I bumped the SALT wrap up to tomorrow — given the market action today, we need a good thrashing of today’s action — an open thread.

Is this the beginning of a crash? A healthy correction? Something global?


What say ye?

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

114 Responses to “Market Whackage Open Thread”

  1. dead hobo says:

    Out of curiosity, what are the very special technical levels on the S&P that are very important to watch for today.

    I like watching the line drawers blather about very special technical levels just like ice cream restaurants sing when a customer has their very special 47th birthday. Unfortunately, nobody on CNBC ever has to explain “oops, blew that one” ever.

  2. powersjq says:

    Government subsidization of the entire economy (pace Keynes) alleviates widespread human suffering and protects businesses from going kaput, right? But it can only make sense if the time that’s bought with the gov’t going in big-time debt is used to clear up all the problems in the financial sector that created the problem. All the talk about credit that I see is about numbers. But credit literally means “belief,” as in, “In giving you this loan I believe that you’ll pay me back according to the agreed terms.” Although we count the dollars loaned, the interest rate at which they’re loaned, default rates, etc., what we’re dealing with is a psychological condition whose effects we’ve quantified. Credit is not a number. We GIVE it a number.

    The fragility of the markets that we see has, as has been observed, only an indirect connection to numbers. What’s at stake here is credibility, both at the particular level of this or that borrower, and at the macro level of the perceived stability of the global political environment. I don’t at mean that it’s all appearances. I just mean to draw attention to the fact that while numbers provide useful indicators for aggregate belief at the margins (read: when most creditors believe that most borrowers are good for it–i.e. when markets are stable), they are less relevant as that belief crumbles.

    So, of the clowns who got us into this mess, who besides Mozilo has left his position? Which political leaders (although really, the damage was done in the 80s) have fallen on their swords? And why hasn’t someone sifted through all the “toxic assets” (remember those? Yeah, you own those now, as a US taxpayer, but no one knows what they’re really worth) to find out what they’re worth? The key number, such as it is, is LIBOR, which indicates clearly that even highly skilled, well informed, and deeply invested institutions are finding it more and more difficult to trust one another. This whole crisis boils down to a misunderstanding of how to create and manage trust.

  3. hue says:

    i wonder if HFTs, algos, bots, flash, Hals look to borrow before selling short then covering in 11 seconds.

  4. Rwethereyet says:

    This has the feel of playing a game where the rules are changing as we go, and we have to guess the next move.

  5. Eye Wall says:

    For those that saw my PS. above, what happened this morning was a ‘working down’ of the market pre-open so the big guys could get their low print on the index puts they were holding. Once that was taken care of (check), you got the bounce that would have normally occured over-night after a day like yesterday (check). This doesn’t always happen, but don’t think for a second that the markets exist for anyone except the pros anymore….

  6. Eye Wall says:

    Sorry, I should have mentioned that the settlement price of those expiring index options were determined on the *open* this morning.

  7. “…And why hasn’t someone sifted through all the “toxic assets” (remember those? Yeah, you own those now, as a US taxpayer, but no one knows what they’re really worth) to find out what they’re worth?…”


    good Q: , how soon We forget(?)..if we were interested in “Price Discovery” for those, it might be best to (make them/roll them out as) the Powerball Jackpot..or, more simply, get the USPS involved and Mail a folder of them to each ‘Household’ in the U.S. ..

    though, to be cynical, something tells me “Transparency” isn’t the Target. (to your, further, point..)

  8. red_pill says:

    My view is that this is a Healthy Correction. no one complains when markets are going up, except those caught short.

    many good names are oversold IMO like collateral-damaged oil services names (NE with a trailing PE of 5), which I own. the best weapons against foolish market behavior are a big pile of cash and patience.

    that said, I agree with BR that market can easily drop when economy is strengthening and vice versa. I am most concerned about 1- China 2- unexpected terrorist or other attack 3- intl conflict (North Korea, e.g.). Absent that, I think govt’s have actually acted pretty quickly and in a coordinated fashion and will continue to do so. This will be positive for businesses, consumers and markets. Rates will remain low as long as necessary and inflation is off the table for now. Down the road (2 yrs plus) rates will spike, bonds of all stripes will get crushed and hard assets will do ok but not as well as people expect.

    Anecdotally, I see unemployment declining and home prices firming up.

  9. powersjq says:

    @MEH: I understand why banks (and the FeD) wouldn’t want to face the music. I frankly don’t savor the thought of seeing how much horsepucky the FED has bought on my behalf. But, it’s either that or we’re all left in this universe where fear of what _might_ happen has taken control of most people’s minds. If I had nickel for every time someone’s written “this is the most frightened I’ve been…”

  10. Pir2 says:

    a favor!
    could you please have your website readable on a bb. i can read NYT, for whatever reason i don’t have to scroll on the right but bigpicture is a PAIN to the point i have to wait to be on the pc/mac to do it. Please i have nothing to do while waiting for the kids to be out of corporate/union school.kidding they are in montessory no union there.
    could it be possible or do i need to change some settings on my bb?

    tx in advance


    BR: On my list of things to do for the next upgrade.

  11. subscriptionblocker says:

    Everything will be on sale sometime during the next 8 months.

    But if you get out now – you’ll live forever :)

  12. powersjq,

    yes, it’s a bit of a “Hobson’s Choice”, though, see some of this http://www.washingtonsblog.com/2010/05/giant-banks-federal-reserve-and.html

    a decent article; seems to put some of it into a more accessible perspective..


  13. engineerd1 says:

    I wish we were going to 600 again, but you don’t get a second bite at the apple in this world, not when you are hungry. We have already looked into the ebyss long and hard, and the fear is gone. Most likely scenario is a takeoff from the Feb lows….Possibly as far down as dow 9600 in a “best” case scenario….don’t get greedy…or let your hatred of “the man” keep you broke….get into the game with some of your cash when the IBD goes into uptrend.

  14. theobannion says:

    Bill Clinton gave a very strong speech — no notes, extemporaneous, just standing and speaking. I was surprised and impressed. The audience of hedge fund managers gave him a standing O when he came out, and when he was finished. (That was even more surprising).

    Why shouldn’t they? When was BC ever an enemy of Big Money? Ditto his wife.