Debate Politics Forums - View Single Post - U.S. Stocks Tumble: Some Comparisons from Past Recessions

donsutherland1 · 07-11-08, 09:02 AM

Stock market poised for a rocky opening…

● Oil: Earlier this morning, the price of crude oil reached a record $146.90 in electronic trading due to renewed Middle East tensions and potential disruptions in Nigeria.

● Trade deficit: The nation’s trade deficit for May amounted to $59.790 billion. That was below April’s $60.498 billion figure and below the consensus forecast for a $62.4 billion figure. However, for the first time on record, oil imports accounted for more than 50% of the U.S. trade deficit. Oil imports came to 52.3% of the U.S. trade deficit. For 2008, oil has accounted for 46.4% of the trade deficit. During the same period last year, oil imports comprised 27.9%

● News that the federal government is reviewing options for placing either Fannie Mae or Freddie Mac or both under conservatorship has sustained the sharp decline in share prices for those two giant government-sponsored enterprises that hold approximately half of the nation’s mortgage debt. In pre-market trading, shares of both GSEs had fallen more than 40% from yesterday’s closing figures. U.S. Treasuries were also trading lower on this news possibly reflecting the impact the move could have on the national debt from a contingency perspective.

● On the inflation front, U.S. import prices surged 2.6% in June vs. the consensus forecast of 1.9%. The sharp rise in the price of crude oil played a leading role in that development.

Additional news will play a role in shaping the outcome of trading. Nevertheless, the Fannie Mae and Freddie Mac issue will likely loom large given the magnitude of risk associated with these entities. New lows for this year for both the Dow Jones Industrials and S&P 500 are possible. Their lows are 11,147.47 for the Dow and 1,244.69 for the S&P 500. Those figures are the lowest since August 14, 2006 for the Dow and July 21, 2006 for the S&P 500. Depending on developments associated with the two major GSEs, a decline that takes the Dow Jones Industrials below 11,000 cannot be ruled out.

07-11-08, 09:02 AM	#31 (permalink)
donsutherland1 Moderator Mod team member Join Date: Oct 2007 Last Online: Today 03:09 PM Location: New York Posts: 2,273 Thanks: 719 Thanked 1,356 Times in 787 Posts Lean: Centrist Gender: Awards:	Re: U.S. Stocks Tumble: Some Comparisons from Past Recessions Stock market poised for a rocky opening… ● Oil: Earlier this morning, the price of crude oil reached a record $146.90 in electronic trading due to renewed Middle East tensions and potential disruptions in Nigeria. ● Trade deficit: The nation’s trade deficit for May amounted to $59.790 billion. That was below April’s $60.498 billion figure and below the consensus forecast for a $62.4 billion figure. However, for the first time on record, oil imports accounted for more than 50% of the U.S. trade deficit. Oil imports came to 52.3% of the U.S. trade deficit. For 2008, oil has accounted for 46.4% of the trade deficit. During the same period last year, oil imports comprised 27.9% ● News that the federal government is reviewing options for placing either Fannie Mae or Freddie Mac or both under conservatorship has sustained the sharp decline in share prices for those two giant government-sponsored enterprises that hold approximately half of the nation’s mortgage debt. In pre-market trading, shares of both GSEs had fallen more than 40% from yesterday’s closing figures. U.S. Treasuries were also trading lower on this news possibly reflecting the impact the move could have on the national debt from a contingency perspective. ● On the inflation front, U.S. import prices surged 2.6% in June vs. the consensus forecast of 1.9%. The sharp rise in the price of crude oil played a leading role in that development. Additional news will play a role in shaping the outcome of trading. Nevertheless, the Fannie Mae and Freddie Mac issue will likely loom large given the magnitude of risk associated with these entities. New lows for this year for both the Dow Jones Industrials and S&P 500 are possible. Their lows are 11,147.47 for the Dow and 1,244.69 for the S&P 500. Those figures are the lowest since August 14, 2006 for the Dow and July 21, 2006 for the S&P 500. Depending on developments associated with the two major GSEs, a decline that takes the Dow Jones Industrials below 11,000 cannot be ruled out.

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