Global markets round-up

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It is 8:15 AM ET and this is what I see in the markets today as we await the opening in New York:

Europe
The U.K FTSE 100 down 7.5%
The German DAX down 9%
The CAC-40 in Paris down over 8%

Asia
Japan’s Nikkei down nearly 10%
The Hang Seng in Hong Kong down7%
The Straits Times in Singapore down over 7%.

Currencies
The USD up against the Euro, the Pound Sterling and the Rand, but down versus the Swiss Franc.
Pound Falls on Concern U.K., Iceland Assets Row May Escalate – Bloomberg
South African Rand Trades Near Six-Year Low on Slump in Stocks – Bloomberg

Credit Markets
The TED Spread at an all time high
Libor for Three-Month Dollars Rises as Cash Injections Misfire – Bloomberg
Treasuries are mixed but TIPS are way down as inflation is expected to collapse.

Commodities
All commodity indices are down
Brent Crude is trading under $80
West Texas Intermediate is under $82
Gasoline and Heating Oil Futures are off 5%
Natural Gas is down 2%
Agricultural Commodities are all down
Industrial Metals and Gold are up

I would characterize this as a global asset re-pricing as nearly all asset classes are off. What would expect to happen as a result of this? Mutual fund redemption and hedge fund implosion are the first things that come to mind.

Therefore, over the weekend the U.S. monetary authorities need to:

  1. Act as Lender of Last resort in the Commercial Paper and in the LIBOR market. Assistance from the Europeans would be appreciated
  2. Start buying shares in financials or preferably take preferred shares in financials as the British are doing.
  3. Think about shutting markets down altogether.

None of this will definitely calm the markets, but we are so close to Depression that they must do everything (anything) in their power to stop this train wreck from happening. We are very close to Financial Armageddon.

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