In a post regarding the transmission of financial turmoil from Europe to the US last week, I noted my research with Kristin Forbes on the determinants of the strength of financial market linkages. A more recent and extensive survey of the macroeconomic — as opposed to financial — linkages is provided by a recent released working paper coauthored by Ashoka Mody and Alina Carare at the IMF.
Staying sane in a crazy market
For a few exciting minutes on Thursday, the Dow-Jones Industrial Average was down a thousand points, with some major stocks momentarily falling to a penny a share. The basic story appears to be as follows. Initial strong selling in some stocks such as Procter & Gamble led the New York Stock Exchange to halt trading temporarily in a few stocks until specialists could sort out what was going on. But trading in those stocks continued on other exchanges, where as a result of their thinner books, orders to sell at any price went far down the list of existing buy bids. These lower prices triggered further automatic selling that sent some stocks all the way through the list of outstanding bids until encountering basement bids at one cent a share.
One popular meme is to attribute these fireworks to the existence of multiple trading venues that didn’t all get shut down simultaneously (e.g.,
WSJ or NYT). But I think we should also be taking a closer look at the folks who were sending the sell orders rather than just blaming the exchanges for carrying out the instructions they received.
More on the Deepwater Horizon
From Peter Coy and Stanley Reed in Bloomberg:
Should the heaviest portion of the spill come ashore, it may cause damage rivaling the 1989 wreck of the Exxon Valdez in Alaska’s Prince William Sound, despoiling the breeding grounds of species in the fragile coastal-buffer zone that provides hurricane protection.
Nonfarm Payroll Employment: The Tide Has Turned (For Now)
From the April 2010 employment situation release: Nonfarm payroll employment trends strongly upward; previous months’ figures are revised upward; not seasonally adjusted figures move upward as well; the upward movement is not driven by government employment; the experimental household based quasi-payroll employment series moves upward even more strongly; and aggregate hours is now 1% higher than the level at 2009M06.
Euro Area to US Contagion?
I was wondering why the Reuters website wasn’t loading on my computer. Then I got a phone call from a reporter asking about the US stock market meltdown in response to Greece…which struck me as an odd linkage. It still strikes me as an odd linkage.
How much damage does the market think the oil spill has done?
Econbrowser is pleased to host this guest contribution from UCSD Ph.D. candidate Ben Fissel, who shares a quick estimate of the economic damage from the Gulf oil spill.
The sluggish recovery
This week we received more evidence confirming that the U.S. economy has returned to positive, but still disappointing, growth.
“Reminbising China’s Assets”
From a paper written by Yin-Wong Cheung (UCSC), Guonan Ma (BIS), and Robert McCauley (BIS):
…Recent policies adopted by the Chinese authorities
can be interpreted as allowing the rest of the world to denominate debt in renminbi. But if trading
partners consider that the renminbi is subject to big jump risk, then prospects for its
internationalisation are weak. …
Where would we be without offshore oil?
As oil continues to pour into the Gulf of Mexico, I thought it might be helpful to review how we got where we are today.
The recession is over
That’s the big take-away from today’s report from the Bureau of Economic Analysis that the seasonally adjusted real value of the nation’s production of goods and services grew at a 3.2% annual rate during the first quarter of 2010. But the details behind today’s report suggest that the recovery so far remains pretty weak by historical standards.