For the first time since 2004, the Dow Industrial Average hit below 10,000 this morning. News around the world was not much better as the sum of all fears of a downward spiral in the credit crunch has spread globally. In Europe early Monday morning, banks continue to decline especially in Russia. Sberbank, Russia's biggest bank, dropped as much as 22 percent. In South America, the Brazilian Stock Market hit a down limit shut off of 10%. In Us markets, many investors are worried not only over Friday's bailout plan specifically that it came a little too late, but also have a lack of trust in the economy. This fear was marked by the VIX level which was up 23% at 55.64 in mid morning trading. We have not seen these unprecedented numbers in the VIX since 1989. Historically, when the VIX has hit a level this high, it has marked a bottom such as in the 1989 level. However, many are speculating whether or not this is the case in this unpredictable market.
ECB officials said last night that ECB President Mario Draghi will likely wait to hear Germany’s Constitutional Court’s ruling on the EFSM before publicly unveiling his plans. Many were hoping Draghi would unveil his plan after the ECB’s September 6th meeting, but this is becoming increasingly unlikely. Today Reuters is reporting that Germany is the latest European nation to begin studying the possible impact of a Greek exit from the Euro. This comes ahead of Chancellor Merkel’s meeting with Greece’s Prime Minister today. Merkel has repeatedly said that she would like Greece to remain in the common currency, though clearly someone in Germany believes a Greek exit is possible outcome worth preparing for. This morning US new durable goods orders numbers we released for July, coming in at a gain of 4.2% M/M. Though this was strong than expected, it was primarily driven by strong aircraft sales. Non-defense orders excluding aircraft were down a sharp 3.4% M/M versus a 0.2% decline expecte...
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