• Tuesday, August 20, 2019

U.S. Stocks End Worst Year Since Financial Crisis: Markets Wrap

Discussion in 'World Affairs' started by SBUS-CXK, Jan 1, 2019.

  1. SBUS-CXK

    SBUS-CXK SENIOR MEMBER

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    Government shutdowns hurt millions. Great depressions hurt even more. History suggests real pain is round the corner

    Sun 23 Dec 2018 06.00 GMTLast modified on Sun 23 Dec 2018 06.01 GMT

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    ‘Ten years after the start of the Great Recession, we face another economic precipice.’ Photograph: Alex Edelman/Getty Images
    On Friday, Donald Trump said: “We are totally prepared for a very long shutdown.” It was one of his rare uses of the pronoun “we” instead of his preferred – and in this case far more appropriate – “I”.

    The shutdown is indubitably his. Congress offered him a way to continue funding the government without the money to build his nonsensical wall along the Mexican border, but Trump caved in to the rabid rightwing media and refused.

    I was in Bill Clinton’s cabinet when Newt Gingrich pulled the plug on the federal government in 1996. It wasn’t a pretty picture. A long shutdown hurts millions of people who rely on government for services and paychecks.

    Trump’s shutdown also adds to growing worries about the economy. The stock market is on track for the worst December since the Great Depression. World markets have lost nearly $7tn in 2018, making it the worst year since the 2008 financial crisis.

    The shutdown is stoking fears that Trump could do something even more alarming. He might fail to authorize an increase in government borrowing before the federal debt reaches the current limit, which Congress extended to 2 March. A default by the US on its obligations would be more calamitous than a government shutdown.

    All this brings us closer to the economic precipice. It worsens America’s most fundamental economic problem.

    Don’t count on American consumers to come to the rescue. Most Americans are still living in the shadow of the Great Recession that started in December 2007 and officially ended in June 2009.


    More Americans have jobs, to be sure, but their pay has barely risen when adjusted for inflation. Many are worse off due to the escalating costs of housing, healthcare and education.

    Trump has added to their financial burdens by undermining the Affordable Care Act, rolling back overtime pay, hobbling their ability to join together in unions, allowing states to cut Medicaid, and imposing tariffs that increase the prices of many goods.

    America’s wealthy, meanwhile, have been taking home a growing portion of the nation’s total income. But the rich spend a small fraction of what they earn. The economy depends on the spending of middle-, working-class and poor families.

    The only way these Americans have continued to spend is by going deeper into debt. By the third quarter of this year, household debt had reached a record $13.5tn. Almost 80% of Americans are now living paycheck to paycheck.

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    Holiday windows in New York City. ‘The economy depends on the spending of middle-, working-class and poor families.’ Photograph: Mark Lennihan/AP
    This isn’t sustainable. Even if the Fed weren’t raising interest rates – an unwise move under these circumstances – consumers would still be in trouble. Mortgage, auto and student-debt delinquencies are already mounting.

    The last time household debt was nearly this high was in 2007, just before the Great Recession. Similarly, between 1913 and 1928, the ratio of personal debt to the total national economy nearly doubled. Then came the Great Crash.

    See a pattern?

    The problem isn’t that Americans are living beyond their means. It’s that their means haven’t been keeping up with the growing economy. Most gains have gone to the top. If the majority of households had taken home a larger share of national income, they wouldn’t have needed to go so deeply into debt.

    Without wage growth, American workers can’t continue to buy without going into deeper debt. Unless they continue to buy, the economy can’t continue to move forward.

    It’s the same sort of trap that preceded the 2008 and 1929 crashes.

    After the 1929 crash, the government invented new ways to boost the wages of most Americans – social security, unemployment insurance, overtime pay, a minimum wage, the requirement that employers bargain with labor unions, and, finally, a full-employment program called the second world war.

    By contrast, after the 2007 crash the government bailed out the banks and pumped enough money into the economy to stop the slide. But apart from the Affordable Care Act, nothing was done to address the underlying problem of stagnant wages.

    Ten years after the start of the Great Recession, we face another economic precipice.

    It’s important to understand that the root cause of those former collapses wasn’t a banking crisis. It was the growing imbalance between consumer spending and total output – brought on by stagnant wages and widening inequality.

    That imbalance is back. Trump is making it worse.


    As 2018 draws to a close….
    … we’re asking readers to make an end of year or ongoing contribution in support of The Guardian’s independent journalism.

    Three years ago we set out to make The Guardian sustainable by deepening our relationship with our readers. The same technologies that connected us with a global audience had also shifted advertising revenues away from news publishers. We decided to seek an approach that would allow us to keep our journalism open and accessible to everyone, regardless of where they live or what they can afford.

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    https://www.theguardian.com/comment...ic-precipice-donald-trump-government-shutdown
     
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  2. SBUS-CXK

    SBUS-CXK SENIOR MEMBER

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    U.S. Stocks End Worst Year Since Financial Crisis: Markets Wrap


    (Bloomberg) -- U.S. stocks ended the worst year since the financial crisis with a narrow gain in thin pre-holiday trading. Treasuries rose to a 10-month high.

    The S&P 500 finished a choppy session higher and the Nasdaq Composite capped its first four-day advance since August amid optimism that President Donald Trump will move toward a trade deal with China. The advance trimmed the worst December rout for the S&P 500 since 1931 to 9.2 percent. That monthly rout capped a 6.2 percent slide in the year, the biggest of the record bull market.

    Stocks around the world limped into the end of a dismal year that’s seen bear markets in equities from Japan to Germany. Europe’s main stock gauge fell 13 percent drop in the year -- the biggest since 2008. The 10-year Treasury yield slid to 2.68 percent, the lowest since February. The dollar edged lower as a government shutdown continued, while the yen climbed to a four-month high.

    In commodities, crude slumped to its first annual loss since 2015, completing a reversal that saw it drop from a four-year high set just three months ago. Natural gas futures slid on Friday below $3 for the first time since September, giving the front-month contract its worst December since 1991. Gold barreled into 2019 near a six-month high on haven demand.

    While the glimmer of hope on the trade front sent global stocks out on a high note, plenty of event risks loom in the next 12 months, from the U.K.’s exit from the European Union to U.S.-China trade talks and the continuing showdown between President Trump and Congress over the budget. The American political landscape is also unsettling investors following departures of senior officials and Trump’s repeated criticism of Federal Reserve Chairman Jerome Powell.

    Here are some events investors may focus on in coming days:

    The U.S. December jobs report is due Friday, Jan. 4.Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance.

    And these are the main moves in markets Monday:

    Stocks

    The S&P 500 Index rose 0.9 percent as of 4 p.m. New York time.The Nasdaq Composite added 0.8 percent. The Dow rose 265 points and the Russell 2000 gained 0.8 percent.The Stoxx Europe 600 Index rose 0.4 percent to the highest in more than a week.The MSCI All-Country World Index gained 0.3 percent to the highest in more than a week.The MSCI Emerging Market Index climbed 0.4 percent to the highest in more than a week.

    Currencies

    The Bloomberg Dollar Spot Index dipped 0.2 percent to the lowest in almost 10 weeks.The euro added 0.1 percent to $1.1455.The Japanese yen rose 0.6 percent to 109.613 per dollar, the strongest in about six months.

    Bonds

    The yield on 10-year Treasuries fell three basis points to 2.68 percent.The two-year yield lost three basis points to 2.49 percent.

    Commodities

    The Bloomberg Commodity Index fell 1.1 percent.West Texas Intermediate crude rose 8 cents to $45.41 a barrel.U.S. natural gas futures slid 9.8 percent to $2.979.Gold futures rose 0.1 percent to $1,284.30 an ounce.

    https://finance.yahoo.com/news/asian-stocks-may-relief-trump-214555736.html
     
  3. nahtanbob

    nahtanbob BANNED

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    it was a great bull market while it tasted
     
  4. SBUS-CXK

    SBUS-CXK SENIOR MEMBER

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    The U.S. economy has actually collapsed, but Americans are frantically trying to hide it.
     
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  5. SBUS-CXK

    SBUS-CXK SENIOR MEMBER

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    Dow plunges nearly 800 points on rising fears of an economic slowdown

    Stocks fell sharply on Tuesday in the biggest decline since the October rout as investors worried about a bond-market phenomenon signaling a possible economic slowdown. Lingering worries around U.S.-China trade also added to jitters on Wall Street.

    The Dow Jones Industrial Average fell 799.36 points, or 3.1 percent, to close at 25,027.07 and posted its worst day since Oct. 10. At its low of the day, the Dow had fallen more than 800 points.

    The S&P 500 declined 3.2 percent to close at 2,700.06. The benchmark fell below its 200-day moving average, which triggered more selling from algorithmic funds. Financials were the worst performers in the S&P 500, plunging 4.4 percent. Utilities was the only positive sector in the S&P 500, rising 0.16 percent.


    The Nasdaq Composite dropped 3.8 percent to close back in correction territory at 7,158.43. The Russell 2000, which tracks small-cap stocks, dropped 4.4 percent to 1,480.75, marking its worst day since 2011. Trading volume in U.S. stocks was also higher than usual on Wall Street.

    The yield on the three-year Treasury note surpassed its five-year counterpart on Monday. When a so-called yield curve inversion happens — short-term yields trading above longer-term rates — a recession could follow, though it is often years away after the signal triggers. Still, many traders believe the inversion won't be official until the 2-year yield rises above the 10-year yield, which has not happened yet.

    Stocks began falling to their lows of the day after Jeffrey Gundlach, CEO of Doubleline Capital, told Reuters this inversion signals that the economy "is poised to weaken."


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    Flattening yield curve spooks markets — Here's what three experts say that means for investors 2:22 PM ET Tue, 4 Dec 2018 | 03:33

    The flattening yield curve caused investors to bail on bank stocks on concern the phenomenon may hurt their lending margins. The SPDR S&P Bank ETF (KBE) dropped 5.3 percent. Shares of J.P. Morgan Chase, Citigroup and Bank of America all declined more than 4 percent. Citigroup and Morgan Stanley both reached 52-week lows along with Regionals Financial, Citizens Financial and Capital One.

    The SPDR Regional Banking ETF dropped 5.5 percent and closed 20 percent below its 52-week high. It also notched its worst day since June 2016.

    "No good deed goes unpunished," said Art Hogan, chief market strategist at B. Riley FBR. "As we get headwinds from trade worries fading, you get an inverted yield curve and another brick added to the market's wall of worry."

    Trading volume rose on Tuesday. More than 159 million shares of the SPDR S&P 500 ETF trust (SPY) exchanged hands. The SPY's 30-day volume average is 110.5 million. These moves come as the U.S. stock market will be closed on Wednesday out of respect for former President George H.W. Bush's funeral.

    "You can see the utilities positive on the day, but financials are getting hammered on the flatter curve while industrials are likely down on the tariffs headlines," said Jack Ablin, founding partner of Cresset Wealth.

    Doubt about a permanent deal between the U.S. and China crept into investors' minds following a stellar rally in the previous session.

    The U.S. and China agreed over the weekend to hold off on any additional tariffs on each other's goods, in order to allow trade talks to continue. Leaders from the two countries met over dinner at the G-20 summit in Argentina. The news sent stocks surging on Monday, with the Dow rallying more than 300 points. Stock futures surged Sunday night as investors initially cheered the news. Dow futures jumped nearly 500 points before Monday's open.

    But discrepancies over when that truce would begin have led to confusion. While President Donald Trump's economic advisor, Larry Kudlow, told reporters Monday that the cease-fire would start from Jan. 1, the White House later issued a corrected statement saying that the 90-day truce period started on Dec. 1.


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    Why you shouldn't panic when stocks are getting slammed 9:47 AM ET Fri, 12 Oct 2018 | 02:11

    China and the U.S. have been engaged in a tense sparring match over trade, with both countries hitting each other's economies with levies on imported goods. Trump's administration has so far slapped tariffs on $250 billion worth of Chinese imports, while Chinese President Xi Jinping's government has imposed tariffs on $110 billion in U.S. goods.

    Trump said in a series of tweets Tuesday that a deal between the two countries would get done if possible. "But if [it's] not possible remember ... I am a Tariff Man."



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    "From a math standpoint, this is screaming buy," said Steven Dudash, president of IHT Wealth. "The only concern I have is people are going to start getting irrational. That's when the emotional trading starts taking place."



    — CNBC's Ryan Browne , Tom Franck and Michael Sheetz contributed to this report.

    https://www.cnbc.com/2018/12/04/sto...fall-amid-us-china-trade-deal-skepticism.html