Markets So Far – Wipeout!


Asian markets tumble

Update: The markets closed at -588! The White House announced that they want more spending.

Things are still grim for the markets today. The Dow is in correction territory and the Wall Street Journal says it’s flashing red. the average correction is 14% and it can take six months before it bottoms out.

It is probably a normal correction which has been long overdue but these are some big numbers.

All signs point to a massive sell-off at open at 9:30 EST, by as much as 600 to 800 points. [Update: the Dow dropped 1000 points at 9:36 but by 9:52, it was down only a little more than 500, for everyone who sells, there is someone who buys.]

There is a rush into bonds and oil is down almost 4%.

This is what we know so far Monday. Wipeout!

China stocks crashed and all Asian markets suffered huge losses. Europe’s markets are bleeding, down 5%.

Global markets are plunging today, with stocks across Asia sliding sharply, led by a freefall in China. The main Shanghai index was down 8.4 percent, erasing its gains so far this year.

Apple stock dropped 100 in pre-market selling but Tim Cook said Apple has done very well in July and August in China.

China doesn’t have a consumer-driven economy and it’s hard to know what is going on. They could be in contraction.

MSN said the market correction is long overdue and the big trigger for selling this week was yet more evidence of a slowdown in China’s economy, but there were plenty of other worrisome developments weighing on the market.

China has the world’s second biggest economy. Falling Chinese demand has sent prices plunging for all manner of commodities — iron, copper, oil. That has walloped countries that export them. Their devaluation, which was done as a last resort, is driving other government’s currencies lower. Fear is spreading that there will be a currency war.

Oil prices have fallen to $39 a barrel and if it keeps going it could drag down the S&P 500. Falling oil prices are good for consumers but bad for profits.

Investors are worried that the U.S. economy can’t handle the turmoil and they’re selling stocks.

Chinese stocks plunged as much a 9% at one point, the most since 1996 when it dropped 9.4% in a single session. This was the biggest Chinese rout since 2007.

There are some differences this time which were pointed out by Charles Hugh Smith at the OfTwoMinds Blog.

Here are some of them.

In 2007, we feared inflation, now it’s deflation. China only had $7 trillion in debt, less than the GDP but now they have $28 trillion in debt which is a walloping 282% of their GDP.

Central banks during the last recession had all those rescue packages and quantitative easing schemes with zero-interest policies, and on and on. Now the banks have nothing new. They’ve done it all.

This is what you get after almost seven years of big government and centralized banks controlling the economies.

We now have a rising dollar, not a falling dollar and its crushing overseas profits of U.S. companies and emerging market currencies and stock markets, resulting in China devaluing its currency which triggered the meltdown in the first place.