You know the bad news: The contaigion spread is spreading. Russia's stock market is closed and an airport outside of London is for sale.
Here's the bad news you may not know. Commercial paper yield curves are sharply inverted and there is a gap (not enough trades to report) in the asset-backed curve. Quality spreads across the board are near historic highs. Odd-lot short positions are still in the normal range!
Here's the good news. US Treasury yields are the lowest since 1954. These low returns will eventually force people to buy stocks that have higher returns than fixed-income securities. Money will eventually flow from 3-mo. bills at 0.23% into the DJIA whose dividend yield is around 3%. It did last time...in 2003 when we were last in the tank.
2 comments:
Btw, all 30 DOW components were down today.. (and you mentioned in your book that such a rare event in July 2002 signaled you to return to the market.)
Naked Short selling rule in effect Thursday, Sept. 18th @ 12:01 a.m. ET. Seems to me that this will only prolong this nonsense.
Just over Bloomberg BoJ is planning on pumping another $247B into capital markets.
Fractional reserve central banking does not appear to live up to Aldrich's stated plan of stopping runs on banks. It appears however to be doing a great job of inflating the US dollar.
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