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No_hite_pls
Joined: 05 Mar 2007
Location: Don't hate me because I'm right
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 Posted: Wed Jan 14, 2009 10:09 pm Post subject: More bad news |
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CNN) -- Asian markets tumbled Thursday after a sell-off on Wall Street, with the Nikkei slumping more than 5 percent in afternoon trading after Japan's Cabinet office reported a record drop in November machinery orders.
Private-sector machinery orders, excluding volatile maritime construction and power-generation equipment, dropped a 16.2 percent for the month, the agency reported, while orders from overseas were down 14.4 percent.
South Korea's KOSPI was down 5.2 percent, Australia's All Ordinaries index shed 4.2 percent, and Hong Kong's Hang Seng gave up 5.8 percent.
On Wall Street, stocks slumped Wednesday as a bleak retail sales report and more dour news from the banking sector amplified fears of a prolonged recession.
After the close, Apple CEO Steve Jobs said he's taking a medical leave through the end of the second quarter because his health-related issues are "more complex" than he thought. Shares tumbled 10 percent in after-hours trading.
The Dow Jones industrial average lost 250 points, or 2.9 percent, ending at its lowest point since December 1. The Dow has now tumbled for six sessions in a row.
The Standard & Poor's 500 index lost 3.4 percent and ended at the lowest point since Dec. 1. The Nasdaq composite lost 3.7 percent and closed at its lowest point since December 4.
Wednesday's decline extends the 2009 selloff. Stocks have slipped through much of the first two weeks of the year as worse-than-expected economic and corporate news has caused investors to question the year-end rally.
"There's a sense of 'Wow. We knew it was bad, but not this bad,'" said Drew Kanaly, chairman and CEO at Kanaly Trust Company.
He said that no one is surprised by the downturn, but rather the scope and speed of it. "I think it's caught people a little off guard, how fast the economic conditions have started to deteriorate."
In particular, investors were reacting Wednesday to the weakness in the banking sector, said Steven Goldman, market strategist at Weeden & Co.
Deutsche Bank reported a huge quarterly loss, HSBC may need to raise billions in capital and JPMorgan Chase's results are looming. Investors are also taking a sour reaction to news that Citigroup is selling a majority stake in its brokerage unit to Morgan Stanley, a move that would seem to indicate the beginning of the break-up of the troubled banking firm.
"Citigroup selling their crown jewels in a bad environment is definitely contributing to the selling over the last week," Goldman said.
Between the bear market lows of Nov. 20 and the end of the first session of 2009, the S&P 500 rallied nearly 24 percent. Since then, the S&P 500 has lost 9.6 percent and looks to be headed for more declines in the short term.
But the financial sector has fared far worse. Between Nov. 20 and the first session of the year, the KBW Bank index gained over 23 percent, roughly comparable to the S&P 500. Since then, it has lost almost 21 percent, far surpassing the broad market's decline. |
When is it going to be over? I thought we had hit bottom. Now I am reconsidering my assumption. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Wed Jan 14, 2009 10:33 pm Post subject: |
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| Anybody still believe that the economy will pick back up in the latter part of 2009? I just read an article saying that housing prices won't bottom out until 2010. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Wed Jan 14, 2009 11:34 pm Post subject: |
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| still believe? Did anyone ever believe that? |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Thu Jan 15, 2009 12:09 am Post subject: |
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Well.........
I can say this I got into an argument with the cordinator at my University about it one night back in October.
He told me how he had a friend who was manager of TD bank and he said now was the time to invest. I said it was just the beginning and the coversation turned to him lecturing me about lemming effect and his knowledge about sports gambling. I was getting a little steamed because he kept interrupting me and lecturing me.
I brought up the fact that I though gold, metals and commodoties were the only safe investment right now. I tried to explain that if you factored in gold's high in the 80's at 850 an oz, it would be worth wll over 2000 bucks. He went on to further ridicule me, then offered to bet me money. I told him I'd bet him a months salary I was so sure about it because I tile him I follow this kind of stuff.
He ended up betting me 10 bucks. Worst mistake I ever made. He accused me of baiting him after I showed him a link, he sent me an almost daily barrage of emails about my performance. He scrutinised almost everyting I did leading up to the final exams and lo and behold, despite having good student reviews, never missing a days work and designing the freshman cirriculum for the past two years, the university decided not to resign me on for another year.
The funny thing about it was a couple of years ago, he was drunk and stoned every night and missing classes every day. I actually talked the Director at the time into keeping him on telling her that he was going through a rough time.
Anyhow, enough of the rant. My point is that if his banking buddy felt it was time to invest, then I am sure others will believe it too. Housing prices in Seoul are starting to climb again. Although I don't think it will be for long. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Thu Jan 15, 2009 12:17 am Post subject: |
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| The guy's a sore loser. You have to watch out for those type of people at work that can influence your performance and not argue with them. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Thu Jan 15, 2009 12:59 am Post subject: |
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| Tell me about it. Sadly enough, I like a good debate and I don't know when to shut up. At the same time, the guy was a real grease ball about it. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Jan 15, 2009 5:57 am Post subject: |
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http://www.koreatimes.co.kr/www/news/nation/2009/01/123_37897.html
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'Triple Punch' Unsettles Korean Economy
Three ``evil'' forces ― a negative wealth effect, the credit crunch and massive layoffs ― are combining to unsettle the economy.
Stock investors sustained 160 trillion won in paper losses last year, triggering a negative wealth effect, which has the chain effect of reducing consumption, production and employment.
This effect has also triggered the credit crunch, making banks reluctant to lend more to individuals and businesses because of their reduced capability to repay debts.
``The main cause of the credit crunch is that potential borrowers are not creditworthy. Their collateral value and income have declined,'' Andy Xie, a former Morgan Stanley economist, said in a recent article.
Finally but most importantly, soaring job losses have severely contracted domestic demand, signaling that the economy will undergo a more painful, longer recession than was widely anticipated.
The worsening job market is particularly worrisome as it hampers consumer spending and business investment, which will in turn hurt banks' balance sheets further.
The sharp fall in manufacturing output growth in the fourth quarter has started triggering an employment collapse. The number of employed totaled 23.24 million last month, down 12,000 from a year ago, marking the first annual reduction since October 2003. Two million Korean adults are technically unemployed.
``Economic recovery depends on how fast the labor and capital markets adjust to the stimulus. It is very important that new jobs are created and that they are taken by people who are losing their jobs in 'declining' sectors,'' Mauro F. Guillen, director of the Lauder Institute at the Wharton School of Business, told The Korea Times.
``A fully functioning labor market is especially important because if too many people lose their jobs without finding new ones, then consumption will go down and more loans will go bad,'' he added.
Faced with the one-two-three punch, the government has deployed all possible measures to minimize the impact.
The Bank of Korea (BOK) has slashed its base rate by a combined 2.75 percentage points to a record low of 2.5 percent since last October, while the government has vowed to offer tax cuts and provide financial aid for troubled banks.
However, market experts stress that the government should focus more on fiscal stimuli because other measures seem less effective. They say the root cause for the current economic turmoil is not a lack of liquidity but poor creditworthiness of potential borrowers.
``Lowering interest rates can't increase credit supply like before. Lenders wouldn't lend to bankrupt businesses, regardless how cheap the funds they get from central banks are,'' Xie said.
``A fiscal stimulus is the only thing that will be effective. Through creating demand directly or boosting income, economies will improve, and borrowers will become more creditworthy,'' he added.
Xie pointed out that debt reductions, either through inflation or bankruptcy, may be necessary to get the credit system back on track, noting that pumping money into financial institutions won't solve the problem. |
The economy in Korea is in serious trouble. I am waiting for the gigantic pop of the housing bubble. That should be interesting to watch. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Thu Jan 15, 2009 5:10 pm Post subject: |
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| The economy in Korea is in serious trouble. I am waiting for the gigantic pop of the housing bubble. That should be interesting to watch. |
I get into that argument on a weekly basis with my wife. She seems to think it is over with. I tell her not to consider buying untill next year. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Jan 15, 2009 5:19 pm Post subject: |
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| riverboy wrote: |
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| The economy in Korea is in serious trouble. I am waiting for the gigantic pop of the housing bubble. That should be interesting to watch. |
I get into that argument on a weekly basis with my wife. She seems to think it is over with. I tell her not to consider buying untill next year. |
Do not buy until you are unable to walk down the streets for fear of being hit by falling bodies.
In the US California and Fl are down 40% from peak, and still falling. Seoul will be lucky to have as orderly a decline as have they. The housing decline is just starting to hit Seoul, Singapore and Hong Kong (though mainland China has seen 50%+ declines in major eastern coastal cities). |
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Jandar
Joined: 11 Jun 2008
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| Posted: Thu Jan 15, 2009 7:09 pm Post subject: |
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I think I said from the beginning the market correction oriented "recession" will continue until the market reaches 1993 levels or 5000 points (some where between 2011-2013), typically a recession doesn't last more than a year so there may be one or two quarters of growth interspersed in there.
Whether it continues into a depression will depend on how the government reacts and how the general public reacts to the the government actions.
Whether the US comes out leading the recovery is also in question, it may take Europe/Japan or China/India to lead into a lasting recovery, so far it looks like China will not, however there is still at least three years recession and growth cycles before either depression or recovery.
A solution to the dependency on oil is a key component of this recovery
The depression if it happens will last 5 years minimum, in that event expect regimentation in work forces, reformation of labor unions controls on transportation and communication industries, complete nationalization of of key industries and suspension of all FTAs.
As of right now I am reconsidering my semi-retirement status because my retirement funds have been impacted. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Thu Jan 15, 2009 8:31 pm Post subject: |
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Do not buy until you are unable to walk down the streets for fear of being hit by falling bodies.
In the US California and Fl are down 40% from peak, and still falling. Seoul will be lucky to have as orderly a decline as have they. The housing decline is just starting to hit Seoul, Singapore and Hong Kong (though mainland China has seen 50%+ declines in major eastern coastal cities). |
Don't worry. We aint buying. At least here. If I buy anywhere, it will be East Coast Canada, whidh is in perpetual recession and has a 3% vacancy rate in many cities. Not big money, but cheap real estate and guranteed income.
Jandar, your prediction seems to be similar to mine. I believe it will last a good deal longer than one year. I don;t think the bail outs will work.
As far as nationalisation, do you think it will be a good or a bad thing? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Jan 15, 2009 9:03 pm Post subject: |
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A depression is not determined by the length of a downturn but by the % of GDP decline from peak. Generally, a loss of 10% is considered depression.
10% in the US is absolutely guaranteed because all of the growth in the Bush years was merely future growth brought into the present (debt).
However, q4 2008 and q1 2009 will be the worst of it. I do not anticipate positive growth until q2 2010.
And then we'll start growing again as per normal, provided the economy isn't nationalized.
Here is an excellent excellent excellent discussion of 2009:
http://www.netcastdaily.com/broadcast/fsn2009-0110-3a.asx
If you are interested in macroeconomics and finance, there is no better podcast today. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Jan 15, 2009 9:17 pm Post subject: |
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| riverboy wrote: |
I brought up the fact that I though gold, metals and commodoties were the only safe investment right now. |
Commodities (less precious metals) are a bet on China. If China continues to grow rapidly, commodities will appreciate. If she has more moderate growth (as I expect) the commodities will not find much growth.
Gold, well, that depends on America. Obvious we are going to have a 2 trillion deficit, and that is all debt. Gold will respond well. But I am not going to look for a long term investment in gold for one reason: Obama has Paul Volker as a key economic adviser. He took the wind out of gold before and I suspect he plans on advising Obama and the Fed to do it again. Once the economy returns to a more normal path, these absurdly low interest rates will dramatically rise. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Thu Jan 15, 2009 11:31 pm Post subject: |
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| True enough, but golds value has been supressed for quite some time. I feel that gold has not been keeping up with inflation. Either way the next little while will be a good opportunity for gold. |
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