Cliff Diiiiiiivvvvviiiiinnnngggg!!

Two painful days in a row. I just read that the 10% drop in the last two days is "the worst two day drop in a month." Okay, when 10% two day drops become that frequent it is perhaps time to watch from the sidelines until the volatility drops. I am separately reading at Bloomberg, however, that this two day drop was the worst since the crash in 1987.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aovYs15vXGf0&refer=home

Check out the VIX (the volatility index). Still reading well over 60, which is below its peak of nearly 90, but still well above normal. Still pretty scary out there.

Apparently peoples' expectations that Obama would be good for the economy, led to a buy-on-the-rumor and sell-on-the-news type of event. Then again I have been thumping for some time on how the recent bull run was a bit premature with a lot of pain ahead. People are finally listening (not to me, of course, because no one reads this blog, but to the continuous dribble of bad economic news).

So why down so much so fast. Let's read the tea leaves and try to guess.

I just went to the Bloomberg site and their "Breaking News" is decidely bearish:

•Qualcomm Forecast Misses Estimates as Phone-Chip Demand Wanes; Shares Fall
•Adelson's Las Vegas Sands Plunges After Casino Cites Potential Bankruptcy
•Blackstone Misses Estimates, Reports Biggest Loss Since IPO; Shares Slump
•Farallon Capital's Flagship Fund Lost 23.8% Through October, Sells Stocks
•Disney Profit Declines 13% on Drop in Parks Profit, Bad Debt From Lehman
•Genworth Has Loss on Rising Claims, Soured Investments, Suspends Dividend

The only news I could find remotely positive at Bloomberg was that oil has dropped to a 19 month low:

http://www.bloomberg.com/apps/news?pid=20601110&sid=anywOgFpqk6I

And Obama is meeting with some people who are smarter about this stuff than "you" (I am assuming someone is reading this other than me) and me. Namely Buffett, Volcker and Daley.

http://www.bloomberg.com/apps/news?pid=20601110&sid=aSzNv81CYh0c

Did I mention that first time unemployment claims came in at 481,000, above analysts expectations of 477,000. This is the highest in 25 years.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.pczFBwkraw

The market may be reacting badly in part because all the analysts have their head up their (well I won't say it but analysts starts with anal) in predicting the third quarter profits. They missed to the high side the worst this quarter than in any quarter in 11 years. They are reducing projections going forward but are still undoubtedly too high. When they finally get their predictions too low, then it may be time to buy.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFLZknOvuU2k&refer=home

You might ask why I rely so much on Bloomberg. They seem to me to present the stories in a relatively unbiased factual fashion. Yes, they come up with their own explanations on why things are happening, but they don't seem to have any particular agenda. On the other hand, a lot of my slant on the news comes from financially related blogs that I follow, and which I will add to this site soon so that you can check them out too. Either way, opening up the Bloomberg site and reading the headlines generally gives you a good sense for how things are going and today was ugly. We're talkin' double brown bag ugly here.

Going Green the Credit Crunch Way

You know all those credit card offers you used to get on a daily basis that wasted so much paper and filled the old circular file. Well there isn't quite the same traffic that there used to be and you can expect it to slow even more. Defaults are rising sharply on credit card debt and there were no sales - as in nada, zero, zip - of credit card backed bonds in October. That is the first time this has happened since 1993. (As an aside here, we should divert ourselves from the stress of all this by trying to remember what we were doing when previous highs (lows) were set, like what were you doing in April 1993 when there were no credit card bond sales or what were you doing 25 years ago when the jobless claims were last this high. Then again, that may just bring up painful memories and we have enough presently to keep us busy.)

http://www.bloomberg.com/apps/news?pid=20601109&sid=awS5vZQvmwd4&refer=home

Let's Get Real

All due respect to Mr. Fox, who the next attached article is about, but jumping out a window over financial problems is just not a good answer. Economies go up and down. You wait around long enough and they will turn. (By the way, I wrote the title of today's post before seeing this story.) Nonetheless, this harkens back to the stories of stock brokers jumping out windows in the Great Depresssion. Kinda sucks.

http://online.wsj.com/article/SB122593803133403929.html

Psssttt Buddy, Yeah You, Want to Buy a Country?

Squarely in the category of "it could always be worse," certain countries make things here look absolutely rosy. Look at the Ukraine. With the commodities bubble still losing air big time, many cities there have nothing to fall back on. The entire country is broke. And it is not just the Ukraine. You have Argentina, Iceland, Pakistan and a host of other countries on the verge of bankruptcy, with the IMF not equipped to help this many. Some nasty stuff lies ahead.

http://www.spiegel.de/international/business/0,1518,588419,00.html