"Global markets to cease trading" Rumour

Mena

Sky news (ok, so not the best source of information ) are reporting rumours of "global" (meaning EU/US) markets ceasing trading today due to the chaos.

Would this actually help the situation or just postpone it until markets open on Monday?

TheBazman

"BERLUSCONI SAYS IDEA OF SUSPENDING MARKETS IS A HYPOTHESIS - NOTHING CONCRETE YET"

It may be something discussed over the weekend - a temporary pause to stop the rot

SoCal90046

Mena wrote: »

Sky news (ok, so not the best source of information ) are reporting rumours of "global" (meaning EU/US) markets ceasing trading today due to the chaos.

Would this actually help the situation or just postpone it until markets open on Monday?

I don't know what they're waiting for. It's been obvious for a while that markets should be closed.

20goto10

It could have an increasingly bad effect. Its an admition that things are dire, like anyone needs an admition....but the markets can be a bit slow and stoopid sometimes.

Besides, I'm still trying to get my head around why it all matters (aside from our pensions). Stocks can go up and can go down but they don't worsen or fix the liquidity problem which is the root of all evil. The media just love ups and downs because everytime there's a movement they can bring up their big flashy breaking news banner. Imagine they were to report on the actual real problem: "Still no change on the Euribor and Libor rates" or "Euribor up by 0.01%"....not exactly worthy of a big flashing banner now is it :rolleyes:

SoCal90046

20goto10 wrote: »

It could have an increasingly bad effect. Its an admition that things are dire, like anyone needs an admition....but the markets can be a bit slow and stoopid sometimes.

Besides, I'm still trying to get my head around why it all matters (aside from our pensions). Stocks can go up and can go down but they don't worsen or fix the liquidity problem which is the root of all evil. The media just love ups and downs because everytime there's a movement they can bring up their big flashy breaking news banner. Imagine they were to report on the actual real problem: "Still no change on the Euribor and Libor rates" or "Euribor up by 0.01%"....not exactly worthy of a big flashing banner now is it :rolleyes:

I would call it more of a recognition rather than an admission.

Liquidity has been at the heart of the problem from the get-go: we saw it initially with banks, now it's with the global economy. The markets aren't just symptomatic of a problem.

For example, one issue that's hitting US markets is redemption of retirement funds--they're called 401(k)'s, but there are a few other tax deterred plans. These retirement plans have a large part of their asset base tied into the stock market through things called mutual funds. People also invest in mutual funds outside of tax deferred accounts. In the past month, there has been accelerated redemption of mutual funds, many times the normal rate, which naturally puts downward pressure on markets.

The bigger problem is that it's time to pay for the credit binge of the past few years and there's no way that I can see to separate out action from consequence. We're (in the the US) going to have a slow down and trying to stop this natural cycle by throwing cash at the problem is risky. It's good to manage a slow down, but I don't think it's avoidable.

There is a connection between exchanges/markets and the credit problem, but these markets set a tone--it's likely related to the comment you made about incessant media coverage and gloomy headlines.

asdasd

In the past month, there has been accelerated redemption of mutual funds, many times the normal rate, which naturally puts downward pressure on markets.

And most people would do that. I have some money in an Etrade account and normaly I invest for the long term. Now, I am out in the money market - have been for a few weeks - waiting for a bottom.

there will be one day when it all bang back up again.

SoCal90046

asdasd wrote: »

And most people would do that. I have some money in an Etrade account and normaly I invest for the long term. Now, I am out in the money market - have been for a few weeks - waiting for a bottom.

there will be one day when it all bang back up again.

I am with you. I am a long-term investor too, so contributions to retirement funds continue every other week; however, for other funds, I have been sitting on the sidelines hoarding cash. Things will come back again--strongly--and that's where great returns will be had. For now, I too am waiting for things to settle before I get back in.

TheBazman

20goto10 wrote: »

It could have an increasingly bad effect. Its an admition that things are dire, like anyone needs an admition....but the markets can be a bit slow and stoopid sometimes.

Besides, I'm still trying to get my head around why it all matters (aside from our pensions). Stocks can go up and can go down but they don't worsen or fix the liquidity problem which is the root of all evil. The media just love ups and downs because everytime there's a movement they can bring up their big flashy breaking news banner. Imagine they were to report on the actual real problem: "Still no change on the Euribor and Libor rates" or "Euribor up by 0.01%"....not exactly worthy of a big flashing banner now is it :rolleyes:

Have you noticed that Sky News now have a second scrolling banner with Libor rates etc - While there is certainly a higher understanding of what these are than there was a month ago, I'd say it is still lost on most viewers

Mark200

I heard last week or so (from Sky News also) that if the stock market drops in the US by 10% in a single day, trading will automatically cease.

SoCal90046

Mark200 wrote: »

I heard last week or so (from Sky News also) that if the stock market drops in the US by 10% in a single day, trading will automatically cease.

What actually happens is that trading halts are set at the start of the quarter; a pause in trading is generally referred to as a "trading curb," but the curb known as a "circuit breaker," the curb to which you're referring, was introduced after the market plummeted in 1987. The circuit breaker is set at three levels: a 10%, 20% and 30% drop. The actual point figure is determined at the start of each quarter and is set to a percentage of the closing value of the market for the last month in the quarter. So, the circuit breaker isn't tied to the current level of the market, but to the average level of the close in the last month of the previous quarter. A 10% drop halts trading for an hour; 20% halts trading for two hours and 30% closes the NYSE for the rest of the day. In this quarter, the first circuit breaker will kick in if the market drops by over 1,100 points: 1,100 points was 10% of the average close in September 2008. The curb on trading is less severe if a circuit breaker level is reached in the afternoon.

SoCal90046

Here's a link to an article that appeared on the CBNC website that discusses circuit breakers on the NYSE.