Thanks shortie for catching. Now its making me question my view. I agree with the premise that markets knew thursday and friday that downgrade is coming and that was the reason for the downmove in stocks on huge volume. But I am still sure specifically about 'emerging markets in Asia' - they will have a massive sell-off on monday. Eventually, Dow might end up higher though for the day. Btw, Saudi was down 5.5%.
Interesting results 50%+ think it is going to go up. A of traders did "bottom" fishing last Friday. You know G20 had crisis call among member deputies on the downgrade today, Saturday. They could have waited after the Weekend.
I often hear people compare U.S. vs. Japan. The too are fundamentally different except gov ran into huge debt. Japanese save a lot, American gov and people both are in huge debt. J-gov can take money from people to stimulate eco and lend, U.S. can only print
Japan had been downgraded before also, this is first experience of US downgrade for this generation. UStreasuries are at the centrestage of worlds financial system. 95% of JGBs are held by japanese domestics. So unlike USA. So different situations not exactly comparable
You are right, they are very different. Japan was much worse off then we are. Their government is 10 times more corrupt then ours, and that is saying something. Their downgrade also came in the middle of their worst bear market ever. Also, nobody outside Japan owns or wants to own their shit debt. That is not true with the US. Come monday morning, everyone is going to line up to keep buying our debt. That will not change for the foreseeable future. This will be a non event market wise. Politically, it will be a big deal as the name calling in Washington will only get louder.
Let me further add, the fastest growing economies in the world (India, Brazil and China) all still have a lower credit rating then the US. Let me also add that S&P downgraded Berkshire Hatheway's debt in 2008 when they were sitting on 30 billion in cash! And at the same time S&P defended the creditworthiness of Bear Stearns and Lehman. Yeah, they have no credibility.
Shake the shares from the sheeple then squeeze the crap outta the people with the cajones to short at the bottom. Volume speaks volumes about Friday. Last week was a blow-off week. The issue is about risk premium valuations. PE's are "cheap" now and in line with previous market bottoms but we could definitely drop another 120 points in the SP500 translated to the dow thats 1200 points due to uncertainty risk premiums which would take the PE as low as 9 versus our current 11/12. If that happens then macrorisk increases as well as the consumer locks down. The bold step in front of trains. The wise push others in front first. The elite drive the trains. If the FED and the WH team up to turn this around we can easily turn around and rally 20% until year end. But 2013 could be hell as taxes increase, the economy stutters and currency/sovereignty issues remain unsolved. As well as 100 other macrorisks. What to do....... Worra, worra, worra.............