Marketballs: Gilt, fear and greed

A couple of weeks ago, TRWS advised punters that gold was the best place for their money (if indeed they had any).

Run bear, run! 

This advice is apparently proving more and more prescient with every passing hour. Yesterday, both the Dow Jones and the FTSE indices tanked spectacularly, the Eurozone continued to spread panic and lose credibility. Overnight, the stock markets of Asia also started tanking and this morning, it’s ground hog day; when the markets opened in London, the FTSE lost more than 3% in six minutes. Spain and Italy are rallying but late morning trading suggests that the FTSE is still down around 2.2%.

Some of these Billy-Big-Balls city boys really do seem to be behaving as if their trading floors are being attacked by gangs of blood-thirsty grizzlies. Well, I can only hope.

There’s plenty of bad news to feed this already bowel-loosening market sentiment. This afternoon, we’ve the US government jobs figures to look forward to. While a rise of 85,000 jobs in July is expected, the unemployment rate is likely to remain rooted at 9.2%. June’s figures were no walk in the park either with only 18,000 'non-farm' jobs being created.

In other heart-warming market stories, the nice people at Standard & Poor have just affirmed their BBB+ rating of Ireland; just three steps from  junk status.

If you like a lot of schaden with your freude, you might be edified to hear that RBS is in trouble. After posting pre-tax losses of £794m in the six months to the end of June (compare that with £1.1bn profit in the same period last year), the bank's shares plunged 14% to 26.05p in early trading this morning. That’s a far cry from the heady days of Fred the Shred’s reign when it was riding high at 602.6p just before everything went tits up in 2007.

And that’s where a lot of people are looking in their search for meaning in all the current chaos; back to the initial credit crunch in 2007. Analysts and economists seem to be torn between  wondering whether this crash is the same as the ’07 model or is it actually a new variation in the cycle. All of it; utter bunkum.

One thing these crashes or ‘market corrections’ always illustrate is that despite all the information and forecasting at their fingertips these overpaid, overstuffed shirts and empty suits never cease to be surprised by the seriousness of the situation.

The time-honoured platitudes these analysts trot out only underline the emperor’s new clothes reality of the situation. In fact, I seem to recall some of these of lines being used before, when I was watching a documentary on the History Channel about the Wall Street  Crash.

One analyst told the Daily Telegraph this morning; “While the headline market numbers are alarming, we should all take a deep breath and remember that the fundamentals are much better than 2008; banks are stronger, companies are generally in good shape, and traders are less heavily leveraged.”  Take out the dates and that speech could almost have been made by US President Herbert Hoover in October 1929 when he was trying to calm the herd....

Gold is trading in the 1660s ($/oz) and a lot of people see it reaching $2000 before year end. I’m not so sure but over the fortnight since I last cast a greedy eye over my trove of sovereigns, Claddaghs and heavy neck chains, the price has already risen by more than fiddy bucks...But don’t worry, I’d never sell all the tomfoolery Mammy Croppy gave me before I left dear old Oireland. 


++Mid afternoon update++: UK markets starting to rally on less than impressive but still climbing US jobs figures (117,000 jobs created, unemployment down to 9.1%) which seem to suggest 'recession averted' for now but volatility is not going away just yet. The world markets wait for US opening trends; bounce expected.