Market recap: Investors spooked by street battles in Egypt stampeded out of riskier assets,...


Market recap: Investors spooked by street battles in Egypt stampeded out of riskier assets, sending stocks to their worst losses in two months. The market was already poised for a pullback after a long rally, and Egypt provided a reason to seek safety. Crude oil surged, the dollar jumped, Treasurys rose, and gold gained. NYSE decliners routed advancers more than five to one.
Comments (31)
  • kmi
    , contributor
    Comments (4600) | Send Message
     
    Tough week after Tunisia and with Japan's downgrade.

     

    Should be an interesting Monday.
    28 Jan 2011, 04:15 PM Reply Like
  • wyostocks
    , contributor
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    Hope you are long oil.
    28 Jan 2011, 04:18 PM Reply Like
  • Short Seeker
    , contributor
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    at last reading, I didn't know that the dollar "jumped" when it is only up a little more than half a percent. Makes the headline sound sooooo dramatic... a jump IMO would be AT LEAST above 1%...

     

    If the market were scared, the dollar surely would have rallied more, which possibly would put more selling pressure in the equity markets... Seems like this is being blown out of proportion, and someone is trying to make a few bucks on panic.
    28 Jan 2011, 04:24 PM Reply Like
  • herbert hoover
    , contributor
    Comments (2001) | Send Message
     
    If the Dow pulls back another 1000 points or so, there might actually be some buyers!
    28 Jan 2011, 04:28 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2213) | Send Message
     
    Are you kidding? "investors" who were unfazed by riots in Athens, London, and Paris suddenly are spooked by a street battles in Egypt?

     

    Quick, how long is the border between Egypt and Iran? (trick question to show that "investors" cannot find either on the map).

     

    The market fell because there were more sellers than buyers and NOBODY in Wall Street cares about Egypt or even knows who fights whom and/or for what reason.
    28 Jan 2011, 04:28 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4428) | Send Message
     
    Maybe investors are more worried about Egypt's border with the Suez canal than their border with Iran...
    28 Jan 2011, 04:42 PM Reply Like
  • wyostocks
    , contributor
    Comments (9115) | Send Message
     
    Harry, if you are old enough, you'll remember that the Iranian revolution started the exact same way. And, lucky us, we have another Jimmy Carter who will deal with it. Also, Iran didn't have a canal that through which a whole bunch of oil flows.
    28 Jan 2011, 04:48 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2213) | Send Message
     
    I am not saying is not important. What dispute is that the "investors" in NY care or even know what is going on.
    28 Jan 2011, 05:05 PM Reply Like
  • Harry Tuttle
    , contributor
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    They should since the latter doesn't even exist.
    28 Jan 2011, 05:11 PM Reply Like
  • wyostocks
    , contributor
    Comments (9115) | Send Message
     
    I think they know.
    These unrests are being sparked by rising food prices and, I think, its only just begun.
    When the world realizes that the commodity price explosion is in great part caused by Uncle Ben's QE I wonder what the reaction will be towards the US..
    28 Jan 2011, 05:58 PM Reply Like
  • hsteele
    , contributor
    Comments (3) | Send Message
     
    It appears that some do not consider the current unrest in Egypt to be of any more concern than the sovereign default issues in Europe. A few critical issues are being overlooked: the civil unrest in Europe was caused by those protesting the loss of benefits (not freedom) and the sovereign debt issue is being backstopped by Germany and the ECB.

     

    The riots in Tunisia, Lebanon, and Eqypt are politically motivated and may lead to total Middle East instability and an increased chance of militant Islamic regimes taking hold.
    28 Jan 2011, 04:49 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2213) | Send Message
     
    Lebanon has been in an out or "unrest" since the 70s. Mubarak has ruled Egypt with the same iron fist for 3 decades. Investors only cared today? This is the excuse du jour and nothing more.

     

    If people cared about what happens in the Middle East the market should fall 10% every time a deal falls through (too many to mention) and it doesn't.

     

    btw Tunisia is not in the Middle East.
    28 Jan 2011, 05:09 PM Reply Like
  • kmi
    , contributor
    Comments (4600) | Send Message
     
    In addition to what others have previously stated with regards to the potential domino effect of these demonstrations, here is a bit more context:

     

    Egypt is the building block of Western relations with the Arab world, the most populous Arab nation, arguably one of the most important to the world economy having served as bread basket since ancient times, and most importantly, unlike the aging top heavy Western nations, Arab nations have a much much lower average population age.

     

    Damn, I want to explain why this last part is so important but it would take too long. Suffice to say, the entire world is watching this and holding its breath, you may not be, and you may not perceive the markets to be (traditional american self centeredness) but it isn't like that outside these borders.

     

    btw Tunisia is relevant to the "Middle East" as it were, just as Morocco would be.
    28 Jan 2011, 06:32 PM Reply Like
  • wyostocks
    , contributor
    Comments (9115) | Send Message
     
    kmi. You nailed it. BTW Egypt has 80 million people and is by far the most dominant economy in the region.
    28 Jan 2011, 06:42 PM Reply Like
  • Edward, Lord Clarendon
    , contributor
    Comments (136) | Send Message
     
    You're right, Harry.

     

    I'd submit Lebanon (the Levant generally) has been the scene of social unrest since Homo Sapiens polished off the Neanderthals.
    29 Jan 2011, 11:02 AM Reply Like
  • vman650
    , contributor
    Comments (123) | Send Message
     
    Quick, someone wake up Ben. He fell asleep at the wheel and forgot to buy stocks today. How can our government possibly make money on their stocks if Ben forgets to print money? If this seems sarcastic, you got it right.
    28 Jan 2011, 05:15 PM Reply Like
  • wyostocks
    , contributor
    Comments (9115) | Send Message
     
    Yeah,agree. While Ben is helping our stock market he is unleashing hate and discontent around the world. What goes around, comes around.
    28 Jan 2011, 06:00 PM Reply Like
  • Tack
    , contributor
    Comments (16378) | Send Message
     
    Europe's calmed down, so somebody had to find a new reason to worry, even if it's even less consequential to world economic affairs.

     

    A classic sheep-spooking day. Nothing more.
    28 Jan 2011, 06:42 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2213) | Send Message
     
    Europe has NOT calmed down. The ADD financial punditry has momentarily turned their attention elsewhere.

     

    The deficits are still there and the debt keeps growing every day.
    29 Jan 2011, 11:12 AM Reply Like
  • Tack
    , contributor
    Comments (16378) | Send Message
     
    Harry:

     

    The more emotional look for something new to worry and squeal about every day. It sure does provide wonderful value opportunities for the more level-headed. It's much better to make money than to worry.

     

    I'm rather hoping that the Egypt nonsense causes some panicky selling on various Israeli issues I track, so I can pick up a few of those cheaply.
    29 Jan 2011, 11:22 AM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2213) | Send Message
     
    Tack:

     

    I very much agree with your principles of betting against emotion. However, when it comes to Europe, the math says the Greeks, Spaniards, and Irish (just to name 3) have less than less than a 5% chance of EVER repaying those debts as they are structured today. History says they have even a lower chance. So, in this case the emotion (and the politicians) are clearly on the bullish side.

     

    I have no idea what will happen in Egypt and it is quite possible that the smart thing to do is try to buy Israeli companies.
    29 Jan 2011, 12:10 PM Reply Like
  • mikeybronx
    , contributor
    Comments (382) | Send Message
     
    at the close of wednesday trading session i was 80% out of S&P500 index with my remaining shares institutional.. looking towards Canada and sleeping good this evening. i do believe a minor storm is on the horizon.
    28 Jan 2011, 07:47 PM Reply Like
  • Grand Nagus Kelly
    , contributor
    Comments (1837) | Send Message
     
    I agree, I think with Mikeybronx. The market was looking for a reason do drop and now it has it. I don't think it's over either.

     

    I sold half my stuff.
    29 Jan 2011, 01:22 AM Reply Like
  • mikeybronx
    , contributor
    Comments (382) | Send Message
     
    Egypt's economy may seem thriving as compared to neighboring countries to some but Turkey is where the stability, growth and economic power will surface. ask any politico analyst that knows his or her stuff.
    29 Jan 2011, 08:29 AM Reply Like
  • wyostocks
    , contributor
    Comments (9115) | Send Message
     
    mikey, you're right. Just hope the riots don't spread there.
    29 Jan 2011, 10:32 AM Reply Like
  • kmi
    , contributor
    Comments (4600) | Send Message
     
    Turkey has installed some good policies post restructuring and future looks mostly good going forward but it is a big country and there is some risk between the Europeanized west and the clannish east.

     

    Turkey's best bet for growth is entrance into Europe but that is 99% unlikely. Stability is good bet because of the military's lead in the political sphere, and it's very moderate, progressive Islamic ideals.

     

    I don't doubt there will be growth but I think the concept of it being part of the new BRIC is a bit overblown.
    29 Jan 2011, 06:41 PM Reply Like
  • Milkguy1
    , contributor
    Comments (3) | Send Message
     
    The real danger is once the hedge fund short sellers take advantage of general market fear the will drive down everything until sanity returns. It could be a good buying opportunity if you are in cash.
    29 Jan 2011, 11:28 AM Reply Like
  • Tack
    , contributor
    Comments (16378) | Send Message
     
    What could be more wonderful than an artificially-created dip that isn't supported by the fundamentals? The kind of stuff value players dream about.
    29 Jan 2011, 11:32 AM Reply Like
  • kmi
    , contributor
    Comments (4600) | Send Message
     
    Wow. Actually, the real fear is that the country falls into civil war, trade is shutdown in the Suez, Egypt's economy and it's massive agricultural market ceases functioning, contagion spreads to other Arab nations, Israel gets scared and starts greasing the tank treads, and the whole middle east falls apart.

     

    I don't know if I'd worry as much about a few folks making some money on shorts.
    29 Jan 2011, 06:45 PM Reply Like
  • Milkguy1
    , contributor
    Comments (3) | Send Message
     
    I am definitely not a stock expert but I have been in the market a few years and enjoy doing my own research on the best stocks to buy and sell. I am from the desert West and have been around for a half century plus.
    29 Jan 2011, 11:31 AM Reply Like
  • mikeybronx
    , contributor
    Comments (382) | Send Message
     
    i like the notion of an artificially created dip as much as an artificially created rally. it certainly holds true for both. i have taken it in the shorts more times then i would like to admit, but persistence and knowledge tends to allow the law of averages to work in ones favor. i will refrain from positions in REITS, retailers, and bonds for the time being and will remain 50% in cash. i haven't any clue if the unrest in Egypt will spread like wildfire. if the individual investor does flee to the sidleines i imagine institutional investors will gobble up those shares. does anyone like Canada? so many think of Canada's economy to be like ours but they have some very strong banks and mutual funds that invest domestically that do quite well. any thoughts?
    29 Jan 2011, 12:41 PM Reply Like
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