Macro
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The Penn Central railroad, the nation's sixth-largest corporation, filed for bankruptcy protection under Section 77 after burning through its cash barely two years after the 1968 merger that created it. The failure stunned credit markets because the company had $80-plus million of commercial paper outstanding that investors had assumed was safe.
Deep recession, the Penn Central rail bankruptcy, a 400,000-worker UAW strike at GM, and new EPA/Clean Air Act cost mandates drove industrial sentiment to its trough by December.
The Securities Investor Protection Act established SIPC insurance for customer accounts after the back-office crisis destroyed dozens of brokerages. The safety net restored retail confidence in holding securities in street name, a precondition for the industry's later growth.
Penn Central bankruptcy triggers commercial-paper panic
Penn Central bankruptcy; commercial-paper panic freezes funding
UAW strike shuts nearly all GM output
Post-Vietnam procurement collapse and the Penn Central recession gutted the order book, triggering an aerospace depression with mass Boeing and Lockheed layoffs; government demand fell just as commercial fell too.
Penn Central bankruptcy freezes commercial-paper funding
UAW GM strike; industrial demand at cyclical lows
Penn Central bankruptcy freezes credit, ad recession deepens
IBM announced the System/370 mainframe family, compatible with the wildly successful 360 line. The launch protected IBM's dominance of corporate computing and set the upgrade cycle that drove tech-sector capital spending through the 1970s.
Recession and the Penn Central commercial-paper panic froze funding and cut computer capital spending, though IBM's System/370 launch signaled a fresh mainframe product cycle and Fed easing stabilized conditions by year-end.
Occidental Petroleum, squeezed by Qaddafi's production cuts, agreed to raise its posted price and tax rate, the first major producer-government victory over an oil company. Other companies and countries followed, and pricing power began its historic shift from the majors to the exporting states.
Occidental's September capitulation to Libya cracked the majors' pricing front and began lifting posted prices, while BP's October Forties confirmation buoyed North Sea prospects; a mild lift amid recession.
Defensive drug demand and Nifty-Fifty bid restore confidence