- Joined
- Apr 13, 2011
- Messages
- 15,910
- Reaction score
- 12,630
- Location
- Plano, Texas
- Gender
- Female
- Political Leaning
- Other
One from your own camp: Market Reacts to Debt Ceiling Increase | Fellowship of the Minds
"“Three main sources of uncertainty have weighed on risky assets in recent weeks: the global growth slowdown, the fiscal crisis in the euro zone and the discussions about the U.S. debt ceiling,” Joost van Leenders, a strategist at BNP Paribas Investment Partners in Amsterdam, who helps oversee about $780 billion, wrote in a report. “This last issue has been solved for now, but the other two came back with a vengeance.”
"Investors nervous about the prospect of a default by the U.S. government pulled money out of all forms of mutual funds, from money-market funds to those that invest in stocks.
U.S. money-market funds experienced $103 billion in redemptions the week ended Aug. 2, the most in one week since the bankruptcy of Lehman Brothers Holdings Inc. in September 2008, according to iMoneyNet, a fund research firm in Westborough, Massachusetts.
Mutual funds that invest in stocks and bonds had net redemptions of $10.4 billion in the week ended July 27, according to an e-mailed statement from the Investment Company Institute, a Washington-based trade group. It was the biggest withdrawal since the week ended May 26, 2010, when investors pulled $17.4 billion, ICI data show."
"Wall Street Journal--
Today’s markets were down because:
1) Debt ceiling. Every day I have to include the debt ceiling as one of the reasons the markets were down, a little piece of me dies. Four days until the Treasury’s deadline and Congress seems to have reached a stalemate. Boehner keeps pushing forward with his bill, and finally has enough votes in the House for it to pass, only to get voted down soon as it reaches the Senate, where Democrats and Republicans alike have vowed they will block it. Senate Majority Leader Harry Reid is working on a budget plan that has wider support in the Senate, but it has yet to be put to a vote, until which point there’s no knowing which way it will go, especially in the Republican-led House. So in the meantime, we wait and listen to China (NYSE:FXI) complain about the US.
2) GDP. If yesterday’s positive economic news wasn’t enough to counteract the depressing effect of the looming debt ceiling, today’s bad economic news sure isn’t going to help matters. Stocks took a huge dip this morning right out of the gate after the Commerce Department reported GDP grew at an annual rate of 1.3% during the second quarter, well below projections of 1.8% growth. While data like durable goods orders and consumer spending give us an idea of how the economy is progressing, GDP covers the whole kit and kaboodle, and the most recent figures are not good.
3) Treasuries. While short-term Treasuries saw a moderate selling-off on Friday, as would be expected, the price on the benchmark 10-year note (NYSE:TLT) rose, pushing the yield down from 2.91% to 2.78%, the biggest one-day drop since December 2010. Longer-term investors tend to focus more on the economy than more immediate issues like those plaguing Washington at the moment, so the fact that the price of long-term notes is up shows that investors have a positive economic outlook."
"The nonpartisan Economic Policy Institute reports that the debt ceiling deal will reduce GDP by 0.3 percent in 2012. Not good considering current growth of around 1, or 1.5 percent at best. Plus, the real cuts don't kick in until 2013. That means we'll be hitting the serious cuts while teetering on increasingly unstable footing. But that's not the grim news. The EPI is calculating that 1.8 million jobs will be killed in 2012 due to the big debt deal."
The WSJ article is from prior to the compromise???