US Week Ahead: FOMC, NFP, ISM, GDP, ECI, UMich Sent, Housing

I can't imagine how the market's gonna react if for some reason GDP came in negative again.

April 29th, 2009

1929 Crash

Economic crisis resulting from the crash of the New York Stock Exchange in 1929
The end of World War I left Europe devastated. At this time, the United States emerged as the richest country in the world and became the great political and economic power of the 20th century. At the end of the 1920s, the North American economic prosperity, associated with high levels of interest rates on United States, attracted investments from around the world. New technologies discovered during the war turned into affordable consumer products. Just as power grids, roads passed the U.S. to join the Atlantic to the Pacific. Soon the automobile, radio, and film passed part of the lifestyle of the time. These dynamic and prosperous times also contagiavam Europe (after 1925) the same euphoria.

In the United States, industries operating under the overproduction, motivated by competition, and confident in the idea that advertising increasingly diffused by the new means of mass communication, would generate demand for products. The industrial production increased by 30% between 1923 and 1929. Profits rose 62% and dividends rose by 65%. The stock exchange quotations reflect this excellent productivity, registering an increase of 17% in this period. The wage / hour of industries did not reflect this exponential growth of the economy, having grown modest 8% from 1923 to 1929. With stagnant wages, while stock dividends doubled in a matter of days, buying bonds became extremely popular not only between banks and companies, but also between individuals.

The Stock Exchange was seen as safe investment and certain profit. The Down Jones index 1921 to 1929 soared. Believing that the market would support a permanent high prices, brokers came to borrow up to two thirds of the value of the shares so that their buyers could continue investing in the stock market. Many mortgages and used all his savings to buy shares, they did not believe that the crash was possible.

After September 3, 1929, the day the Dow Jones Index peaked, 381.17 points, the stock market began to show an increasing volubility. In the days that followed periods of high were recorded
sales of shares, interspersed by a rise in prices, and a slight recovery. The automobile industry realized in mid-1929 that its dealers had no means to absorb more cars. Decided by a severe cutback in production, reducing orders for rubber, copper, glass and steel. This drastic reduction in production more attentive warned speculators who offloaded the roles of United States Steel. The steel saw its shares on the stock market in free fall throughout the month September 1929.

The prospect of reduced dividends of these companies made ​​those titles suffered a huge depreciation in value in the period from September to November. In October 1929 the unthinkable happened. On day 24, later known as "Black Thursday", the approximate number of 12.9 million shares were sold in just one day. Throughout the weekend events were widely reported in the American press. On October 29, 1929, which became known as "Black Tuesday", the break proved inevitable. Panic gripped the investors and more than 15.6 million shares were sold by the end of the day.

The U.S. market totaled a loss of $ 14 billion. The crisis had a ripple effect on the U.S. economy, leading to unemployment, freezing loans, corporate bankruptcy and falling profits - the period known as the Great Depression, fought later by the New Deal of President Roosevelt. The crisis has also generated a deep downturn in several western economies. As a result, many countries would join the political control of markets. The social effects of the crisis have also favored the growth of far-right movements in Europe as German Nazism and Italian Fascism.



att: And you're ready ....... ok?

category one carefulness is highly required in this case.