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1/25/2018 7:38:29 AM
Posted: 9/11/2001 5:50:38 PM EST
[Last Edit: 9/11/2001 5:53:24 PM EST by lordtrader]
As many of you know the markets will also be closed tomorrow. What would this mean? Given the current state of the market already, this is devastating. Market requires liquidity. Without liquidity you have panic. Panic causes sell offs. Sell offs will devalue many companies already having a bad time in the market. Many wirehouses are housed within the WTC. Oppenheimer Fund HQ is in the WTC. Oppenheimer is amongst the top 10 Mutual Funds Cos. in the country. You also have brokerage houses such as Solomon Smith Barney, Dean Witter, etc. The 2nd largest securites clearing firm is also housed in WTC, that's National Financial, a subsidiary of Fidelity. Not to mention National Financial Securites lock box(place where stock certificates are booked in from all their broker/dealer correspondents). With that burning down, it could put stress on Securities Insurance Protection Corp. SIPC is the FDIC for the securities industry. Don't really know if they have something in the markets set for burned up stock and bond certs in case of terrorism. Someone's gotta pay for em. Granted all of these firms have extensive back up. All also have different locations. National Financial has operations offices here in the DFW area, trading is done in Boston, as well as operations offices in Denver and FL. It is this factor that added to the SEC deciding not to open tomorrow. Clearing of trades would be difficult when your 2nd largest clearing firm gone in flames. I also believe, but not sure, the Depositary Trust Corp(entity that keep track of all securities) is housed in WTC or nearby building. The US currency has already dropped. This is actually good to stimulate the economy, however, given we just had tragedy it is viewed as a bad thing. Kinda hard to get investors into a country that just had a terrorism attack even if it is pennies on the dollar. The world markets are tied in to each other, so as you can see the domino effect of markets dropping. Trading of securities is missing a link in the global markets. Financially the terrorist not only hit America but also impaired the free world as far as the financial markets are concerned. The damage from this really extends farther out than our borders. If the world doesn't back us in eradicating these bastards, they are more blind than expected.
Link Posted: 9/11/2001 6:55:46 PM EST
Actually, I kind of welcome this from a market perspective. I have been waiting for a definitive and final crash from which we can coalesce and build from. Well, this looks like it to me.
Link Posted: 9/11/2001 9:51:21 PM EST
I understand Morgan Stanley was the WTC's largest tenant. Fifty something floors occupied. I think that the most significant damage may be yet ahead in the impact on our economy. Time will tell. LT, You may be right about liquidity. But look at it this way. Everyone knew since early today that the markets would be closed tommorow. Selling tommorrow would be less calculated than selling on thursday-poeple will have time to think about what a new best strategy is in light of this event. Everyone will know what they want to do by then and won't be acting out of fear -as much- That means less uncertainty in my book. Maybe?
Link Posted: 9/11/2001 9:55:23 PM EST
[Last Edit: 9/11/2001 9:56:17 PM EST by Gloftoe]
Link Posted: 9/11/2001 10:01:49 PM EST
I don't think this is a death blow. The free market does not need to be located in NYC to work, it doesn't need government to operate either. All those funds must have backup and contingency plans (after '93 they'd be crazy not to). First day, big drop. It will recover though. Remember, America has been through much, much worse in terms of world instability. If anything, this situation will relax regulations on the the free market, maybe some good will come of it.
Link Posted: 9/12/2001 4:47:25 AM EST
[Last Edit: 9/12/2001 4:47:52 AM EST by lordtrader]
back ups are in place, and if you're a long term investor you should ride it out and even buy into the market. However the financial markets have been dealt a great blow. The recovery of US economy has been set back at least another year. Consumer confindence will go down. Lay-off will continue. NOt to mention debt being issued by the state and city of NY to rebuild. The gov't will help but will not flip the bill for the entire thing. During the Northridge and S.F. CA quakes state sales taxes were bumped up .50 BPS. Given current economy, a raise in sales taxes would mean less consumer buying in those states. Means likely that businesses will not have good receivables. Means economy of one of the largest state in the US is not going to recover quickly. A lot of public companies are in the WTC. Means charge off on earnings. Some of these firms may not have the resources to open its doors again. Namely asset management firms. Which would cause SIPC to cover lost investment cause the firms will not have the money to do so. SIPC may become partially insolvent, much like FIDC in the early 90's after bailing out SLIC. I was never to be a chicken little, but the more I think of the domino effect the more fearfull I become. Especially being un-employed.
Link Posted: 9/12/2001 5:22:48 AM EST
Consumer confindence will go down.
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Small investors will also start wondering if their assets are going to go "poof" with the next terrorist attack. There's going to be some money pulled out of the market and buried in the backyard.
Link Posted: 9/12/2001 10:03:01 AM EST
Be prepared to have insurance rate go up. Can you imagine the life insurance, property, and business insurance claims?
Link Posted: 9/12/2001 10:30:08 AM EST
Speaking of insurance claims. Depending on the wording of the applicable policies, a lot of the property damage and business interruption claims [i]may[/i] not be covered. Some policies contain exclusions for war, terrorism, civil unrest and the like. It will be interesting to see how this works out.
Link Posted: 9/12/2001 10:36:41 AM EST
Link Posted: 9/12/2001 10:46:08 AM EST
Originally Posted By Bud: Speaking of insurance claims. Depending on the wording of the applicable policies, a lot of the property damage and business interruption claims [i]may[/i] not be covered. Some policies contain exclusions for war, terrorism, civil unrest and the like. It will be interesting to see how this works out.
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I expect that the court cases will be going on long, long after the rubble has been cleared. [:|]
Link Posted: 9/12/2001 11:18:56 AM EST
Looks like I ain't getting a job anytime soon now.
Link Posted: 9/12/2001 11:42:14 AM EST
Hopefully bush will cite the need to do a few things: 1) reduce the capital gains tax 2) reduce the top rate down to 33% or less 3) tell congress that the country needs money in the hands of the poeple right now to rebuild and get our economy back on track asap. And threaten to tell the american people if any of them don't fall into line.
Link Posted: 9/12/2001 11:52:29 AM EST
Take a look at the gold market. That may be an indicator of what will happen. Gold spiked quickly in the wake of the attack yesterday, buit does nto appear to be holding to any significant gain in value.
Link Posted: 9/14/2001 3:25:28 AM EST
Well the estimate I heard last night was around 30billion dollars in damage. That is not including life insurance claims, liability claims from the up coming suits to the airlines and possibly the FAA. The airlines and the businesses housed in the WTC will have to take charges from earnings. It will trickle down from there. I really don't think lowering taxes is what the gov't will do in this case. The refund we got is from a surplus that is on paper not hard cash sitting in a bank account. It was dependent on certain things staying the same. I have said before that tax refund was a bad idea. It was like counting on a raise at work and spending based on a raise that is not yet in the bank. Can you say "recession" boys and girls. Sad to say the only good that will come of this is that a lot of trading jobs will be opening up. Hopefully I can land one of em.
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