Daily Investment Interpretations

May 6, 2010

2010-5-6:  The markets absolutely crashed today: Wall Street washout. The NASDAQ Composite plummeted 82.65 points (-3.44%) to close at 2,319.64, the Dow dove 347.80 points (-3.2%) to 10,520.32, and the S&P 500 fell 37.76 points (-3.34%) to end the day at 1,128.13. Oil dropped $3.15 to $76.82 a barrel (Oil ends 3.6% lower as panic selling takes over), while Gold added $33 to close at $1,208: Gold surges on 'alternative currency' appeal. The VIX jumped 9.75 to 34.62
    Meanwhile, in Sentiment slams the Street, Mark Hulbert observes that the fact that gold rose at the same time the dollar rose reveals that investors were in a state of panic today. (At one point, the Dow was down 993 points, "its biggest intraday drop on record"!) there is reason to believe that someone somewhere made mistake and "pushed the wrong button": Bizarre pace of plunge points to trading snafu.
    On the other hand, the ECB (European Central Bank) President, Claude Trichet, after today's meeting of the ECB mouthed such Herbert-Hoover platitudes as "Current rates remain appropriate", "The economic recovery in the Eurozone is continuing", and "Risks to the outlook are broadly balanced." Instead of announcing decisive actions, he tried to pretend the problems did
n't exist, and the world's markets reacted accordingly.
    At the same time, there was some mildly bad news. Jobless claims for the past week weren't down quite as much as was predicted, and the unemployment rate is probably going to remain at 9.7%: Jobs slowly returning on Main Street. However, days like today alternate with days that are better than expected. In other-less-than-good news, Debt fears push Libor to highest since August. The Libor (London Inter-Bank Overnight Rate) skyrocketed  during the fall of 2008. In another piece of worrisome news, Moody's warns of Greek contagion for (European) banks.
    Meanwhile, the markets are now quite oversold on a short-term basis.
    In spite of riots in the street, Greek parliament approves government austerity plan
    Todd Harrison has written tonight: Europe traces U.S.'s battle plan, arguing that Europe is attempting the same minimization tactics that the U. S. practiced in 2008 until the plaster began to fall from the ceiling.
    Today's 993-point plunge occurred at 2:49 p. m. Eastern time, and is being  blamed on programmed trading blip that triggered a computerized "sell" chain reaction.
    Market futures are up significantly tonight.
    John Williams: A Hyper-Inflationary Great Depression Is Coming. I picked up this last article from the general news. I haven't a clue what kind of credibility this has.