Eliot Ness must have bashed down the doors of the market's speakeasies last evening, as the beefers are climbing out the windows this morning, having all hit the sell buttons at the same time. I wrote about this behavior a few days as a reason that I don't like being leveraged long when the markets are making intermediate term highs.
And they are acting according to the book on their behavior.
Chinese markets were down over 5% last night, Europe is down about 2% this morning early and US futures are down about 2%. Commodities are down, too.
Any news ? Nope.
FT: "Japan has climbed out of recession after the economy returned to growth in the second quarter, raising hopes that the worst of the financial crisis is over in the world’s second-largest economy. Data released on Monday showed that gross domestic product expanded 0.9 per cent quarter on quarter on a seasonally adjusted basis, following four quarters of contraction. On an annualised basis, the economy grew 3.7 per cent.
The Street is reverting to its foolish overpayment culture as Barclays is offering some commodity traders in London huge pay packages to lure them from JPMorgan.
I was thinking this morning of the proper names for this economic slowdown and conclude that the Panic of '08 fits best. The world economies were going into a plain mid-cycle slowdown until the beefers and shorts started the raiding in the summer of 2008, culminating in the full bore financial panic of September and October. The second wave of that panic occurred in February and early March of 2009 over fears that Obama was failing to lead.
Hmmm in French, that name is a rhyming La Panique d'Zéro Huit.
I am doing nothing. Je ne fais rien. Often these selloffs take a few days to run their courses unless some fundamental change is being recognized. Thus, for now, I wait. Fido Fund has plenty of cash as does Obama Fund. If nothing fundamental seems changed, I'll target some names and groups that I've been noodling over.
Word of the Day
"Zeitgeist" - noun [$10]; a German word now used in American writing.
Zeitgeist means the spirit and outlook characteristic of a period or generation.
Sentence: If a phrase reflects the zeitgeist of the Great Depression, it was "buddy, can you spare a dime". I wonder what phrase will reflect the zeitgeist of the Panic of '08?
"Fortuna" - noun, first declension, feminine; its genitive is fortunae.
Fortuna means fortune, luck.
Sententia: Fortes fortuna iuvat. [from Terence]
Sentence: Fortune helps the brave. [alternate: Fortune favors the bold.]