The Serious Stock Market Crash Thread

[Flopper]

Woowee! Now that's a beatdown! Dow down 635. S&P down 80. Russell 2000 down 64. Small cap stocks fell 7% today. Large caps were down 6.7%. The S&P is down 13.4% in August, the worst start to August ever.

No summer rally this year. Europe is looking a lot worse than the US. We just need to have politicians start drawing some red lines in the budget or raise some taxes. In contrast to the United States, the European Union has a constitutional problem: Serious sanctions against members who go into deep debt are nowhere to be seen on the horizon as of yet. As long as Europe’s politicians fail to solve that problem, the euro will lurch from one crisis to the next. America’s problems seem almost trivial in comparison.

Watching America   :   » America Is in Better Shape Than Europe

 

[bill5]

The other thread has turned into the usual mindless political hack garbage.

Shocking isn't it

This thread is to discuss the stock market crash without blaming everything on Republicans or Democrats by people who barely know the difference between a stock and livestock.

Refreshing approach and thanks for that.



My pathetic money market isn't ideal but not lookin so bad now. I want to move it but not many option right now IMO. Might spread into a few CDs, but they aren't much better right now.

 

[Trajan]

every blue chip I track was down at least 2.5%, bank of America down almost 20% to 6.51. wow....

 

[Modbert]

Every market is down today.

every blue chip I track was down at least 2.5%, bank of America down almost 20% to 6.51. wow....

That's because AIG hit them with a $10 billion lawsuit.

http://online.wsj.com/article/BT-CO-20110808-714292.html

NEW YORK (Dow Jones)--Bank of America (BAC) shares fell more than 17% as of midday Monday, leading financial stocks down in a broader market sell-off.

Earlier Monday, American International Group Inc. (AIG) sued the Charlotte-based bank, the largest U.S. bank by assets, seeking to recover the $10 billion it lost on mortgage investments. AIG also intends to object to Bank of America's $8.5 billion settlement with other bond investors.

 

[Toro]

It is worth noting that not just the US Markets tanked today. They all did.

And that it isn't just about Obama. As much as that would bother him. It is also about Spain and Italy beging given handouts to do more of the same as well. The Eruo bank bailed out the Italians and Spaniards, who will not do reform, but seem determined to take the rest of europe with them.

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

 

[Toro]

Every market is down today.

every blue chip I track was down at least 2.5%, bank of America down almost 20% to 6.51. wow....

That's because AIG hit them with a $10 billion lawsuit.

Bank of America Shares Plummet Monday After Lawsuit, US Debt Downgrade - WSJ.com

NEW YORK (Dow Jones)--Bank of America (BAC) shares fell more than 17% as of midday Monday, leading financial stocks down in a broader market sell-off.

Earlier Monday, American International Group Inc. (AIG) sued the Charlotte-based bank, the largest U.S. bank by assets, seeking to recover the $10 billion it lost on mortgage investments. AIG also intends to object to Bank of America's $8.5 billion settlement with other bond investors.

That's part of it, but not entirely. If I recall correctly, tangible book value for BofA is about $50 billion. Since AIG won't recover all $10 billion, even after the lawsuits, BofA will still be well capitalized, at least after the lawsuits. The worry, in part, is that as the most exposed domestically of the biggest banks, BofA still has a lot of garbage from their purchase of Countrywide that will roll over if we go into recession. Also, BofA is owned by some large hedge funds that have had bad performance over the past few months. Other hedge funds are shooting against those funds, trying to break the poor performing hedge funds by banging down their holdings such as BofA.

 

[Modbert]

That's part of it, but not entirely. If I recall correctly, tangible book value for BofA is about $50 billion. Since AIG won't recover all $10 billion, even after the lawsuits, BofA will still be well capitalized, at least after the lawsuits. The worry, in part, is that as the most exposed domestically of the biggest banks, BofA still has a lot of garbage from their purchase of Countrywide that will roll over if we go into recession. Also, BofA is owned by some large hedge funds that have had bad performance over the past few months. Other hedge funds are shooting against those funds, trying to break the poor performing hedge funds by banging down their holdings such as BofA.

True, it's not the entire reason but it does certainly contribute to their troubles. Where do you see Bank of America a year from now?

 

[Trajan]

That's part of it, but not entirely. If I recall correctly, tangible book value for BofA is about $50 billion. Since AIG won't recover all $10 billion, even after the lawsuits, BofA will still be well capitalized, at least after the lawsuits. The worry, in part, is that as the most exposed domestically of the biggest banks, BofA still has a lot of garbage from their purchase of Countrywide that will roll over if we go into recession. Also, BofA is owned by some large hedge funds that have had bad performance over the past few months. Other hedge funds are shooting against those funds, trying to break the poor performing hedge funds by banging down their holdings such as BofA.

True, it's not the entire reason but it does certainly contribute to their troubles. Where do you see Bank of America a year from now?

getting a bailout......

actually I am not kidding

 

[Toro]

That's part of it, but not entirely. If I recall correctly, tangible book value for BofA is about $50 billion. Since AIG won't recover all $10 billion, even after the lawsuits, BofA will still be well capitalized, at least after the lawsuits. The worry, in part, is that as the most exposed domestically of the biggest banks, BofA still has a lot of garbage from their purchase of Countrywide that will roll over if we go into recession. Also, BofA is owned by some large hedge funds that have had bad performance over the past few months. Other hedge funds are shooting against those funds, trying to break the poor performing hedge funds by banging down their holdings such as BofA.

True, it's not the entire reason but it does certainly contribute to their troubles. Where do you see Bank of America a year from now?

I have no idea. Either a zero or much higher from here.

 

[Toro]

The NYSE only had 50 stocks in positive territory at the end of the day, while there were 3,111 in the red. The last time breadth was this bad was over 70 years ago in 1940 when Germany invaded France.

http://www.thestreet.com/p/_revblog/rmoney/revsharkblog/11214181.html

 

[Trajan]

The NYSE only had 50 stocks in positive territory at the end of the day, while there were 3,111 in the red. The last time breadth was this bad was over 70 years ago in 1940 when Germany invaded France.

http://www.thestreet.com/p/_revblog/rmoney/revsharkblog/11214181.html

from the link..

you have to wonder if the market is close to some sort of massive snap-back rally....

I won't bet on I, BUT I am ready to add some choice stocks to my portfolio and am prepared to hold, tomorrows Volume will tell us a lot more.

 

[Flopper]

every blue chip I track was down at least 2.5%, bank of America down almost 20% to 6.51. wow....

AIG is suing them for 10 billion.

 

[Trajan]

every blue chip I track was down at least 2.5%, bank of America down almost 20% to 6.51. wow....

AIG is suing them for 10 billion.

no problem, they can write them a check from uncle sams kick...

and is that after or before the robosigning thing whacks them too? its a mess.

 

[Quantum Windbag]

It is worth noting that not just the US Markets tanked today. They all did.

And that it isn't just about Obama. As much as that would bother him. It is also about Spain and Italy beging given handouts to do more of the same as well. The Eruo bank bailed out the Italians and Spaniards, who will not do reform, but seem determined to take the rest of europe with them.

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

 

[Ravi]

It is worth noting that not just the US Markets tanked today. They all did.

And that it isn't just about Obama. As much as that would bother him. It is also about Spain and Italy beging given handouts to do more of the same as well. The Eruo bank bailed out the Italians and Spaniards, who will not do reform, but seem determined to take the rest of europe with them.

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

Good question and one I've asked a few times with no serious answer.

 

[Toro]

It is worth noting that not just the US Markets tanked today. They all did.

And that it isn't just about Obama. As much as that would bother him. It is also about Spain and Italy beging given handouts to do more of the same as well. The Eruo bank bailed out the Italians and Spaniards, who will not do reform, but seem determined to take the rest of europe with them.

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

I disagree with Krugman. There is a weird dynamic in the market right now. Treasuries are the default instrument for those seeking safety. So a downgrade increases fear in the market, which causes buying of the "safest" investment, which are Treasuries. It's circular, I know, but don't the market is weird sometimes. Note that Japan was downgraded many years ago to AA+ and yields on JGBs are far lower now than when they were when they were downgraded. The market is selling off in part because of the economic slowdown, but that wasn't why we were down so heavily today.

At 8pm, Dow futures were down another 75 points.

 

[Ravi]

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

I disagree with Krugman. There is a weird dynamic in the market right now. Treasuries are the default instrument for those seeking safety. So a downgrade increases fear in the market, which causes buying of the "safest" investment, which are Treasuries. It's circular, I know, but don't the market is weird sometimes. Note that Japan was downgraded many years ago to AA+ and yields on JGBs are far lower now than when they were when they were downgraded. The market is selling off in part because of the economic slowdown, but that wasn't why we were down so heavily today.

At 8pm, Dow futures were down another 75 points.

Is it possible that the markets have more trust in the ability of the US to pay than they do in the ability of corporations to pay in this economy? Even with the downgrade, no one thinks the US will suddenly stop paying its debts. No so much with corporations.

 

[Flopper]

It is worth noting that not just the US Markets tanked today. They all did.

And that it isn't just about Obama. As much as that would bother him. It is also about Spain and Italy beging given handouts to do more of the same as well. The Eruo bank bailed out the Italians and Spaniards, who will not do reform, but seem determined to take the rest of europe with them.

Today was about the downgrade. Last week was about the European banking system. Last week, most European stock markers fell further than the US.

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

They are buying treasuries because the US is always looked on as a safe have in times of crisis. While stock markets were selling off around the world bonds rallied. The 30-year bond price gained more than a point in price as investors sent their own clear message that in times of turmoil, Treasurys were still the safest house on the block. News Headlines

Keep in mind that the two other major bond rating services, Moody's and Fitch have not change their AAA rating. In fact Moody's reaffirmed that rating twice this week.

I find it interesting that S&P, whose failure to rate bonds properly were a major cause of the 2008 debacle in the bond market is now setting off a major stock market crash in 2011.

 

[Toro]

The NYSE only had 50 stocks in positive territory at the end of the day, while there were 3,111 in the red. The last time breadth was this bad was over 70 years ago in 1940 when Germany invaded France.

http://www.thestreet.com/p/_revblog/rmoney/revsharkblog/11214181.html

from the link..

you have to wonder if the market is close to some sort of massive snap-back rally....

I won't bet on I, BUT I am ready to add some choice stocks to my portfolio and am prepared to hold, tomorrows Volume will tell us a lot more.

When the market snaps back, it will most likely be massive. The question will be whether or not it will hold.

Ideally, you don't want the market to rally right back. You want the market to hit a low, stabilize, retest the low and hold. The more times it does that, the more confident you can be that a bottom is in because it will signal an exhaustion in selling. What is most likely to happen is a bounce after a consolidation, then a retest that either holds or breaks down. If we retest and hold, I will get very aggressive on the upside.

But right now, the market is very dangerous and I am just sitting in cash and waiting.

 

[Toro]

Here is what I do not get, and apparently I am not the only one that is completely confused by this. If this is about the downgrade why are so many people buying treasuries?

Paul Krugman.

Aaauuuggghhh! Market Commentary Edition - NYTimes.com

Arnold Kling.

Market plunge: Don't blame the Standard & Poor's downgrade

The Downgrade might be a factor, but it is certainly not the driving force behind what is happening. If it was people would also be avoiding the one thing that is directly related to the downgrade, and they are not doing that.

I disagree with Krugman. There is a weird dynamic in the market right now. Treasuries are the default instrument for those seeking safety. So a downgrade increases fear in the market, which causes buying of the "safest" investment, which are Treasuries. It's circular, I know, but don't the market is weird sometimes. Note that Japan was downgraded many years ago to AA+ and yields on JGBs are far lower now than when they were when they were downgraded. The market is selling off in part because of the economic slowdown, but that wasn't why we were down so heavily today.

At 8pm, Dow futures were down another 75 points.

Is it possible that the markets have more trust in the ability of the US to pay than they do in the ability of corporations to pay in this economy? Even with the downgrade, no one thinks the US will suddenly stop paying its debts. No so much with corporations.

Most likely.

Remember, a downgrade doesn't mean that the US will default. It means that the probability of a default has risen. And a decline from AAA to AA+ is a fairly minor increase in the perceived probability of a default. That isn't a minimization of the downgrade, just a recognition of what a downgrade means.

Dow futures down 90 at 8:20.