Archive for the ‘economy’ Category

Euro Falls against Dollar, Asian Markets Retreat

May 17, 2010

17/05/2010 The European unified currency is facing more risks as it has fallen to four-year low against the dollar, after being hit by renewed fears over the strength of the Eurozone country and as the global stock markets mostly retreated on Monday, with the heaviest falls in Asia .

Despite the huge sums of money pledged in support for Eurozone countries, the Euro fell to $1.2237, while one pound was worth 1.1702 Euros. Thus, severe austerity measures are needed to cut budget deficits and debt.
This is affecting the value of the euro as analysts worry the cuts will hold back economic growth in the Eurozone.

Asian equity markets tumbled on Monday, with Shanghai diving five percent to reach the lowest level in more than a year. Tokyo fell 2.17 percent, hitting an 11-week low, Hong Kong shed 2.14 percent and Sydney slumped 3.12 percent.
The picture was brighter in Europe, with London managing to rise 0.44 percent and Frankfurt up 0.16 percent in morning trade, although Paris fell 0.45 percent.

This situation is affecting the value of the euro as analysts worry the cuts will hold back economic growth in the Eurozone.
John Kyriakopoulos, from the National Australia Bank in Sydney, said: “Concerns that severe fiscal austerity in the eurozone will crush growth in the region continues to weigh (on the euro).”

The debt crisis began when Greece teetered towards default triggering fears that other weak Eurozone economies such as Portugal, Spain and Italy may be next.
Athens is now paying a painful price for its past overspending with the government forced to slash civil servant pay and pensions while raising taxes as a condition for a 110-billion-euro EU-IMF bailout.

The IMF and EU agreed the Greek bailout only at the beginning of May, and a week later were forced to put together a trillion-dollar –750 bn euro- a rescue plan to the unified currency as investors continued to dump the currency and European shares.

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The May 6 Stock Crash Revisited

May 14, 2010

“Over My 21 Years on Wall Street, I Never Saw Anything Remotely So Suspicious”

Procter & Gamble may have to put the second half of its name in bold in the future or maybe add an exclamation point. Cowboy capitalism threw a lasso around the staid 173 year old household products company on black Thursday, shaving some $62 billion off its market cap at the low point in trading.

Procter & Gamble started its day on May 6, 2010 talking about babies’ bottoms. It went downhill from there. Jodi Allen, Vice President for Procter & Gamble’s Pampers line of baby diapers issued a press release stating: “For a number of weeks, Pampers has been a subject of growing but completely false rumors fueled by social media that its new Dry Max diaper causes rashes and other skin irritations.”

It’s highly doubtful that this statement could have set off a precipitous plunge in its stock price. The company has been around since 1837. It owns some of the most well known brands in the world: Gillette, Ivory soap, Crest toothpaste, Camay, CoverGirl, Max Factor, Pantene, Oral-B, Scope, Pepto Bismol, Cascade, Vicks, Charmin and dozens of other top brands.

What Procter & Gamble is also, however, is one of the 30 stocks that make up the Dow Jones Industrial Average, the index most frequently quoted as a measure of the stock market. Someone wanting to knock out a strut holding up the stock market structure might see entering a large sell order on Procter & Gamble as one of a number of pivotal steps. Here’s why.

Procter & Gamble is in a lot of hands. Because of its historic strong performance and stability, it’s owned by a lot of conservative mutual funds. It would be beneficial to someone wanting to conduct a bear raid on the market on May 6 to knock out all those trailing stop loss orders on Procter & Gamble and pick up a tidy quick profit. (A stop loss order is when one wishes to place a limit on how far down one wants a stock price to go before it is automatically sold. That order stays in place for weeks or months or even years until the stock reaches that price and then is executed on the next tick. Unfortunately, on May 6, the next tick could have been many points below the last tick.) Stop loss orders also serve to slow down plunging stock prices because they cause trades to be printed at each of these various price levels, offering a chance for new buyers to come in at these prices. Once these are knocked off, there’s a big air pocket in a plunging market.

According to reports of time and sales, around 2:45 p.m. when the massive market disruption got underway, Procter & Gamble traded at $59.66. It had opened the day at $61.91. About a minute later, it was trading at $57.36, then $53.51, then it hit a liquidity air pocket and plunged to print a trade at $39.37. This created panic in the market. If one of the most conservative stocks can hit a 36 percent downdraft, some traders thought a major news event was happening outside. Liquidity hit a wall. In an eight minute span, the Dow lost $700 billion and saw a cumulative decline of 998.5 points or 9.2 percent before turning on a dime and moving in the opposite direction. It closed the day down 3.2 percent.

Aggravating the liquidity crunch on May 6 was the fact that the New York Stock Exchange, where Procter & Gamble is listed, paused trading momentarily to let humans on the floor of the exchange attempt to find buying support. That pause sent trades off to the world of electronic exchanges which now make up the bulk of all trading in the U.S. The New York Stock Exchange has only a 25 percent market share in its own listed stocks. The cowboys of capitalism command the rest.

To underscore how dramatic and unprecedented the trading in Procter & Gamble was on May 6, I reflected back to the day I sat behind a Wall Street terminal and watched the market lose 22.6 percent in one day. That day was October 19, 1987. That was more than twice the percentage drop at the worst market point on May 6. And yet, Procter & Gamble lost only 28 percent at its worst point in 1987 versus 36 percent on May 6 when the overall market was down less than 10 percent.

When a bear raid knocks out these stop loss speed bumps on Dow components like Procter & Gamble and 3M (it lost 21 percent at its worst point), the New York Stock Exchange pauses trading momentarily and trades are left to the feckless electronic exchanges, proprietary trading desks of the bailout boys (big Wall Street firms) and high frequency traders. This is like hitting an air pocket at 30,000 feet, then opening the cockpit door to find out no one is inside and the plane is on autopilot as the plane goes into a nose dive.

But sell orders in individual Dow component stocks were not the only problem on May 6. There was extensive selling in the Standard and Poor’s 500 futures contract known as the E-Mini. Futures can be purchased on much greater margin giving bear raiders a bigger bang for their buck. According to testimony from Gary Gensler, Chairman of the Commodity Futures Trading Commission before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises yesterday, one trader “entered the market at around 2:32 and finished trading by around 2:51. The trader had a short futures position that represented on average nine percent of the volume traded during that period. The trader sold on the way down and continued to do so even as the price level recovered. This trader and others have executed hedging strategies of similar size previously.” That last sentence may be ignoring the reality that this was no ordinary day: the gauge of fear in the market, the VIX, had spiked over the past two days; there was intense fear of Greece defaulting on its debt and stresses in the credit markets were being reflected in rising yields on junk bonds.

Cumulatively, mom and pop investors lost many millions of dollars on their stop loss orders from this free fall on May 6. Only those trades occurring between 2:40 and 3 pm that were 60 percent or more away from the market are being cancelled. That means the losses in Procter & Gamble and dozens of other stocks are real losses for those who got stopped out and real profits for those on the other side of the trade.

Over my 21 years on Wall Street, I never saw anything as remotely so suspicious as the trading activity on May 6 or as non-responsive as the SEC’s  investigation to date.

To be continued…

By PAM MARTENS

Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any financial company. She and family members own less than 500 shares in Procter & Gamble. She writes on public interest issues from New Hampshire. She can be reached at pamk741@aol.com

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Putting glass jars to use

May 12, 2010
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http://www.JewishWorldReview.com | Frugality involves reducing waste. This includes saving useful item s to reuse. But you don’t want to accumulate a bunch of clutter because — let’s face it — you can have the best of intentions, but that doesn’t mean you will use hundreds of saved items. In other words, saving a handful of twist-ties is good if you use them regularly. Saving every single one for years until your kitchen drawer doesn’t close is hoarding. It seems funny that anyone would save that many, but plenty of people do so. Some items are harder to decide whether to keep or toss (or curbside recycle, in some cases). One example is glass jars. Label removal is easy if you soak the jars in hot water. If there’s still some glue residue, use vinegar, baby or vegetable oil and a plastic or green Scotch-Brite scrubbie to remove it.


Here are a few ways to use empty jars.


IN THE KITCHEN: Glass jars work well to hold food such as rice, pasta, flour, tea, coffee, dried beans, snacks, etc. Jars often use less space than bulky packaging. Reuse a jar to shake gravy, as a refrigerator storage container for leftovers, drinking glasses, to grow sprouts, hold sourdough starter, or to put your soap slivers into with water. Toss in a marble to help combine the two, and then use as liquid hand soap. One reader, Lisa C. in Texas, shares: “I always keep a jar to store my onions in the fridge. Keeps the odor from seeping out into the fridge and making other foods taste funky. It keeps the onion fresher than a storage bag does. I use the same jar over and over.”


DECORATION: Use a jar to display mementos such as seashells, small stones or sand from the beach or dried flowers or candles.


PLANTS AND FLOWERS: Use a spare jar as a vase for cut flowers, or keep the lid and make a terrarium by layering small pebbles or gravel for drainage, adding potting soil, your plant(s) and then a little bit of sheet moss. Water lightly, and add the lid. One reader, M.J., writes: “After I harvest and dry my flower seeds at the end of the summer, I store the seeds in glass jars on a shelf in my garage. I label each jar with the flower name and when to plant the seeds next spring. I can see at a glance how many seeds I have of each type of flower.”


GIFTS: Gifts in a jar are popular homemade items to give. Gift ideas include homemade mixes, candies, cookies, pet treats, etc. But your gift doesn’t have to be food-related. Use a large jar (gallon or larger) to hold anything you would normally place into a gift basket such as craft supplies, toys, first-aid supplies, sewing or office-supplies kit, cosmetics or photos (http://content.photojojo.com/diy/glass-jar-photo-frames).

Jewish World Review

May 12, 2010

By Sara Noel

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