Editor's Note #1: Possible Imminent Crash, Week Long Market Shutdown
Today's update will be posted this afternoon or early evening as there looks like there's going to be a lot of crash news today and some type of damage assesment will likely be in order. It's only 6:30 AM Pacific time and Bloomberg is already reporting that the futures market has plunged by its daily limits:
U.S. stock-index futures plunged by their daily limits after slumping earnings at automakers and technology companies spurred concern the financial crisis has infected the broader economy.
General Motors declined 13% and Ford Motor lost 10% after Toyota Motor Corp., the world's second- largest automaker, reported its first sales decline in seven years. Apple Inc. fell 8.4% as Samsung Electronics, Asia's biggest maker of chips and mobile phones, had its steepest profit drop in more than three years. Exxon Mobil lost 8.2% as oil and gasoline prices retreated.
"It's the spillover of the banking crisis into real economies around the world,'' said Michael Mullaney, a money manager at Fiduciary Trust Co., which oversees $10 billion. "Everything's going down hard. Diversification is not working right now, that's what it amounts to. We're throwing everything out.'' Source
Meanwhile, Nouriel Roubini is being quoted by Bloomberg saying that "sheer panic" may force the feds to shutdown the market for a week or longer:
Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said. "We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, told a conference in London today. "There will be massive dumping of assets'' and "hundreds of hedge funds are going to go bust,'' he said.
Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.
"Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. "We're seeing the beginning of a run on a big chunk of the hedge funds,'' and "don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said. Source