Markets tumbled again yesterday. Bloomberg reports:
Stocks fell around the world, the pound sank the most against the dollar since 1992 and commodities retreated as the economic slump deepened and corporate profits declined...
The Standard & Poor's 500 Index lost 6.1 percent to 896.78, the lowest since April 2003. Europe's Dow Jones Stoxx 600 Index declined 5.1 percent. The MSCI World Index of developed markets slid 6.4 percent.
The slump in oil, gold and copper dragged down Brazilian stocks, sending the Bovespa Index to a 10 percent retreat. Argentina's Merval fell 10 percent. The MSCI Emerging Markets Index lost 8.4 percent, falling to the lowest level since 2005.
The MSCI Asia Pacific Index decreased 5.4 percent...
The euro fell below $1.28 for the first time since November 2006 on speculation Europe's central banks will cut interest rates as the global economy heads for a recession. The U.K. currency dropped as much as 3.4 percent to a five-year low of $1.6139...
The Reuters/Jefferies CRB Index of 19 raw materials fell 4.5 percent to the lowest level since July 2004. Crude oil for December delivery declined 7.3 percent to $66.90 a barrel, a 16- month low, in New York. Copper, gold, wheat and soybeans slumped.
The improvement in LIBOR made little impact.
The London interbank offered rate, or Libor, for three-month loans in dollars fell for an eighth day as central banks offered cash to revive lending. The measure, which banks use to charge each other for loans, dropped to 3.54 percent. It's still 2.04 percentage points more than the Federal Reserve's target rate for overnight loans.
That's because there are other problems to worry about.
The next leg of losses may be fueled by collateralized debt obligations tied to corporate credit. Investors are writing down as much as 90 percent in the $1.2 trillion market following failures of Lehman Brothers Holdings Inc. and Icelandic banks.
So the panic-selling may not be over.
Indeed, Mark Hulbert says that what we have been seeing is investor panic, not capitulation. And a final low in the stock market is likely to come only when investors have capitulated, something he is not seeing yet.
Certainly there doesn't seem to be capitulation among bloggers, if Ticker Sense's blogger sentiment poll is an accurate indication. According to the latest poll, bloggers are showing "overwhelming bullishness".
Well, bloggers may be bullish but central bankers aren't taking any chances. This morning saw another big easing on the monetary front. From Bloomberg:
New Zealand's central bank cut its benchmark interest rate by a record 1 percentage point to 6.5 percent and foreshadowed further reductions to limit damage from the worldwide financial crisis and a slump in the global economy.