I've long thought the Dow Jones Industrials (DJI) should really be around 7,500, in order for stocks to get back to historical P/E ratios of about 15/1, and it looks like this particular version of nirvana is almost in sight, with the DJI closing today at 7,997.28.
Not that anyone is real happy about it. Remember, nirvana isn't really about feeling happy, but about feeling nothing. And Wall Street traders are now about as close as you can ever get to feeling utterly numb.
And why the decline today?:
- Housing starts dropped for the fourth straight month, signalling that the housing market has yet to stabilize. Housing permits also dropped -- promising further declines to come. (The 4.5 percent drop in housing starts translate to an annual rate of 791,000, the lowest such number since the Commerce Department began keeping records in 1959.)
- The minutes of the last meeting of the Federal Reserve Board of Governors indicated that the Fed is open to another rate cut, pushing the Fed Funds rate down to its lowest point in 50 years, because current economic problems "could persist for some time."
- The CEOs of Ford and GM told the House Financial Services Committee that bankruptcy would mean liquidation of their respective enterprises.
- Citigroup announced it was buying $17.4 billion worth of toxic assets previously squirreled away in "Structured Investment Vehicles," (SIVs) an acknowledgement that the reeling financial giant had no other option but to assume the debt on its own books.
- Consumer prices fell in October at the sharpest pace in 60 years.
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