Market Shaken but not Stirred?

As per my previous comment on market turbulence is not over, global markets have indeed reacted at the slightest signs of negative data triggered by a weak retail (consumer) data in the US, and concern on the impact of sub-prime mortgage defaults by sub-prime mortgage lenders on major US banks. These concerns had triggered a 2% overnight fall in Wall Street and a global sell-down in stockmarkets!

So what are sub-prime mortgages? Sub-prime mortgages are home loans given to borrowers with weak credit that have been bought over by investment banks, who repackage them and sell to investors around the world, including pension funds and hedge funds. Some of these sub-prime mortgage lenders have in fact, borrowed funds from major investment and commercial banks, including Morgan Stanley, Citigroup, Bank of America and the mortgage division of Goldman Sachs. That casts a spotlight on how much the problems in the subprime mortgage business will hurt the big banks that have helped bankroll subprime lending. The upcoming quarterly results announcements will provide a clearer indication the impact of such scenario.

In the meantime, sit tight and watch whether the market will undergo any further "stirring" effect or just a shake.