Press Release Summary: The position of the stock market is disrupted. Now it's a hard to take a step forward in order to bring back the degree of balance to the economic cycle.
Press Release Body: According to a stark commentary by BBC radio business presenter Greg Wood, the real affects of the mortgage market will hit the stock market in September.
The claim centers on the profit reports from investment banks, starting with Goldman Sachs and the rest following close behind. Standard and Poor revealed that because of bad debt markets might be 50% wiped from their profits.
The main reason is that parceled debt, a big commodity in hedge funds especially have broken down in value which results in an effectively worthless. The impact on the investment banking is likely to be neutral.
The main warning is not related to take a big step in the shares of investment banking. It is that historically, stock market crash is the reason of big stress in the stock market.
From the last three months, investment banks like Morgan Stanley, Goldman Sachs, Lehman Brothers, and others, have been busy in calculating the actual cost of the debt they hold.
Till the time stock markets is getting nervous about the extensive problem with debts markets, remained opaque.
When the profit reports come out then only we will get to know the exact problem and investors are not likely to forgive.
This is especially as the toll in mortgage companies, small banks and hedge funds continues to hike on daily basis.
Meanwhile, general markets are expecting some downfall in interest rates which would help to save the credit market are likely to be stressed by food price inflation.
Meanwhile, general market expectations of cuts in interest rates which would help save the credit market are likely to be dashed by food price inflation.
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