ANYC, no i was in college then, and while getting free t-shirt and flash drives from all the startups was great, by the time i graduated (2002) finance was in shambles and jobs were hard to come by so, knowing i would have that to look forward to while trying to repay my student loans i would have to say NO
Posted by WDE , Nov 01, 2007 11:46AM
The week long drinking binges and total lack of responsibility was pretty fun though.
Posted by Anonymous , Nov 01, 2007 12:20PM
Everyone figured out the GDP numbers are bogus. The chain deflator is way below what it should be. YOY CPI increases for November and December will approach 4%. SO we are nearing stagflation.
Tomorrow everyone will forget about it after the job numbers. Or maybe not.
Posted by Anonymous , Nov 01, 2007 2:38PM
Someone at CNBC finally noticed the ABX index has been on a free-fall for a while.
The Citi never sleeps.
Posted by Dave D'Rave , Nov 01, 2007 3:32PM
I kind of liked the late 70s.
The economy was crappy, but I had
a really great girl friend.
Remember when the Dow hit 800?
It felt so good, like things were
finally turning around. . .
Posted by Dave D'Rave , Nov 01, 2007 3:38PM
Citibank's dividend???
Are you guys nuts????
That sub-prime toilet paper is coming back onto their books, and they will
be lucky if there's enough cash to pay the electric bill.
If things are so good over there, then why are they asking for $100B in the super-SIV?
No way this is going to have a happy ending.