US data remains strong. Manufacturing conditions remained strong in the New York and Philadelphia regions and the Markit manufacturing PMI rose, the Conference Board’s leading indicator is continuing to rise, and jobless claims fell further. Housing-related data, like starts, permits and sales, doesn’t have a lot of momentum but it’s consistent with a flat/modest contribution to economic growth and at least it’s a long way from the pre-GFC housing boom that went bust.
Now started the preparations for reforms to revive the market and pull it out from the huge crisis. The first and foremost reform that was suggested was the uniformity of the margin requirements. This was done so that the volatility of the stocks, stock options and index features could be reduced. Also, the installation of new computer systems was suggested so that the market could be pulled out from these difficult times as soon as possible. These computer systems that were newly installed in the stock exchanges needed just a single keystroke to enter the trade. Earlier this work would be tiresome and needed almost 25 keystrokes. These new computer systems rejected the trade if a wrong input was made. Those ways these computers helped increase the efficiency of data management. They also helped to minimize errors and maximize productivity. Overall these new computer systems were helping to manage the data with much ease decreasing chances of mistakes to a great extent.
The joint report continued: "At 2:45:28 p.m., trading on the E-Mini was paused for five seconds when the Chicago Mercantile Exchange ('CME') Stop Logic Functionality was triggered in order to prevent a cascade of further price declines. In that short period of time, sell-side pressure in the E-Mini was partly alleviated and buy-side interest increased. When trading resumed at 2:45:33 p.m., prices stabilized and shortly thereafter, the E-Mini began to recover, followed by the SPY". After a short while, as market participants had "time to react and verify the integrity of their data and systems, buy-side and sell-side interest returned and an orderly price discovery process began to function", and by 3:00 p.m., most stocks "had reverted back to trading at prices reflecting true consensus values".
“Big surprise and a shock to me. Sitting on strong liquidity position. We have been extremely conservative in maintenance of liquidity. There is no default whatsoever. The repayments are not even due yet. There is ample liquidity lying with us in the system to take care of interest as well as the principle payouts over the next couple of quarters. All this what we are seeing is panic-stricken market reaction. Total liability position till 31 March is just Rs 4,800 crore; obviously there is some amount of CP that is there in the system, but it’s not a very big amount. At the same time there is close to Rs 10,000 crore of liquidity available with us in the system other than collections that we accrue on a monthly basis. Those collections are anywhere between 2500-3000 crore. Not to go on a pledge shares; no loan against shares NPA position is strong; asset quality is top notch,” Kapil Wadhawan, MD, DHFL told CNBC TV 18.
Meanwhile, domestic stock markets were closed on Thursday on account of Muharram. On Wednesday, the indices ended on a lower note. The S&P BSE Sensex settled at 37,121.22, down 169.45 points and the Nifty50 index of the National Stock Exchange (NSE) ended at 11,234.35, with a loss of 44.55 points. This was the lowest closing levels for markets since late July. (With agencies inputs)
I find it hard to believe inventory increased by 50 percent, do you have any numbers on that? To see why inventory is low you need to look at the number of sales as well. If we were selling many more homes that would indicate inventory is low because people are buying everything up, but sales are down. That indicates it is not investors buying everything, but there are simply not enough houses for sale. That is what I see in most markets. There are not enough houses for everyone who wants to buy.
As an investment banker who buys blocks of mortgages around America this is an important subject as to whether the value of my collateral will deteriorate. Talbott does a good job presenting his case that there is a relationship between household income and housing prices. His point is well taken that low interest rates have fueled this boom and that when rates rise, housing prices will have to come down. So, from the perspective of his thesis, I found this to be well written and well documented even if I agree there is a risk but do not believe that it will be significant.
Following the 1987 stock market crash was one of the major reforms that were introduced was by the Chicago Mercantile Exchange and the NYSE. They together introduced the revolutionary “circuit breaker” mechanism. This system was installed in these two exchanges to that no major market crashes further occurred. What this mechanism did was halt the market in case of major fall of the Dow. During this period no trade could be carried out in these two exchanges. If the Dow fell 250 points or more, the market would stop its trading for an hour. If the fall had been for more than 400 points then the market would halt for two hours.
Oil futures inched up on Friday amid concerns over supply as U.S. sanctions on Iran's crude exports loom, although calls by U.S. President Donald Trump for lower oil prices dragged, a Reuters report said. Brent crude for November delivery was up 26 cents, or 0.33%, at $78.96 a barrel while US West Texas Intermediate crude for October delivery was up 7 cents, or 0.10%, at $70.39 a barrel, the report added.
Until 1982, few third-party console games existed other than Activision's. Imagic and Games by Apollo demonstrated their own 2600 cartridges in January 1982, and Coleco announced several 2600 and Intellivision games. Parker Brothers, CBS Video Games, and Mattel also announced 2600 cartridges at the February Toy Fair, and Coleco announced the ColecoVision. At the Summer 1982 Consumer Electronics Show, 17 companies including MCA Inc. and Fox Video Games announced 90 new Atari games. By 1983, an estimated 100 companies were vying to get a foothold in the video game market.
But what about the risk of a property price crash as suggested by the recent Sixty Minutes report? Several things are worth noting in relation to this: predictions of a 30-50% property price crash have been wheeled out regularly in Australian media over the last decade including on Sixty Minutes; the anecdotes of mortgage stress and defaults don’t line up well with actual data showing low levels of arrears; borrowers have already been moving from interest only to principle and interest loans over the last few years, without a lot of stress; and the 40-45% price fall call on the program was “if everything turns against us”. Our view remains that in the absence of much higher interest rates, much higher unemployment, or a multi-year supply surge (none of which are expected) a property crash is unlikely. But the risks are now greater than when property crash calls started to be made a decade or so ago and so deeper price falls than the 15% top to bottom fall we expect for Sydney and Melbourne are a high risk. This is particularly so given the risk that post the Royal Commission bank lending standards become excessively tight, negative gearing is restricted and the capital gains tax discount is halved after a change in government in Canberra. There is also a big risk that FOMO (fear of missing out) becomes FONGO (fear of not getting out) for some.
Tech stocks, this year’s best-performing industry, will be in the spotlight, as executives from Twitter, Facebook and Google’s parent Alphabet begin testimony to Congress on Wednesday while Trump blasts about antitrust. Friday’s monthly payrolls data precedes a policy meeting by Federal Reserve later in the month, when the central bank is expected to raise interest rates for an eighth time since 2015.
The bottom line: As a sandpile grows, all sort of sand “avalanches” take place, but it is impossible to predict how big or how often they occur. Sometimes a few grains roll down the slope, while occasionally a large avalanche carves a big section of the sandpile. The size and frequency of those avalanches, mathematically speaking, bear a notable resemblance to the size and frequency of earthquakes, solar flares, river floods, forest fires, and stock market returns. Intriguingly, all of them have defied attempts at prediction. The question is why.
On Black Monday, the Dow Jones Industrial Average fell 38.33 points to 260, a drop of 12.8%. The deluge of selling overwhelmed the ticker tape system that normally gave investors the current prices of their shares. Telephone lines and telegraphs were clogged and were unable to cope. This information vacuum only led to more fear and panic. The technology of the New Era, previously much celebrated by investors, now served to deepen their suffering.
You can cushion the effects of a crash by allocating to defensive and blue-chip stocks, bonds, gold and cash. Having some cash in your portfolio also allows you to buy back into the market at lower levels. The current stock market is fairly expensive, but there are no signs of an imminent crash. However, that doesn’t mean market conditions can’t change quickly. That’s why you should always be ready for the next crash.
The U.S. game industry lobbied in Washington, D.C. for a smaller $1 coin, closer to the size of a quarter, arguing that inflation (which had reduced the quarter's spending power by a third in the early 1980s) was making it difficult to prosper. During the 1970s, the dollar coin in use was the Eisenhower dollar, a large coin impractical for vending machines. The Susan B. Anthony dollar was introduced in 1979, and its size fit the video game manufacturers' demands, but it was a failure with the general public. Ironically, the new coin's similarity to the quarter was one of the most common complaints. In Canada, existing dollar bills were removed from circulation and replaced with coins in 1987.
Did you ever stop to think about how goods and services can’t teleport? We don’t have teleportation technology – or magic, for that matter. So when a president/congress decides to move the economy, it takes *time* for the economy to react. Policies take time to come in force, markets take time to guage impacts and respond accordingly, equilibrium is established only after a long series of interractions. It takes *years* not days or weeks. You don’t judge a president (or congress) by what happens immediately after they take office (read: the economic meltdown during Obama’s first term, or the economic uptick during Trump’s first few months). You look at what happens two years into their term of office, with acknowledgement of the context.
Slingshot, you have me laughing, thats a good one. Hopefully i am not responsible for run on the ammo. Me like everyone else, has heard it from the horses mouth. No one knows the exact date when it will hit in September. I was told by my scientist that by Novermber, people will literally be on the streets in mass, raising hell on earth, and he is not sure why, its just what he was told. Food and water shortage, civil war, revolution, uprising? etc. Who knows. All that crap i am tryping up, its what i am being told is likely to commense.
This does not mean that successful investing is impossible; only that the more we learn about market behavior, the more it seems that trying to deal with uncertainty is more important than pretending that we can have any certainty. More precisely, managing risk seems to be a better approach to investing than concocting forecasts on asset returns. This could mean, for example, finding ways of identifying when market participants start to align on one side of a trade by measuring correlations, or measuring returns to flash a warning when they start growing at “super-exponential” rates.
Note: The statements and information presented in this post is not intended as professional investment advice. It is solely an exploration of stock investing and the risks, perils, and behavior of stock markets and the economy. No one should rely on a single source of information or a single stock market and investing professional’s advice. The overall message of the post might be to diversify stock, real estate, and cash/gold holdings as a hedge against stock market crashes. Investors should look into hedging strategies but be aware that even hedging may provide limited protection from a crash.
So, I should go ahead and take that last $15 I have in the bank out?? (better yet ill use it to fill up a gas can) Looks like this isn’t going to end well. The problem is the talking bimbos on the idiot box keep telling the lotus eaters of this world that everything is fine. (And they believe them!!) Have you tried to wake some of these people up to the fact that this will not end well?? My friends all thought I was crazy when I decided to move to the country to an off grid cabin in the woods two years ago, still not 100% ready but at least I don’t have to walk among them. God bless and prep on!
In 2011 high-frequency traders moved away from the stock market as there had been lower volatility and volume. The combined average daily trading volume in the New York Stock Exchange and Nasdaq Stock Market in the first four months of 2011 fell 15% from 2010, to an average of 6.3 billion shares a day. Trading activities declined throughout 2011, with April's daily average of 5.8 billion shares marking the lowest month since May 2008. Sharp movements in stock prices, which were frequent during the period from 2008 to the first half of 2010, were in a decline in the Chicago Board Options Exchange volatility index, the VIX, which fell to its lowest level in April 2011 since July 2007.
In putting this into practice today, let’s assume we have $100,000 invested in equities currently so we need to buy $500 in 2-month put options (0.5% of $100,000) that are 30% below the current underlying price. SPY trades at 219.4 as I write this so $154 is about 30% beneath this price. A small segment of the October 21 put options chain is below (from Yahoo!Finance). Looking at the ask prices and volume it looks like the 155 puts are a bit more liquid and better priced than the 154 puts. At $9 each (9c times 100 shares) we can buy 55 of the October 155 put options for $495.
What you can do is prepare for the next crash. In fact, regardless of how the stock market is doing today, you should be prepared for a crash – because unexpected events (black swans) can trigger one at any time. You don’t need to wait for the next stock market crash prediction to come along to learn about bear markets, how they occur, why they occur, and what you can do to avoid being wiped out. We prepared this guide for that very reason.
At first, while the regulatory agencies and the United States Congress announced investigations into the crash, no specific reason for the six hundred point plunge was identified. Investigators focused on a number of possible causes, including a confluence of computer-automated trades, or possibly an error by human traders. By the first weekend, regulators had discounted the possibility of trader error and focused on automated trades conducted on exchanges other than the NYSE. However, CME Group, a large futures exchange, stated that, insofar as stock index futures traded on CME Group were concerned, its investigation found no evidence for this or that high-frequency trading played a role, and in fact concluded that automated trading had contributed to market stability during the period of the crash. Others speculate that an intermarket sweep order may have played a role in triggering the crash.
"I think we're going to work through this continued intersection of domestic and international political risk, with the fact the economy is very good and the earnings projection is very good, and the valuations are creeping up, but they're by no means excessive, with interest rates at this level," said Julian Emanuel, chief equity and derivatives strategist at BTIG. "But our view has been all along that basically you've got to fix the relationship with China in order to really make material further upside progress."
Interesting points. To say a 2 billion dollar a day trade deficit is meaningless might be understating it. Running trade deficits every year is dangerous and leads to the recession you’re fearing. It’s the trade policies that make it happen. The global economy was highly dependent on US willing to run huge trade deficits and Europe and China are undergoing withdrawal problems.
The crash shook the then-booming industry, and led to the bankruptcy of several companies producing home computers and video game consoles in the region. It lasted about two years. Analysts of the time expressed doubts about the long-term viability of video game consoles and software. The North American video game console industry recovered a few years later, mostly due to the widespread success of the Nintendo Entertainment System (NES) in 1985; Nintendo designed the NES as the Western branding for its Famicom console originally released in 1983 to avoid the missteps that caused the 1983 crash and avoid the stigma that video games had at that time.