Ahead of the open, (10-11)
Thursday, November 10, 2011 at 02:40AM As discussed for a few days as to how the market remains in denial was answered today in a bloodbath..”..It’s also possible it’s too early, a few days at these levels may change everything for the world’s 3rd largest debtor.” …and of course the market would follow. SP500 -47pts to 1,229, DJIA -389pts to 11,781, NASD-105.84pts to 2,622 and R2K -36 to 719 (which led the ride as mkts had their biggest decline since mid August, although market seemed less panicky than August b/c eventually (as always before), things will be fixed is the motto…
However, in this view, what was before was a solvency problem with Greece etc, Italy is a growing liquidity problem. Liquidity problems lead to monies not loaned to US companies etc.(last week saw loan surveys pointing to taps being closed for some US co`s dealing w Europe) and a Lehman situation arises. That`s how recessions grow from overseas, as noted other day `big`Europe is in a recession already (note only a analysts have stated this publicly last few days, so it`s only personal opinion from recent eco`data out of Europe) and today we saw GM blame Europe and GDP was lowered by a tier 1 financial after eco`numbers today showed US is not immune…so, question has the dam broken and the spill started from across the Atlantic. Oh yeah, earnings were horrible today, it’s possible to list 10+ single stocks(lots nasd tech stuff) that succumbed badly to bad earnings, although CSCO was quite positive AH’s.
Maybe this spillage realization took the market from down DJIA 300pts to 190 and back down to 400+ , instead of the usual afternoon rallies recently that were hyped all over the media today. Once this buying after Europe closed was not playing out in the afternoon, selling picked up last hour. Correlations were high with all sectors-stocks, all were hit.
Note there are plenty of so-called solutions (ECB, IMF, unity gov’t in Italy) to Europe-Italy, so market can rally at any time, but the question is will it come quick enough or be big enough (if ECB,IMF) to keep contagion away and not affect US corps’.