Just How Bad Was October 2008 ?
Not too shabby a week -- plus 11% across the major indices, with some areas even stronger. Of course, that comes from deeply oversold levels, with stocks peak trough down 27% within October. The key question going forward is whether or not this past week's snapback rally has legs. But rather than guess about that, let's look at some of the more intriguing data points from October 2008.
I picked a bad month to stop sniffing glue:
• October was the worst month for the Standard & Poor’s index of 500 stocks in 21 years — since the 1987 stock market crash. (NYT)
• The Dow dropped 14% drop over the past four weeks -- the biggest October decline since 1987, when the crash sent markets down 23% for the month. The S&P 500 was down 17%, and Nasdaq fell 18%. This ranked as the 15th worst monthly decline for the Dow Industrials since 1900.
• October 2008 was the most volatile in the 80-year history of the S.& P. 500. (see NYT chart, at right)
• We had the most down days in a single month since August 1973. (Marketwatch)
• Compare 3 recent SPX Bear Markets: -46% from October 2007; Compare that with 1973-74 down 48% over 23 months. The 2000-03 bear was 49 percent over nearly 3 years.
• The S&P 500 had the most volatile month since November 1929 (1% moves higher or lower).
• October had two days where the indices were up more than 9% -- the 10th time this has occurred over the past 80 years. (NYT)
• During an eight-day losing streak at the beginning of the month, the Dow lost 2,396 points.
• Consider days with 4% moves up or down: None from 2003 through 2007; Three throughout the 1950s and two in the 1960s. October 2008? 9 days with four percent plus or minus. That edges out September 1932's record of 8. (NYT)
• The Dow had its second-biggest point drop on record, of 733 points. The Dow posted two of it biggest point gains, climbing by 936 points (October 13th) and 889 (October 28th)
• US dollar gained 14.3% against the euro, 22.3% against the Canadian dollar, and 31.8% against the Australian dollar. This is the fourth best month on record (using data going back to 1967). March '91, November '78, and October '82 are the only three months where the US Dollar saw bigger gains. (Marketwatch)
• Perhaps the credit crisis is finally easing: Overnight Libor dropped to its lowest levels in 6 years, falling to 0.73125%, down from 5.09% on October 9th. (Bespoke)
• Copper and Crude oil had their worst one-month losses ever (Barron's)
• Crude-oil futures lost one third of their value, falling 33% during the month. This was their biggest monthly percentage drop since trading began in 1983. Average retail price for gasoline fell 31%, ($2.504 a gallon), down 14% from a year ago.
• Gold lost 18% for the month -- its worst monthly drop since 1980.
• Wheat had its largest monthly decline in 22 years; Copper and Aluminum had their largest drop in more than 20 years; Sugar for its biggest monthly fall in a decade. (WSJ)
• Emerging-market bonds popped 8% over Treasurys -- a six-year high.
• Market cap losses: Standard & Poor's global indexes lost $6.79 trillion (September's 2008 lost $3.4 trillion)
• European stocks rose 12% (Dow Jones Stoxx 600 Index) -- their biggest weekly gain since 2001. (Bloomberg)
• MSCI Emerging Markets Index fell nearly 30% -- the worst month since August 1998. Thats a loss of about ~ $900 billion. (Marketwatch)
• Japan's Nikkei 225 hit a 26-year low.
• Iceland's exchange crashed 81% for the month. (Marketwatch)
• Russia had the world's most volatile index, with 17 days with of more than four percent moves in the Micex index. For the month, the Micex lost 28.8%, but had a weekly gain of 42.5%. (NYT)
• Argentina's Merval and Brazil's Bovespa indexes were set to make their biggest one-month percentage losses since August 1998, with the Merval falling 37% and the Bovespa losing 25%.
Adjusted Monetary Base
And speaking of sucking, how about this chart? Check out that huge spike at the end -- as big as Greenspan's Y2K money supply surge.
There is an inflationary spike somewhere out there, once we get through this massive deflationary period.
Here is the longer term view:
Notice how this spike dwarfs 2001 post 9/11
Research Division of the Federal Reserve Bank of St. Louis
Adjusted Reserves: Welcome to the United States of Argentina
Adjusted Reserves are up 768.1% compounded annually since July 30; Adjusted Monetary Base is also spiking:
charts via Federal Reserve Bank of St. Louis
Seinfeld investment advice: Gold, Jerry. Gold!
Stephan Roach: Huge Setback for US-style Capitalism
click for videos
Crude Oil = $130
I guess the markets are not enamored with the Paulson plan.
The dollar has dropped the most versus the Euro since its inception, according to Bloomberg. And ddue to the collapse of the greenback, Briefing is reporting that COMDX Crude oil trades to new 2-month high of $130 per barrel.
Crude Oil, October Futures (delayed 20 minutes)
chart via Barcharts
Bailout Plan Threat to Dollar ?
Today's most noteworthy MSM piece is this Bloomberg article, titled. Dollar May Get `Crushed' as Traders Weigh Up Bailout.
Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
"As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion. . .
"The downdraft on the dollar from the hit to the balance sheet of the U.S. government will dwarf the short-term gains from solving the banking crisis,'' said David Woo, London-based global head of foreign-exchange strategy at Barclays, the third- biggest currency trader, according to a 2008 survey by Euromoney Institutional Investor Plc.
Warning: Your currency may be smaller than it appears in the mirror . . .
Dollar May Get `Crushed' as Traders Weigh Up Bailout
Bo Nielsen and Anchalee Worrachate
Bloomberg, September 22, 2008
Bill Moyers & Kevin Phillips on Bad Money
Bill Moyers sits down with former Nixon White House strategist and political and economic critic Kevin Phillips, whose latest book BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM explores the role that the crumbling financial sector played in the now-fragile American economy.
September 19, 2008
This will be the funniest thing you read today:
ACME Systematic Leveraged Macro Momentum Fund LP
321 Overprice Street
Greenwich, CT 00573
This letter is to inform you that the wheels have come off of the proverbial wagon at ACME Systematic Leveraged Macro Momentum Fund LP, and that the same awesome thematic portfolio that made you feel (in the first half-year) as if you'd become very rich in comparison to those sucking wind on their leveraged MBS portfolios or Japanese Small-Cap Value Funds, has, quite literally, spontaneously combusted in our faces...
Faber: Global Economy in Recession
Investor Marc Faber, publisher of the Gloom, Boom & Doom Report, talks with Bloomberg's Kathleen Hays about the euro's performance against the U.S. dollar, the commodities market and the global economy. The euro fell the most in almost eight years against the dollar as traders pared bets the European Central Bank will raise interest rates as the economy slows.
click for video
00:00 Euro versus dollar; "global recession"
01:54 U.S. economy, ECB rates; commodities market
04:14 Investment strategy: dollar, Japan
Running time 05:18
Faber Says Global Economy in Recession; `Long' on Dollar: Video
Bloomberg, August 8, 2008 15:27 EDT
New Fiat Federal Reserve Note
Actually, the dollar is off of its recent lows, but this email, via Hong Kong, was too cute not to pass along: