5m ago
06.57 EDT
Larry
Elliott
Although
the losses of recent days have been very painful for investors large and small,
the market meltdown still has a way to go to match the crash of October 1987.
Our
former economics editor Larry Elliott (a veteran of a fair few market crashes)
reminds me.
Then, on
the Monday and Tuesday the FTSE 100 fell by 23% in two days.
The Dow
dropped by 22% on the Monday. In the days before modern communication Alan
Greenspan, the newly appointed Fed chair, was on a plane from Washington while
the carnage was happening. When he reached his destination (Dallas from memory)
he asked how the Dow had finished. Down 508 he was told.
Mistakenly,
Greenspan thought that meant down 5.08 points and assumed the Dow had had a
late bounce as it sometimes does after a turbulent day. His relief was short
lived!
Greenspan
wrote more about this dramatic day, here.
Updated
at
06.57 EDT
19m ago
11.43 BST
Bloomberg:
Three-day selloff wipes out $9.5tn
We’re
well into the third day of the market meltdown after Donald Trump’s ‘Liberation
Day’ tariff announcement last Wednesday.
Bloomberg
have calculated that around $9.5trn has been wiped off global share prices
since the US president announced new trade levies on on friends, foes, and the
penguins living on barren, uninhabited volcanic islands near Antarctica.
They
explain:
The
carnage in financial markets worsened on Monday with stressed-out investors
abandoning hopes that President Donald Trump would change his tariff policy.
Stocks
tumbled, taking the three-day wipeout in global equity value to about $9.5
trillion. S&P 500 equity futures signaled a 3% loss and the VIX Index
spiked above 50. Europe’s Stoxx 600 tumbled 5%. Asia capped the worst day since
2008. Treasuries and the yen gained as investors sought refuge.
32m ago
11.31 BST
JPMorga's
Dimon warns tariffs will lift prices and could cause recession
Jamie
Dimon, the CEO of JP Morgan, has warned that Donald Trump’s new tariffs will
hurt growth and drive up prices for consumers.
In his
annual letter to shareholders, Dimon – one of the most influential voices on
Wall Street – says:
The
recent tariffs will likely increase inflation and are causing many to consider
a greater probability of a recession. And even with the recent decline in
market values, prices remain relatively high. These significant and somewhat
unprecedented forces cause us to remain very cautious.
[Dimon is
clearly correct – with Goldman Sachs lifting their US recession chances today]
In his
letter, Dimon also warns that the US economy had already begun weakening before
the recent tariff announcement.
In the
short term, he says, tariffs will have “inflationary outcomes”, not only on
imported goods but on domestic prices, as input costs rise and demand increases
on domestic products.
[Reminder:
tariffs are paid by the importer of foreign goods, not the overseas producer].
Dimon
says:
How this
plays out on different products will partially depend on their substitutability
and price elasticity. Whether or not the menu of tariffs causes a recession
remains in question, but it will slow down growth.
46m ago
11.16 BST
Elon Musk
appears to be signalling his displeasure with Donald Trump’s trade war.
Over the
weekend, the Tesla boss turned government official said he backed eventually
ending all tariffs and creating a free-trade zone between the U.S. and the
European Union.
And this
morning, Musk has doubled down by posting a video of economist Milton Friedman
using the example of the humble pencil as an example of how the free market
creates the global cooperation needed produce goods cheaply and efficiently.
1h ago
11.06 BST
Trump’s
“medicine” has left equities with a bitter taste, reports Thomas Mathews, Head
of Markets for Asia Pacific at Capital Economics, who says:
The
carnage in global equity markets has continued after President Trump doubled
down on his tariff plans, noting that “sometimes you have to take a medicine to
fix something”.
We still
think he will lower the dosage by paring back his tariffs. But, if he doesn’t,
equities could get a lot sicker yet.
1h ago
10.45 BST
Wall
Street could tumble into a bear market today, judging by the futures markets.
The
S&P 500 index is currently on track to fall around 3.5% when trading
resumes, according to the futures market, with investors expected to hammer the
sell button again.
Samer
Hasn, senior market analyst at XS.com, said this morning:
S&P
500 futures continued to collapse in early trading this morning, along with
global indices, falling nearly 5%. Nasdaq 100 futures also fell nearly 6% at
the same time.
S&P
500 futures officially entered bear territory today, having fallen more than
22% from their all-time highs. US markets are set to dive this week in the bear
market, amid gloomy prospects surrounding the US trade war and weak signals
regarding the possibility of a settlement to the conflict.
Tariffs
are not new, and markets reacted strongly to them last week. However, Trump’s
indications over the weekend that he will maintain the tariffs further
frustrate markets, which are clinging to hope for a de-escalation. Trump’s
weekend golfing after the widespread market collapses could also be interpreted
as a sign of indifference – which he has denied – to the consequences of his
recent actions, suggesting he may be sticking to his plan.
Furthermore,
although many leaders of countries affected by the tariffs are inclined to
negotiate and make steps that would reduce the tariffs imposed on them, recent
signs and reports do not suggest any progress toward a diplomatic solution to
the trade war. For example, China and the United States have been unable to
move forward on the tariff negotiations, and these efforts have failed, ending
up in the imposition of massive tariffs on China, which has responded with
massive counter-tariffs. This escalation and counter-escalation keeps hope for
negotiations slim, according to the Wall Street Journal.
Share
2h ago
10.24 BST
We’ve
reached the scale in the crisis when central banks are pondering whether to
intervene in the markets.
Over in
Jakarta, Indonesia’s central bank said today it would “intervene aggressively”
in domestic foreign exchange markets when they re-open on Tuesday for the first
time since new U.S. tariffs were announced.
Bank
Indonesia said in a statement that it had already intervened offshore in Asia,
European and New York curency markets.
It added:
“Bank
Indonesia’s series of measures are aimed at stabilising the rupiah exchange
rate and maintaining the confidence of market participants and investors in
Indonesia.”
In
Taipei, Taiwan’s central bank said it will intervene if necessary to ensure the
stability of the Taiwan dollar exchange rate, ading that it has “sufficient
ability” to deal with fluctuations.
Sem comentários:
Enviar um comentário