But, if it falls 2,000 points in three or four sessions, it would definitively signal the bottom. Note, it needs to be a sudden drop "" if the market just grinds lower over six months, with 10,000 in clear view before it breaks, it may not work. My sense is we will continue in limbo till the Dow drops sharply, ending up below 10,000. Indeed, nobody is going to buy anything till it is CLEAR that the collapse is over and a market-clearing price has been established.Īnd till that happens, the market will continue to resemble that 60s dance craze, the Limbo Rock, where you have to fold yourself backwards and edge under the limbo bar, which keeps getting set lower each time, as the crowd screams, How low can you go? Banks are staying as liquid as they possibly can to ensure that when another large domino "" following Carlyle, Bear, and so on "" bites the dust, they will have enough capital to stay afloat. The truth is that though equities are already dirt cheap "" Citibank under $20, for God's sake "" nobody is buying. Rather resembling the last hours of the Titanic. The Fed, like a blind symphony conductor, is wildly chopping interest rates, coordinating private sector rescues and, in a duet with the US Treasury, putting taxpayer money at risk (by taking on highly impaired assets as collateral), while the orchestra plays on.
US equities are in a nervous funk, gaining 300 points one day, losing 250 the next, and barely holding above the 11,500 target so definitively seen by all and sundry as the bottom signalled by the head and shoulders pattern formalised back in November last year. Meanwhile, the credit market collapse continues to hit new crescendos every week, with the purported rescue of Bear Stearns the latest in a string of failed efforts by the US Fed to bring some semblance of order to the market. Gold has shot through the $1,000 ceiling, and markets everywhere are in a rout.Įverybody believes the dollar has further to fall, and there is increasing talk of coordinated intervention by the good old G-3 "" remember them? Spot gold fell for a fifth straight session, down about 0.67% at $1,746 per ounce, in what could be its longest losing streak since November 2021.Confirming the fear described in my special report, the dollar has, indeed, collapsed to a new all-time low on a trade-weighted basis, broken through 100 yen and parity on the Swiss franc. Gold was headed for its first weekly drop in a month after hitting a three-week low. It was last at $21,332, down nearly 9% on the day. crude fell 0.4% to $90.14 per barrel and Brent was at $96.04, down 0.57% on the day.Ĭryptocurrencies fell sharply, with sudden selling dragging bitcoin to a three-week low. dollar and fears that an economic slowdown would weaken crude demand. Oil prices steadied on Friday, but fell for the week on a stronger U.S. and we note that stronger momentum will ultimately be met with additional policy rate firming," Gapen added. He cited improving motor vehicle assembly and retail sales data, but noted declining housing numbers. economy retains fairly healthy momentum," Michael Gapen, a Bank of America economist, wrote in a client note. "Incoming data, on net, suggests the U.S. Next week, investors will be paying close attention to minutes from the European Central Bank's July meeting, as well as comments by Fed Chair Jerome Powell when he addresses the annual global central banking conference in Jackson Hole, Wyoming, on Aug. Federal Reserve's plan to tighten monetary conditions. benchmark 10-year Treasury yield rose to a month high of 2.9776%, just shy of the 3% threshold it crossed in May for the first time since 2018 as investors worried about the U.S.
Treasury yields also rose on Friday, mimicking European bonds' own sell-off on inflationary fears. 20-21 policy meeting, Richmond Federal Reserve President Thomas Barkin said on Friday.īut more hawkish Fed official comments on Thursday helped push the dollar index up on Friday around 0.5%, a one-month high. central bank officials have "a lot of time still" before they need to decide how large an interest rate increase to approve at their Sept. "That means a continued tussle between central bank tightening expectations and recession fears." they will find central banks still far from having achieved their goals of reining in inflation," ING rates strategists said in a note to clients. "When market participants start to return from their holidays and look back.
The MSCI world equity index, which tracks shares in 47 countries, was down 1.3%. The pan-European STOXX 600 ended 0.8% lower.
European shares fell on Friday and posted a weekly loss as the highest-ever jump in German producer prices in July added to gloom over the economic outlook.