Monday, October 13, 2008

We're in the Money

Dow jumps 936 points in biggest point gain ever. The Dow, S&P and Nasdaq all gain over 11%.

Time for some 1930's pig latin from when dames were dames!


  1. According to Nouriel:

    Are we close to the bottom of this financial crisis? Today stock markets – and other financial markets - will rally on the news that terrified policy makers peering into the abyss got religion and started to do in a consistent way what is necessary but financial markets will remain volatile with significant downside risks over the next few weeks as:

    - details of these plans are still very fuzzy and ambiguous and with uncertain effects on various assets classes (common shares, preferred shares, unsecured debt of financial institutions, etc.);

    - macro news will surprise on the downside as the economies sharply weaken and contract while fiscal policy stimulus is lagging;

    - earnings news for financial and non financial firms will surprise on the downside;

    - the damage done to confidence and to levered investment is already severe and the process of deleveraging of the shadow financial system will continue;

    - major sources of future stress in the financial system remain; these include the risk of a CDS market blowout, the collapse of hundreds of hedge funds, the rising troubles of many insurance companies, the risk that other systemically important financial institutions are insolvent and in need of expensive rescue programs, the risk that some significant emerging market economies and some advanced ones too (Iceland) will experience a severe financial crisis, the ongoing process of deleveraging in illiquid financial markets that will continue the vicious circle of falling asset prices, margin calls, further deleveraging and further sales in illiquid markets that continues the cascading fall in asset prices, further downside risks to housing and to home prices.

  2. Did you hear the pig latin? I was impressed.


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