11.27.2009

11.27.2009

                                       Friday’s action showed how quickly fear can return into this fragile climate. After the announcement that Dubai wants a stand- still agreement for their Debt payment of some 20 Billion dollars, markets around the globe plunged. Our Dow 30 dropped 233 points in the first few minutes but managed to recover and ended down 154 points. Other Global markets were down as much as 4.8%. This event has caused much consternation and confusion in the investing world. Concerns in the areas of potential asset bubbles, bank exposure to global debt, and a domino effect from commercial real estate loan defaults are just a few of the potential ramifications. At the onset it appears that the biggest problems will be with the largest overseas banks and not too bad within our borders. Next week will be filled with the news and analysis of this event and the possible effects on our side of the pond, as the English like to refer to it. Surprise, surprise, there is usually something sinister that comes along when there is the kind of utter confusion in the world markets like we have seen in the past year. Early last week Art Cashin, the Director of Floor Trading for UBS said that if a global geo-event happened, it could knock our market down 1000 points in a heart- beat. Great call Art.

          It is going to take a while for this event to play out, so as we have been, we will stay 100% in CASH and watch it play out from the sidelines and sleep very, very well.

Till next time

The MTA Staff