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U.S. stocks in the red after Fed announcement

Stocks plummeted Wednesday morning after the U.S. trade deficit widened unexpectedly and a string of weak economic reports from Asia and Europe deepened concerns that the global recovery is veering off track.

The Dow Jones Industrial Average fell 217 points, or 2.05 percent, in morning trading, with all 30 component stocks lower. The Nasdaq was down 2.74 percent, and the Standard & Poor's 2.33 percent.

Yields on 10-year Treasury notes fell to one-year lows of 2.72 percent. And the dollar hit a 15-year low against the yen even as it strengthened against the euro.

The chaos in financial markets came a day after the Federal Reserve did an about-face in its efforts to wind down aggressive measures to boost the economy. The Fed said it would use money from maturing mortgage-backed bonds to buy government bonds.

Overnight in Asia, China released data showing that its economy was beginning to cool rapidly. Industrial output, retail sales, and bank lending all showed that the pace of growth was slowing down. The government also announced a looming economic problem: the inflation rate spiked 3.3 percent in July, amid flooding that disrupted food supplies. The government target had been 3 percent.

In Europe, the Bank of England lowered its GDP growth forecast for 2011 to 3 percent annually, down from 3.4 percent, saying the country faces a "choppy recovery."

In the morning, there was more bad news from a third continent: the United States.

The Commerce Department said the trade deficit ballooned more than analysts expected in June, after the stronger dollar made it easier for people in the U.S. to snap up cheaper exports from countries such as China. The gap widened to $49.9 billion in June, up from a revised $42.0 billion in May. Economists had been expecting a smaller gap after a recent drop in oil prices.

Imports in June rose to $200.3 billion, from $194.4 billion in May, as shoppers in the United States bought more consumer products, auto parts and other goods from overseas.

Exports, meanwhile, fell to $150.5 billion from $152.4 billion. U.S. companies struggled to sell products such as industrial supplies, food and consumer goods to customers in foreign countries.

"This is another indication that the economy continues to slip," said Peter Cardillo, chief market economist at Avalon Partners in New York.

IFR Markets had expected a modest pullback in the trade deficit, down to $41.25 billion. In a report Wednesday, the research firm noted China's record June exports, but added that the dollar's continuing strength in the wake of intensified euro zone troubles pushed down petroleum prices. May's trade deficit unexpectedly jumped from $40.32 billion to $42.27 billion.

-- Ariana Eunjung Cha and Sonja Ryst


By Ariana Eunjung Cha and Sonja Ryst  |  August 11, 2010; 11:15 AM ET
Categories:  U.S. Economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Has the Fed entered a new policy regime?
Next: Bottom keeps falling out of trade data

Comments

Still no relief from the OBAMA DEPRESSION.


Posted by: Anonymous | August 11, 2010 10:45 AM | Report abuse

Yes, precisely. Obama started two decade-long wars and funded them with scrip. At the same time, he cut taxes on the wealthiest and gutted regulation on the crookedest. Then he funded a massive bailout for his banker buddies, before heading down to Crawford to--ooops.

Posted by: redlineblue | August 11, 2010 10:54 AM | Report abuse


Why get anxious?

We just jumped upwards over 200 points last week.

This is nothing but the market going back to where it's supposed to be before that bizarre blip of irrational exuberance.

YAWN.

Posted by: thardman | August 11, 2010 10:55 AM | Report abuse

FACTS are that according to US (right-wing) Media Republicans are supposed to win big in Nov and if Republican lunatics win any more seats then that would mean US economy going further down and down, since they would have even more Votes to block anything getting done to address the fundamental problems of US economy, as a result World investors are fleeing US markets.


There are many many issues with which to prove that Republicans are lunatics, but there is an ABSOLUTE way, their position on health care.


You see Republicans are against Universal nationalized health care, something that all European countries, Canada, in fact all developed nations have. Put another way, to see crystal clear that the Republican are not a Conservative party at all, but a party of lunatics, consider hat Margaret Thatchers Conservative party in UK, Steven Harpers Conservative party in Canada, etc. ALL are 100% for their nationalized health care systems. WHY? Because, nationalized health care means the following KEY advantages:
1- everyone having health care for their obligation to pay Taxes.
2- health care costing 50% LESS as evident by the FACT that in ALL countries that have nationalized health care, health care is taking on avg 9% of the GDP, while in US it is taking a DEFICIT BUSTING 18% of GDP.


More:
http://RealNewsPost.com?n=think.34034

Posted by: Anonymous | August 11, 2010 10:57 AM | Report abuse


No wonder our politicians will do or say ANYTHING to keep the PONZI going----

--50% of American households report they couldnt survive more than A MONTH with a missed paycheck---

SAYS IT ALL-----

"This is flashing so bright red," said Paul Ballew, senior vice president of Nationwide Insurance Co. "Roughly 60% of the population was ill-prepared (financially) before the meltdown."

A MetLife study released last week found that 50% of Americans said they have only a one-month cushion -- roughly two paychecks -- or less before they would be unable to fully meet their financial obligations if they were to lose their jobs. More disturbing is that 28% said they could not make ends meet for longer than two weeks without their jobs.

http://www.marketwatch.com/story/fears-grow-more-consumers-just-a

Posted by: Anonymous | August 11, 2010 11:01 AM | Report abuse

Can you say THIRD WORLD NATION--?!?!?!?!?!

Until the middle class gets out from behind it's keyboards and into the streets of DC and NY, NOTHING WILL CHANGE!!!!

Why are so many people taking this continual daylight ROBBERY lying down?!


Posted by: Anonymous | August 11, 2010 11:03 AM | Report abuse


Still no AUDIT of the Federal Reserve.

The FED was begun by Congress in 1913 when Wilson was President.

Yesterday, the CHILD of the Congress, the FED, announced it was going to PRINT $Trillions of dollars.

Input FROM YOU was unwanted, unneeded, unnecessary, and un-relevant (sic) though your money, if you have any, will be devalued by that much less.

Guess we're going to need a printing of some $100,000 bills to start carrying around in our wallets. I wonder whose FACE is printed on the bill?

Wait just a moment......oh, here it is. It's Woodrow Wilson, the greatest RACIST President in American History.

Glenn Beck will be on at 5PM on Fox.

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Posted by: notinpa | August 11, 2010 11:04 AM | Report abuse

Look at the dollar index.

Vote in November.

Save the country.

Posted by: Anonymous | August 11, 2010 11:07 AM | Report abuse

The Demorats are saying the Gov has money?

Really? Then why is The Fed starting to buy government IOUs with IOUs it bought with printed fiat currency during the recession?

Can you say our economy is well and truly f---ed?

Posted by: illogicbuster | August 11, 2010 11:13 AM | Report abuse

Lincoln Memorial, August 28th - Be there!

Posted by: Anonymous | August 11, 2010 11:15 AM | Report abuse

Americans,why do you buy made in CHINA goods as CHINA'S currancy is pegged resulting in your actions are cutting our America's throats? The consumer holds the key of recovery. Do not buy made in CHINA and let the retailer get stuck with his CHINA products which is a country of socialistic econmics with a pegged currancy. Your little purchases add up with all the others.

Posted by: Anonymous | August 11, 2010 11:18 AM | Report abuse

This ideologue idiot wrote:

"Can you say THIRD WORLD NATION--?!?!?!?!?!

Posted by: Anonymous | August 11, 2010 11:03 AM "


And worse than an idiot. Third World Nation with a First Class War that costs billion++ a week. Did I say week? Duh.


The money is going down that sewer like water outta a faucet.

Duh.


Not to mention the previous Administration and the billions a week down the toilet for 6 years.

It does all add up, you know.

Posted by: jato11 | August 11, 2010 11:20 AM | Report abuse

This ideologue idiot wrote:

"Can you say THIRD WORLD NATION--?!?!?!?!?!

Posted by: Anonymous | August 11, 2010 11:03 AM "


And worse than an idiot. Third World Nation with a First Class War that costs billion++ a week. Did I say week? Duh.


The money is going down that sewer like water outta a faucet.

Duh.


Not to mention the previous Administration and the billions a week down the toilet for 6 years.

It does all add up, you know.

Posted by: jato11 | August 11, 2010 11:20 AM | Report abuse

The Obama's. The gift that keeps giving....

Maybe he should have been FOCUSED LIKE A LASER BEAM on the ECONOMY instead of playing basketball or golf.

Affirmative action doesn’t not breed fiscal responsibility. There very little pain involved in SPENDING OTHER PEOPLES MONEY….

Posted by: askgees | August 11, 2010 11:20 AM | Report abuse


Switching AWAY from the disastrous policies of the DemonRATS AND the ReBooblicans to Constitutional and fiscally sound policies of the Tea Party candidates IS A WAY OUT of the current DEBACLE.

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Posted by: notinpa | August 11, 2010 11:23 AM | Report abuse

Another BOZO wrote:

"The Obama's. The gift that keeps giving....

Maybe he should have been FOCUSED LIKE A LASER BEAM on the ECONOMY instead of playing basketball or golf."

NEED I REMIND YOU HOW MANY Y-E-A-R-S Bush took off to CLEAR BRUSH? Yeah, more than a year off at that phony ranch.
Clearing garbage for a couple of years instead of focusing on ...well...better he cleaned garbage.

Posted by: jato11 | August 11, 2010 11:23 AM | Report abuse

The voters have demanded an end to free trade, tariff wall to put and end to job outsourcing and rid our store shelves of cheap Chinese and Indian goods, and our workplaces of Indian and Chinese guest workers, and the government isn't listening! What good is a government that wont even listen to the people it purports to represent? None!

Posted by: mibrooks27 | August 11, 2010 11:24 AM | Report abuse

Recovery Summer! Catch the fever baby!

(so what if every pronouncement by B.O. and his obsequious surrogates has been wrong, it's racist to disagree)

Posted by: dandean | August 11, 2010 11:27 AM | Report abuse

This is VERY BAD economic news!

The Fed is doing what they said last year before Congress the WOULDN'T do!

They are MONETIZING the MASSIVE DEBT of Obama, Pelosi, and Reid!

We're heading down the Road to Predication!

Posted by: theaz | August 11, 2010 11:32 AM | Report abuse

The United States is not a continent.

Posted by: Anonymous | August 11, 2010 11:33 AM | Report abuse

Yes, precisely. Obama started two decade-long wars and funded them with scrip. At the same time, he cut taxes on the wealthiest and gutted regulation on the crookedest. Then he funded a massive bailout for his banker buddies, before heading down to Crawford to--ooops.

------

Almost. He didn't start the two wars, but he did jump in with both feet. He also continued ALL of the above mentioned initiatives, AND started some new ones of his own, without new funding.

The only difference is that he's from Illinois, and practices THAT brand of politics.

The more things change, the more they stay the same.

Posted by: Anonymous | August 11, 2010 11:38 AM | Report abuse


We're going down.

Until YESTERDAY on CNBC all the commentators were DENYING that we were going to have a "Double Dip". Now, today, it's only a matter of how deep the 'Double' will be.

You'll recall last year we were going to have a "Hockey Stick" recovery. Then, it sort of flattened out to a 'V' shaped recovery, then, flatter to a 'U' shape.

We'll be LUCKY to recover AT ALL with even a BASKIN-ROBBINS shaped (TRIPLE-DIP) recovery.

Go Tea Party.

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Posted by: notinpa | August 11, 2010 11:42 AM | Report abuse

Ben Bernanke is beginning to resemble Don Quixote.

10:45 - you are a friggin' moron or a troll.

11:20 - since you're so concerned about politicians golfing, maybe you should direct some of your irritation at John Boehner. You know, the guy with the tan George Hamilton envies, the guy with the seven handicap, the guy who played ONE HUNDRED AND NINETEEN rounds of golf last year.

Posted by: quicksilverer | August 11, 2010 11:42 AM | Report abuse

One has to wonder if Ben knows what he is doing.
With really no major policy changes why does Fed meet and tell stale stories?

Fed policies do not encourage people to save or invest. All Obama administration wants to do is throw money at the problems.
Ben is sleep at the wheel and administration does not know much.
This s*** has been going on for past 10 years.

Posted by: Anonymous | August 11, 2010 11:45 AM | Report abuse

after all this spending

obama and democrats are

still going to blame Bush.

How pathetic. Democrats

are id!ots. Play some more

basketball and golf, have

another party obama.

Posted by: COOLCHILLY | August 11, 2010 12:06 PM | Report abuse

after all this spending

obama and democrats are

still going to blame Bush.

How pathetic. Democrats

are id!ots. Play some more

basketball and golf, have

another party obama.

Posted by: COOLCHILLY | August 11, 2010 12:06 PM | Report abuse

Keep hiring those Indian IT slaves! Everything's gonna be great!

Posted by: Anonymous | August 11, 2010 12:06 PM | Report abuse

WHEN ARE THE DEMOCRATS GOING TO REALIZE THEY HAVE RUINED THE COUNTRY WITH THEIR POLICIES?

Posted by: COOLCHILLY | August 11, 2010 12:08 PM | Report abuse


Tragic to see Schiff lose in Connecticut, where a criminal is running away from the voters this year.

But, Schiff should have been smarter than he already is. He was trying to be a Fiscal Patriot in a State filled with accountants, and lawyers, and Wall Street wonks, the very people who profit from the THIEVERY and who HAD to VOTE to keep him OUT of the Senate or LOSE EVERYTHING.

At least, without Schiff, they'll have a chance to SURVIVE the CHAOS they have ALREADY caused, they, and the DemonRAT Party.

Go Tea Party.

Posted by: notinpa | August 11, 2010 12:13 PM | Report abuse

First, China cooling its economy is a plus for the US. It means sustained growth there is more likely later on, and less chance of an overheated bubble or collapse in key sectors. We should NOT want a collapse of another economy, particularly one as large as China's.

Second, increased imports by the US means consumers are finding more spending power for goods per dollar. Strong dollar equals more buying. You may proceed to enjoy your evil, imported goods.

However, decreased exports as reported here is not so damaging; look, it only fell $1.9B out of $150.5B in exports just 1.2% (tiny, tiny!) So looking at the sky, I see it is NOT falling today except on Wall Street.

The incremental US exports decline was most likely due to the stronger dollar and selling things that were too hard to sell overseas anyway. Like beer in a muslim country, a laptop in a place with no electricity, or aircraft that weren't going to be bought right then until selling terms were agreed to.

"In monetary matters, appearances are deceiving; the important relationships are often precisely the reverse of those that strike the eye" -Friedman and Schwartz, A Monetary History of the United States, 1867-1960 (1963).

Regards

Posted by: Anonymous | August 11, 2010 12:16 PM | Report abuse

Watch out below when we get the revision of the 2nd quarter GDP. It's expected to be revised significantly lower.

It's the economy/jobs stupid!!!!!

Posted by: Jimbo77 | August 11, 2010 12:28 PM | Report abuse

The lack of US exports is a reflection on our inability to manufacture competitively in the world, not on our eagerness to try and sell beer to a Muslim.

Posted by: EconomyInCrisis | August 11, 2010 12:31 PM | Report abuse

Still amazed at how guilelessly the media buys into this "recovery summer" BS. How can we consistently receive horrible economic reports for every month of Obama's presidency, and have each one be "unexpected"?

Bush ran up deficits, yes -- with concrete goals in mind like, say, a free and democratic Iraq. Obama lapped Bush's deficits within a few months of taking office, and for no better reason than to redistribute wealth and add yet another inevitably crushing, unsustainable Democrat social program. How many of those do we need, exactly? Social Security -- which has a "trust fund" just stuffed with more government IOUs -- is now projected to collapse like a Ponzi scheme decades faster than thought. Obamacare is supposed to correct gigantic overruns in two other Democrat healthcare programs, but really just cranks up the deficit even more. And the Democrats' collective reaction to all this? Why, we can't cut spending, because some illegal alien from Bolivia who has been here 3 days might need a nosejob (and someday might vote Democrat), so instead we need to land crushing taxes on the few productive people and companies we have left.

The illogic and passive-aggressive scapegoating of the Democrats is why the economy is in a flat spin. Businesses cannot plan for the future, because they have no idea what the next 2,000 page Democrat bill will actually contain. They can't hire, because someone taking a $50,000 a year salary will actually cost the company $100,000 in salary plus the endless array of taxes and penalties Democrats have created to prolong their social programs.

And to be clear, all of this is spelled out in OBAMA'S OWN ECONOMIC PLANS. His projections for the giant stimulus bill tried to scare people into voting for it by also including charts showing what would happen if it was NOT passed. Those "worst case" projections turned out to be far BETTER than what has actually happened with the stimulus bill! In other words, Obama's own economic projections show that his stimulus bill was a complete disaster, and we literally would have been better off if he'd just golfed 12 hours a day and let the economic cycle come back on its own. Instead, we are headed nowhere but down -- "unexpectedly".

Posted by: zippyspeed | August 11, 2010 12:39 PM | Report abuse


It's a matter of timing.

Selling stocks now, raising cash, in the face of the FED's defacto devaluation of the US Dollar IS ADVISABLE if you are young enough to tolerate investment in distressed real estate.

Paying no more than 25% on the 2006 sales price of real properties is a speculation worth considering in light of the coming Islamic takeover of Europe. Fleeing 'Euros' will pay ANY AMOUNT for a property, ESPECIALLY near to WASHINGTON, D.C. but, further out from D.C. where property prices have COLLAPSED the greatest is where the best investments lie.

It will be PARAMOUNT to insist upon payment in total and in GOLD, ESPECIALLY GOLD COINS. No Euros, no Swiss Francs, which are no longer backed by their gold.

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Posted by: notinpa | August 11, 2010 12:41 PM | Report abuse

We should remember at this point that market movements are dictated by the recommendations of market analysts, who have proven time and time again that they have no idea what's going on, and if problems exist, what to do about them.

Posted by: RGee1 | August 11, 2010 12:45 PM | Report abuse

If we could just get the "deserving rich", Wall Street banks & the corporations off of government welfare, then all of our financial problems would be solved but the government has decided that the working poor & middle class must keep them in the lifestyle to which they are accustomed because the "political class" has joined the ranks of the "deserving rich".

If you want to see a model of how to do it correctly, then look at Germany where the economy is recovering and reaching full employment, their exports are rising and they "lock up" the likes of the Wall Street "grifters".

Posted by: mikeconville | August 11, 2010 1:05 PM | Report abuse

How bizarre that instead of trying to make a profit, our central banks try to engage in Ouija board guesstimates about how to maniupulate our economy.

You grow the economy by not being a slave to affordable housing policy and overextending credit for people who cannot really afford homes.

You grow the economy by trying to make a profit off of loans, which again means not lending to those who cannot afford homes.

You grow the economy by not doing anything drastic, which the Fed always manages to do anyway.

Ugh.

This country is *so on the wrong track* towards state management of markets.

Posted by: mtnrunner2 | August 11, 2010 5:40 PM | Report abuse

More proof that the Obama administration is a disaster. Not only do they not get it, they are way too arrogant to change course.

The current government is NOT governing with the consent of the governed. They must be replaced with honest and responsible people who will actually uphold their oath of office.

Posted by: samadams25 | August 11, 2010 9:23 PM | Report abuse

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