Monday, June 07, 2010

Flash Crash Part 2....

Well, this is an interesting turn of events. Stocks have now taken out the lows hit during the flash crash a month ago. So, that computer glitch has proven to be a pretty accurate predictor of the markets over the last month. Markets are rebounding in Asia tonight on the heels of B. Bernanke's comments. The market is due for a bounce we'll see if it can carry on through the night. I think it is interesting to note that despite all of the market rally talk, the stock market is up less than 2% over the past 9 mths and is now solidly red for 2010.

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Just a quick thought on the spill. Anyone watching the videos of the underwater ROVs can see that oil is still gushing out of the well at a disturbing rate. When they severed the pipe to attach their latest capture tool, the rate of oil flow increased dramatically. So while it may be accurate to say BP is capturing 400,000+ gallons of oil/day, I think it would also be accurate to say that an amount of oil equal to the previous uncapped levels is still leaking into the Gulf. BP's apparently working to get a second ship on site so that they can capture up to 850,000 gallons/day. Remember the official estimate until recently was that this well was only leaking 200,000 gallons a day, but now they are somehow capturing almost 4 times that amount?

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I've mentioned before that rail traffic is a decent indicator of economic activity. There are many factors at work here, but it is worth noting that May saw a decline from March and April and this could be an issue if the trend continues.

"U.S. freight railroads originated 1,153,675 carloads in May 2010, an average of 288,419 carloads per week.

• U.S. railroads averaged 294,758 carloads per week in April 2010 and 288,793 in March 2010. Thus, May 2010’s average was actually down slightly from those months.

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The new UK Prime Minister went all Gov. Christie on the Brits today and that has shaken many in the UK (sidebar: I find it comical how Gov. Christie of NJ gives basically the same speeches as Gov. Paterson in NY but he is being touted as a potential VP candidate while Gov. Paterson is being run out of town).

"Cameron’s forecasts are that the public debt could reach 1.4 trillion pounds in five years. The annual interest payments on that are expected to be 70 billion pounds. “£70 billion means spending more on debt interest than we currently do on running schools in England plus climate change plus transport,” he said."

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Cheers!

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