【青史流芳的今天】A Sweet Piece of History

美鈔嘩嘩進，躺著看大戲。

嗬嗬。。。:-)


The House of Representatives rejection of the financial relief plan sparked a massive 431 basis point increase in the over night dollar Libor to 6.88%.  The Libor measures what banks charge each other for short-term loans, so an elevated number represents tight credit markets.  All terms of Libor climbed, which range from overnight to 12 months.


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$1 trillion rejection -- House to Street: Drop dead
Failure of plan drafted by Paulson and Bernanke and backed by White House sends a message to Wall Street.

Dow chopped hundreds of points in biggest-ever point drop; S&P loses $700 billion as Wall Street reacts to failure of bailout legislation. Congress calls Wall Street's bluff and we all lose our shirts, according to David Callaway.


$1 trillion was erased from the value of the U.S. stock market.

Specifically, the DJ Wilshire 5000 -- the broadest measure of the American equity market -- plunged 1,024.27, or over 8%, to 11,322.76. Since every point on the DJ Wilshire is worth $1 billion, those thousand-plus points of fright were worth over $1 trillion.

A&D Data      NYSE     NASDAQ
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Advances     198 (6%)     422 (14%)
Declines     3,340 (94%)     2,557 (84%)
Unchanged     16 (0%)     79 (3%)
Up Vol*     150 (5%)     83 (3%)
Down Vol*     2,585 (94%)     2,795 (97%)
Unch. Vol*     1 (0%)     4 (0%)
New Hi's     17     18
New Lo's     1,054     705

*in millions


VIX  Cboe Volatility Index  9/29/2008 4:14 PM
Last:   46.72        +11.98     +34.48%  High: 48.4


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Briefing: Latest Updates
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4:30 pm : The stock market posted is worst one-day percent decline in 21 years after the House of Representatives rejected the $700 billion financial relief plan.

Stocks were down 3.5% at 1:30 PM ET on news that Wachovia (WB 1.84, -8.16) sold its banking operations at fire-sale prices, reports that several European financial institutions had to be bailed out and concerns that the changes made to the financial relief plan over the weekend would limit financial firm participation.

The S&P 500 then plummeted to a loss of 8.8% after the House of Representatives rejected the Emergency Economic Stabilization Act by a vote of 228 against it to 205 for it. A total of 218 votes were needed to pass. The act was expected to pass, so the stock market's reaction was decidedly negative on the fear that the economy will suffer if credit markets do not improve.

Presumably, Congress will work toward a new plan to ease the financial market turmoil, although it is not clear how long it might take.

To be sure, credit markets remain tight. The TED Spread -- the difference between what banks charge each other for 3-month dollar loans (3-month Libor) and what the U.S. government pays for 3-month loans (3-month T-bill) -- rose 63 basis points to 3.55%. This is the highest level since at least 1984 and indicates that banks are reluctant to lend to each other.

With regard to Wachovia, Citigroup (C 18.98, -1.17) will pay Wachovia roughly $2.2 billion in stock (worth roughly $1 per WB share) for more than $700 billion of Wachovia's banking operation assets and related liabilities in an FDIC-facilitated transaction. Citi will raise $10 billion in a common stock offering and cut is dividend by 50% to help absorb the acquisition. Wachovia will continue to own brokerage AG Edwards and invesment managment firm Evergreen Investments.

Overseas markets also tumbled, with clear signs that the global financial system is strained. Three European governments bailed out Belgian bank Fortis, the U.K. nationalized mortgage lender Bradford & Bingley and Germany's Hypo Real Estate Holding was rescued by a consortium, according to The Wall Street Journal.

To help improve dollar liquidity, the Fed coordinated with nine central banks across the globe to more than double their swap authorization limits to $620 billion. In addition, the Fed is increasing the size of its Term Auction Facilities. The moves gave a modest improvement to credit markets, only to be overshadowed by the rejection of the financial relief plan.

Investors rushed to Treasuries in a flight-to-quality bid. The 10-year note rose two points to send its yield down to 3.61% and the 30-year bond rose nearly four points to push its yield down to 4.15%.  The one-month Treasury bill fell five basis points to yield only 0.05%. Likewise, gold, which is considered a safe-haven, rose 3.7% to $915.50 per ounce.

Commodities as a whole tumbled 5.9% on global economic concerns. Crude oil futures fell 10.7% to $95.48 per barrel.

The Dow, Nasdaq, and S&P 500 fell 7.0%, 9.1% and 8.8%, respectively, settling at session lows. The Nasdaq and S&P 500's declines were the largest since Black Monday in 1987, while the Dow posted its worst day since the September 11 attacks.

All ten of the economic sectors posted a loss. The worst performing sector, financials, fell 15.9%, while the best-performing sector, consumer staples, fell 4.2%.

Weakness was broad-based. Declining issues outpaced advancing issues by a whopping 55-to-1 margin on the NYSE. A total of 1.85 billion shares exchanged hands on the NYSE, with volume surging in the final minutes of trade.

The S&P 500 is now down 25% year-to-date and is at its lowest level since 2004.
DJ30 -777.68 NASDAQ -199.61 SP500 -106.59 NQ100 -10.5% R2K -6.7% SP400 -7.3%
NYSE Adv/Vol/Dec 52/1.85 bln/2846
NASDAQ Adv/Vol/Dec 424/2.84 bln/2563

3:25 pm : The major indices have hit new session lows in the last half hour amid continued disappointment over the House's failure to pass the Emergency Stabilization Act of 2008.

In a telling flight-to-safety trade, the yield on the 1-month T-Bill is now 0.06%, which is down from 0.11% at Friday's close.  Similarly, gold prices are up $25.50, or 2.9%, to $914.00 per ounce.

The current decline in the S&P 500 is the single worst day for the market since October 26, 1987, when it fell 8.3%.  Since then, a 6.9% decline on October 27, 1997, which coincided with the Asian currency crisis, was the largest single day percentage decline. Month-to-date the S&P 500 is down 12.6%, making it the worst monthly showing since September 2002 when it declined 11.0%.DJ30 -665.06 NASDAQ -167.85 SP500 -92.06 NASDAQ Adv/Vol/Dec 364/2.13 bln/2597 NYSE Adv/Vol/Dec 52/1.22 bln/2829

3:00 pm : Republican Congress members said during a press conference that they are going back to the drawing table on the financial plan as both political parties blame each other for the failure to pass the plan.

The S&P 500's decline of of 7.2% at its low is the largest intraday decline since the week following Black Monday in 1987.

The Nasdaq and S&P 500 are trading near session lows.DJ30 -571.08 NASDAQ -145.51 SP500 -79.01 NASDAQ Adv/Vol/Dec 364/1.97 bln/2571 NYSE Adv/Vol/Dec 55/1.09 bln/2818

2:30 pm : The NY Times reports that government leadership plans a second attempt to pass the $700 billion financial bill, which conflicts with a CNBC report that there is no possibility of a second vote.

The Volatility Index (VIX) spiked as much as 11.02 to 46.28, which is its highest level since 2002.  The high levels of the VIX indicates greater uncertainty during the next 30 days.

The Nasdaq establishes a fresh session low and then pares some losses. The S&P 500 and Dow trade modestly above their worst levels.  The financial sector is down 9.3%, energy is down 9.4% and tech is down 6.8%.  The consumer staples sector is down 2.4%, making it the best-performing sector this session.

The S&P 500's decline of 6.1% is the largest one-day percent decline since falling 6.8% in April 2000.  Only two stocks within the S&P 500 are posting a gain.

Commodities (-4.8%) fall on the rejected plan, with oil prices dropping 9.3% to $96.92 per barrel.

Meanwhile, Treasuries extend their gains as investors seek safety.  The 10-year note is up nearly two points, sending its yield down to 3.61%.DJ30 -530.37 NASDAQ -142.05 SP500 -74.58 NASDAQ Adv/Vol/Dec 404/1.75 bln/2517 NYSE Adv/Vol/Dec 80/910 mln/2772

2:00 pm : The current Emergency Economic Stabilization Act vote tally comes at 207 for the plan, 226 against, with one vote remaining.  A total of 218 votes were needed to pass the vote.  House members can still change their vote, and as a result the number of yes votes did tick a few points higher.

Democrats voted 141 for, 94 against.  Republicans voted 66 for, 132 against.

All three of the major indices hit multi-year lows.  At session lows, the Dow, Nasdaq and S&P 500 were down 6.3%, 6.7% and 7.2%, respectively.  The major indices currently post massive losses, although they have recovered quite a bit from the knee-jerk reaction decline.DJ30 -487.49 NASDAQ -128.85 SP500 -68.31 NASDAQ Adv/Vol/Dec 540/1.37 bln/2333 NYSE Adv/Vol/Dec 191/705 mln/2642

1:45 pm : The House of Represenatives falied to pass the Emergency Economic Stabilization Act., getting 202 votes compared to the 218 needed.  There are eight votes left to be counted.

The S&P 500 tumbles, down more 7%DJ30 -680.49 NASDAQ -146.48 SP500 -87.02 NASDAQ Adv/Vol/Dec 559/1.32 bln/2310 NYSE Adv/Vol/Dec 181/685 mln/2652