S&P Nosedive — Biggest One-Day Drop since 11/11/11 (Reuters)
Stocks fell 2 percent on average yesterday, in what could be the beginning of the end for the world’s “inflate-a-bull” market. However, you’d be hard-pressed to find an investor who was caught by surprise by this move — or who would admit it. For weeks now, ever since Federal Reserve Chairman Ben Bernanke first hinted at a reduction in quantitative easing, investors worldwide have been bracing for the day when the Fed publically confirmed it. That day was Wednesday. The question becomes whether the pain will be followed by a gain, with the S&P 500 and the Dow Jones Industrial Average trading up today.
No Such Thing as a Win-Win-Win Deal… (Bloomberg)
Coming out of this week’s Paris Air Show, investors in Boeing and Airbus SAS were both soaring among the clouds, content in the knowledge they’d captured some $129 billion in new revenue. For roughly half of that amount, Boeing will receive 382 aircraft and Airbus 466 planes. Both of the orders are large enough, in fact, to lock down production for years. Investors couldn’t be happier, as that’s guaranteed revenue and growth. However, there is a loser amid all of this jocularity: the airlines purchasing these planes. For example, Qatar Airways Ltd. isn’t scheduled to take possession of the new editions to their fleet until 2020 — by then, it is anybody’s guess as to whether the current order will suffice. So what’s the solution? Buy shares. And let the companies fight out the logistics.
Is Brazil the New Greece? (Bloomberg)
If you thought unrest was the sole province of Europe this summer, think again. Brazil’s starting to feel an economic pinch — not exactly like that felt by Greece, but painful enough that one million citizens are taking to the street to protest. The incident triggering the latest incidents was a 9-cent increase in bus fares. But in reality, that price hike was merely the spark igniting a growing sense of unrest in the country concerning its once robust economy. The country’s stock market is mired in in a 52-week low, and its economy had its second worst year — production-wise — in the last 13 years. Among the most vulnerable to this economic reversal is the new middle-class. These are families that have overcome poverty and hardship during the last decade or so, as the economy boomed. But they now face a return to that former life, and it’s not sitting well with them. I know the maxim, “Invest when there’s blood in the streets.” But in this case, it could get a lot more bloody before there’s anything close to investable.