STEIN: “The Financial System is in Terrible Shape . . . “
THANK YOU to my good friend Mark Cragun for the tip on what is happening world wide. Mark is a trader and he told me that what he is seeing worldwide is really, really scary. To read this entire article sent to me by Mark, click here:
Governor Romney is the only person any voter should be considering for President right now. The United States of America, and the world are entering an era unknown to man. Economically, we are in unchartered territory. We need an economic expert to navigate the waters we are entering!
Stocks tumbled from Hong Kong to Germany and Brazil and U.S. futures posted their steepest drop since 2001 on mounting speculation the world economy is slowing and company defaults will rise.
Check out this quote. Folks, I think we are only at the beginning of this:
Trading in the U.S. is closed today for Martin Luther King Day.
“It’s the worst I’ve ever seen,” said Johan Stein, who helps manage the equivalent of about $14 billion at Nordea Asset Management in Stockholm. “The financial system is in terrible shape, and no one knows where this will end.”
Today’s declines follow the worst week for U.S. stocks in five years after President George W. Bush’s $150 billion plan to revive the economy and expectations of interest-rate cuts failed to allay recession concerns.
The risk of European companies defaulting soared to a record today on speculation credit-rating cuts at bond insurers including Ambac Financial Group Inc. may trigger forced asset sales. European Central Bank council member Nout Wellink said economic growth in the region may slow more than policy makers had expected.
Market Crisis
“This is a stock-market crisis,” said Alberto Roldan, head of research at Inverseguros SVB in Madrid. “Investors believe that neither a government package nor a huge rate cut is going to help evade a recession in the U.S.”
White House spokesman Tony Fratto said in Washington today the government doesn’t comment on daily market moves.
Check this link too: Hourly Action In Gold From Trader Dan — Author: Dan Norcini
Hold on tight for the next year!
~ Vic
Stocks Plummet in Germany, Hong Kong and India in Global Rout
By Sarah Thompson
Jan. 21 (Bloomberg) — Stocks tumbled from Hong Kong to Germany and Brazil and U.S. futures posted their steepest drop since 2001 on mounting speculation the world economy is slowing and company defaults will rise.
The MSCI World Index slumped the most since 2002, while Europe’s Dow Jones Stoxx 600 Index sank into a bear market as Allianz SE and BNP Paribas SA slid. Hong Kong’s Hang Seng Index had its biggest drop in six years after BNP Paribas said Bank of China Ltd. may write down overseas securities by $4.8 billion because of losses from U.S. subprime mortgages. Citigroup Inc. retreated in Frankfurt.
The MSCI World slipped 3 percent to 1,394.23 at 1:15 p.m. in New York, extending its decline from an Oct. 31 record to 17 percent. India’s Sensitive Index lost the most since 2004, while Germany’s DAX had its biggest loss since 2001. Futures on the Standard & Poor’s 500 Index sank 4.5 percent. Trading in the U.S. is closed today for Martin Luther King Day.
“It’s the worst I’ve ever seen,” said Johan Stein, who helps manage the equivalent of about $14 billion at Nordea Asset Management in Stockholm. “The financial system is in terrible shape, and no one knows where this will end.”
Today’s declines follow the worst week for U.S. stocks in five years after President George W. Bush’s $150 billion plan to revive the economy and expectations of interest-rate cuts failed to allay recession concerns.
The risk of European companies defaulting soared to a record today on speculation credit-rating cuts at bond insurers including Ambac Financial Group Inc. may trigger forced asset sales. European Central Bank council member Nout Wellink said economic growth in the region may slow more than policy makers had expected.
Market Crisis
“This is a stock-market crisis,” said Alberto Roldan, head of research at Inverseguros SVB in Madrid. “Investors believe that neither a government package nor a huge rate cut is going to help evade a recession in the U.S.”
White House spokesman Tony Fratto said in Washington today the government doesn’t comment on daily market moves.
“We’re confident that the global economy will continue to grow, and that the U.S. economy will return to stronger growth,” Fratto said in an e-mailed message.
The Stoxx 600 slid 5.7 percent, extending its drop from a 6 1/2-year high on June 1 to 23 percent. A decline of more than 20 percent is the common definition of a bear market. France’s CAC 40 lost 6.8 percent. The U.K.’s FTSE 100 sank 5.5 percent, and Germany’s DAX slid 7.2 percent.
Volatility Climbs
The VDAX-New Index, a benchmark gauge of European stock- market volatility, surged as much as 39 percent, the most since 2001. The measure of expected price swings for stocks is derived from prices paid for options on Germany’s DAX.
The MSCI Asia Pacific Index lost 3.8 percent. Australia’s S&P/ASX 200 Index slumped for an 11th day. Hong Kong’s Hang Seng Index lost 5.5 percent. Japan’s Nikkei 225 Stock Average dropped 3.9 percent as the Finance Ministry cut its evaluation of five of 11 regional economies as housing investment fell and employment worsened.
The MSCI Emerging Markets Index, a global benchmark, sank 5.8 percent, extending its retreat from an October record to 20 percent. At least 36 countries around the world have fallen into bear markets, according to Bloomberg data.
Brazil’s Bovespa index slid 7 percent, the most since September 2001. Russia’s Micex Index declined 7.5 percent, the biggest drop since June 2006.
Canada’s Standard & Poor’s/TSX Composite Index fell 4.2 percent.
Allianz, Europe’s biggest insurer, tumbled 9 percent to 120.15 euros. BNP Paribas, France’s second-largest bank, sank 9.6 percent to 62.71 euros. ING Groep NV, the biggest Dutch investment bank, declined 10 percent to 20.99 euros.
`Sharp Contraction’
“The market is finally catching on to the fact that a recession will lead to a sharp contraction in earnings,” said Jane Coffey, head of equities at Royal London Asset Management, where she helps oversee about $11 billion. “We need to see more aggressive changes to forecasts before investors become more positive about looking through the downturn.”
Swiss Reinsurance Co. decreased 10 percent to 68.7 Swiss francs. UBS AG cut its share-price estimate for the world’s largest reinsurer to 80 francs from 88, citing the probability of more investment losses related to credit-market problems.
“We see on-going downside risk to earnings and stock performance until we have better visibility,” London-based analysts including Ben Cohen wrote in a report to investors.
Bank of China
Bank of China, which has the largest holdings among Asian banks of U.S. subprime mortgages, slid 6.4 percent to HK$3.37. The bank may write down 17.5 billion yuan ($2.4 billion) for the fourth quarter of 2007, and an equal amount for this year, Dorris Chen, a Shanghai-based analyst at BNP Paribas wrote in a note on Jan. 18.
Commonwealth Bank of Australia, the country’s second- largest bank, dropped 4.6 percent to A$50.78. National Australia Bank Ltd., the nation’s largest, declined 2.9 percent to A$35.20.
Morgan Stanley raised its 2008 forecast for loan-loss charges at the country’s major banks by 26 percent, analyst Richard Wiles wrote in a note today, citing a deteriorating global economy and “the difficulty faced by some companies in refinancing maturing debt.”
Citigroup, the biggest U.S. bank by assets, dropped 5.4 percent to $23.13 in Frankfurt. JPMorgan Chase & Co., the second-largest U.S. bank by market value, slid 5.5 percent to $37.43, also in Frankfurt trading.
The slump has made stocks cheap by historical standards. Europe’s Stoxx 600 is valued at 10.8 times its companies’ profits, the lowest since at least 2002, according to data compiled by Bloomberg. The 1,953-member MSCI World has a price- earnings ratio of 14.1, the cheapest since at least 1998.
Rio Tinto
Rio Tinto Group, the world’s third-biggest mining company, dropped after BHP Billiton Ltd. failed to make a new offer. Rio, defending a hostile $108 billion takeover bid from rival mining company BHP, fell 10 percent to 4,228 pence.
BHP may not make a new offer before the Feb. 6 deadline set by the U.K.’s Takeover Panel, the London-based Times newspaper reported. The BHP board has not met to discuss a new bid, the newspaper said, after its initial three-for-one all share offer in November was rejected.
Samantha Evans, a BHP spokeswoman in Melbourne, declined to comment. Rio spokeswoman Amanda Buckley also declined to comment.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net .
Last Updated: January 21, 2008 13:19 EST
January 21st, 2008 at 7:57 pm
Vic:
Your article on the World Stock Market is indeed a scary situation. It is strange how attitudes in the United States in the last few months have gone from worrying about the War in Iraq, to securing our borders, and now to the economy.
Isn’t it wonderful that we’ve got just the Candidate who can take care of any and all of those problems, and it sure isn’t McCain, Huckabee, Rudy or Fred.
Lucky for all of us, Mitt Romney just happens to be available, and the 5 point lead in the Drudge and Rasmussen Poll’s in Florida is indicative that the people of Florida also are beginning to realize that Mitt is the Only Candidate, that can begin to repair the damage to this country’s economy and it’s other world problems, that this unattended congress has helped to create.
January 21st, 2008 at 10:43 pm
This Black Tuesday coming tomorrow in response to the world markets decine of over 5% gonna work in favor of Mitt in a huge way. Margin calls gonna impact all sectors as people need to raise cash. Even gold gonna crash as people sell it to cover their margins. It will be nasty and the FED better do an emergency rate cut this week or there won’t be much of a bounce.
FEAR and GREED works everywhere and the same is true in politics. FEAR in markets and economy is a huge plus for Mitt. Watch his poll numbers fly over this week.
January 22nd, 2008 at 4:40 am
It is worth noting that in the most recent SurveyUSA poll 1/20/08, “Among voters who say the Economy is the issue the next President should focus on ahead of all others, McCain is 1st, 10 atop Romney”
I think this is because McCain focuses on Pork Barrel spending earmarks and keeping spending down in general. This is his last bastion among fiscal conservatives. And he is unassailable in it. His record is good on this and it seems since it is resonating among voters.
I believe Governor Romney may need to stress that this is indeed his opinion and philosophy too.
Please, can anyone arm me with some good information about Romney on this? From his record or speeches, etc.
January 22nd, 2008 at 10:19 am
McCain is just using the popular political rhetoric to appease the voters. He needs to do a lot more to help the economy than just keep spending down. McCain is effectively a democrat who wants the republican party to honor him for stabbing his party in the back numerous times.
Romney has a great record in Mass. He got them out of debt and left them with a rainy day fund. He has the skills to help America at this crucial time in our history.
January 22nd, 2008 at 11:23 am
I couldn’t agree more, except that McCain has a good record on keeping spending low. Otherwise he is a fiscal liberal. He is definitely not the man for the job. Mitt Romney is definitely the man. ROMNEY IS THE ECONOMIC CHOICE! My concern is that McCain’s rhetoric is resonating too much and people aren’t seeing him for the whole liberal that he is. I still know that Romney will WIN IN FLORIDA and WIN THE NOMINATION. I just think there is a group of people out there that he hasn’t reached yet and that this spending thing is the way to bring them around.
January 22nd, 2008 at 1:27 pm
OK I found this White paper on Romney from http://www.Clubforgrowth.org:
“Governor Romney receives credit for actual spending in FY 2003, even though he entered office halfway into the fiscal year, because of the tremendous spending cuts he forced down the Legislature’s throat in January of 2003. Facing a $650 million deficit he inherited from the previous administration, Romney convinced the unfriendly State Legislature to grant him unilateral power to make budget cuts and unveiled $343 million in cuts to cities, healthcare, and state agencies.19 This fiscal discipline continued in 2004, in which Romney continued to slash “nearly every part of state government” to close a $3 billion deficit. . .”
Though the article is not completely flattering to Romney the summary is quite positive:
” . . .given his outstanding private sector entrepreneurial experience; the strong pro-growth positions he has taken on the campaign trail; his overall record as governor; and the fact that the U.S. Congress will not be as liberal as the Massachusetts Legislature, we are reasonably optimistic that, as President, Mitt Romney would generally advocate a pro-growth agenda”
January 22nd, 2008 at 1:34 pm
Compare the above Romney white paper from http://www.clubforgrowth.org to their summary of John McCain:
“Senator McCain’s outspoken pursuit of anti-growth and anti-free-market policies in the realms of taxes, regulation, and campaign finance reveals a philosophical ambivalence, if not hostility, about limited government and personal freedom.”
And:
“The evidence of his record and the virulence of his rhetoric suggest that American taxpayers cannot expect consistently strong economic policies from a McCain administration.”