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Minyanville's Before The Bell: Stocks Plunge, Flight to Quality


Credit Fears, Global Sell off! Flight to Quality!

U.S. stock futures are under heavy downside pressure again this morning amid a global equity selloff. As of 8:00 AM EST, S&P futures are trading down -17.20 points at 1397, Nasdaq futures are trading down -23.2 at 1855.2 ,

Asian markets are in a sea of red ink this morning. The Hang Seng closed down -3%, Nikkei closed down -1.99%, and Shanghai Composite closed down -2.14%.

European markets are getting hit hard as well. CAC is down -3%, DAX is down -2%, and FTSE is down -3%.

The story is the same as it has been all week. Global stocks tumbling on heightened credit fears which may begin to hit corporate earnings and stall economic growth. The Morgan Stanley Capital International World Index fell 1.3% to 1,474.56 and has declined 11% since reaching its peak in mid July.

Bloomberg also reports of a flight to quality as investors are scooping up Treasury bills like few times in history. The yield on the T-bill fell 54 basis points to its lowest since 2005. The drop in the yield was the largest since 1989 when the Dow fell 6.9% and even surpassing the drop in the aftermath of 9/11. See Professor Tafel's Why the Fed is Stuck for great insight into how the Fed may act given current market conditions.

The Japanese yen also rose to its highest levels versus the dollar in a year as investors continue to unwind the carry trades. Please read Professor Bloudek's The Duration Carry Trader for the effects it may have on the U.S. markets.

In other news, Countrywide Financial (CFC) reported it will supplement its funding by drawing on an $11.5 bln credit facility.

Kraft (KFT) is in the early stages of finding a buyer for its Post cereals. Potential targest include Pepsi (PEP) and General Mills (GIS). Be sure to click on our Stocks to Watch for more stock-specific news.

Be on the lookout for economic data being released this morning. Click here for the full Trading Radar.


8:30 Housing Starts: 1410 k cons
8:30 Building Permits: 1400 k cons
8:30 Initial Claims: 316 k prev
8:30 Philadelphia Fed: 88.5 cons

The markets are getting increasingly turbulent. Click on our Risky Business Package for in depth coverage on how to navigate through this storm and be sure to take a look at Toddo's updated Ten Trading Commandments.

Good luck, Minyans. It should be another wild ride today.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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