Market News

You, Sir, Are No Thespian


Joe mentioned this earlier but we have something to add so just deal with it. The above clip is our nomination for Worst Fake Freak Out Over A Market Swoon of the year. While there are a few good lines (“Let’s watch it go to the depths of fucking hell,” “Whoever’s short, congratulations,” “Thank you Mr. Motherfucking Stock Market”) there’s NO dancing around the fact that this guy is a horrible actor, and I’m not buying his little performance. He makes Tim Sykes look like Sydney Poitier and I don’t say that just because yesterday was Martin Luther King’s birthday. There’s no dread in his eyes, real or feigned. Also, and this my biggest directorial complaint, he should’ve done more with the walking off set (3’10) and then coming back on, something reminiscent of the “Happy Gilmore” scene when his girlfriend’s leaving and he screams “Fine, get the hell out of here! Who needs you?!” retreats and then runs back to the intercom and is all “I’m sorry baby, come up and Happy will make it okay” and then she goes “No!” and he responds “Fine! Get out of here! You know you’re a lousy Kindergarten teacher; I’ve seen those finger paintings you bring home and they suck!” [pause] “I’m sorry baby, I love your finger paintings. PLEASE don’t go” and then sleeps with the older Chinese woman. If he’d wanted this to be believable, he should’ve freaked out, left, come back and whispered sweet nothings to the market. Then freaked out again, left, sweet nothings. Freak out, leave, sweet nothings. Freak out, leave, sweet nothings. That’s how you make the market work for you. Larry Robbins knows what I’m talking about.

It’s Morning In Non-Black Monday America

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As it turns out, everything is going to be alright. We take it all back.
The Gloomsayers Should Look Up [New York Times]

Pay No Attention To Mounting Volatility

While everyone else was talking about the anniversary of “Black Monday” last week, we kept reminding anyone who would listen that it was not insignificant that the blackness of that day in 1987 fell on a Monday. The calendar may have read October 19th on Friday but today is a much better proxy for the day that the bottom fell out of the equities markets twenty-years ago. Black Monday, we think, is more like Easter Sunday—we should always commemorate the anniversary on a certain day of the week rather than have the calendar tell us that it’s Black Monday on a Friday.
And Friday was eerily close to the Friday before the original Black Monday. On that day twenty-years ago, the Dow Jones Industrial Average dropped 4.6%. This past Friday we saw the Dow down 4.1% when the market closed. The Nasdaq saw it’s worst decline since the great Glitch of February. The S&P was down 5.2% in 1987, and 3.9% this past Friday.
Anxiety is everywhere, and not least in the Chicago Board Options Exchange’s implied volatility index. The Vix has climbed back to levels it hasn’t seen since the last week of July, just when the credit and equities markets decided to take a header. And this morning? We’re all over the place this morning. A sharp decline at the open, followed by a bit of a rally led by the Nasdaq. But that was short lived and now we’re back down in slightly negative territory. Which does, we hate to point out, bear a scary resemblance to both that day in 87 and a typical Thursday happy hour for DealBreaker.
It’s completely superstitious to think that market conditions will repeat on anniversaries. What are the odds, right? This two week run-up in the Vix is probably not really telling us anything at all. Market psychology, ten and twenty month trend lines, Fibonacci numbers and, for all we know, the Da Vinci Code all say the equities market will stabilize. Merrill Lynch reports on Thursday, and it only has suffered $5.5 billion in losses from the subprime mortgage market and credit crunch, providing you believe the very people who told us in July that their exposure to subprime was “limited.”
We can’t even talk about this stuff without getting sarcastic. Oh, hey, another market uptick. Maybe everything will be alright after all.

Are The Credit Markets Predicting Another August?

Okay. That’s about enough time buried in quarterly financial reports for us. To cheer ourselves up after spending too much time with Bank of America’s investment banking division and JP Morgan’s commodities trading desk, we decided to turn to the broader markets.
But for some reason we’re not exactly cheered up. The yields on short term treasuries have been shrinking all week, while commercial paper rates climb. The spread between three month t-bills and Libor keeps getting wider. The last time we saw this kind of action was in August and September. During that “summer credit crunch.”
Even the good news is wrapped in bad news. While overall commercial paper issuances grew, asset backed commercial paper issuance shrank for a 10th straight week. The Entity doesn’t seem to be inspiring much confidence.
Implied volatility is down from its highs, but sits right about where it was at the end of July. Oh, and we just ran the charts and noticed that the major stock indexes are right about where they were before the August turmoil hit. Well, actually, the NASDAQ is a bit higher. But we can’t help feeling that this is all a bit spooky.
One question. Everyone keeps focusing on Friday as the anniversary of 1987’s market crash. But wasn’t that on a Monday following a week of losses and volatility? Which is to say, shouldn’t we be thinking not so much about Friday as Monday?
Whew. We’re in a gloomy mood today. We’re blaming it on “market dislocations.”

Caption Contest Monday: Let’s Start With A Smile

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[photo via an enterprising young reader]

As Fifi Goes, So Does the Market

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Reasons why the Dow, Nasdaq and S&P are all down over 1% today.
1. Disappointing earnings from Google, Caterpillar and Ericsson mixed with subprime worries and the flight to quality represented by the Treasury yield falling below 5%.
2. News that Dick Cheney will be in charge of the country this weekend for several hours while George Bush gets a colonoscopy (get out of U.S. markets before Dick bombs Iran, the New York Times offices or an abortion clinic (or all three)). Or the news that after the procedure, having clean innards and a polyp-free environment will bolster Dubya’s ability to make those “from the gut” decisions.
3. The passing of Fifi, one of the world’s oldest chimpanzees at age 60, in Sydney’s Taronga Zoo.

Dow over 13,000

The Dow is hovering over 13,000 again this afternoon, after slipping into 13,000 territory just for a minute (just to see how it feels) this morning. If the Dow closes over 13,000, it will be just 188 days since the Dow first closed over 12,000, on October 19 of last year. The Dow would rise 1,000 points every 7 months or so in the boom days of the mid-90s, although this represented a much greater % increase in the expansion of the market. Before the 2,726 day gap between the Dow rising from 11,000 to 12,000, the Dow was rising 1,000 points in just 219 days on average (since it hit 4,000).
Here’s a closer look at when the Dow first closed above each thousand, since it hit 4,000 in 1995:
Feb 23, 1995: Dow closes above 4,000
Nov 21, 1995: Dow closes above 5,000
Oct 14, 1996: Dow closes above 6,000
Feb 13, 1997: Dow closes above 7,000
Jul 16, 1997: Dow closes above 8,000
Apr 6, 1998: Dow closes above 9,000
Mar 29, 1999: Dow closes above 10,000
May 3, 1999: Dow closes above 11,000
Oct 19, 2006: Dow closes above 12,000
Any predictions on when the Dow will close over 14,000?
Dow Reaches 13000 on Profits, Alcoa – [WSJ]
Dow Closes Above the 12,000 Mark – [About.com]