Wall Street (along with the rest of the world) bled red ink again today with another 200+ point downward move.
Um, in case you are unaware, this time the markets are bleeding taxpayer money, money that Wall Street ‘borrowed’ from the Fed at zero percent interest…the real killer here is what will happen if Wall Street decides it isn’t going to pay the money back?
We’re not talking TARP funds here, these are ‘regular funds’ that all, er, ‘commercial banks’ have access to via the Fed ‘discount window’.
Of course you remember that all (of the surviving) Investment banks were permitted to alter their charters to become commercial banks…well, paying back the TARP didn’t ‘revoke’ their Fed access.
If it did you’d expect investors to be a bit more careful of financial institutions that no longer enjoyed Fed backing, circumstances being what they are…
So we arrive at tonight’s offering
Wall Street Starts Another Day on Downside [And ends there as well…]
By MATTHEW SALTMARSH and BETTINA WASSENER
Published: January 22, 2010
Shares on Wall Street traded lower on Friday as the markets try to stop a two-day slide that has sent the Dow Jones industrial average down more than 335 points. [Not looking good, down another 213 points today too!]
The main focus remained President Obama’s plans, announced Thursday, for tighter restrictions on the activity of banks. [Oddly, as one might suspect, the proposed ‘new’ regulations will hardly touch Mr. Obama’s ‘true constituency’; and they know this so it isn’t the reason behind the huge selloff…as much as the MSM would like you to believe it was so.]
“There’s no doubt that there will be a significant amount of regulation in the banking industry in the next year,“ said Henk Potts, equity strategist at Barclays Wealth in London. “But there’s a long road to travel and lots of discussions and negotiations before we find out exactly what this will entail.” [Hmmn…um, just how concerned would a London banker be about regulation in the US?]
Financial shares were down in almost all markets, continuing Thursday’s decline. On Wall, shares of Goldman Sachs were down 4.2 percent; Morgan Stanley 4 percent; and Bank of America fell 2.4 percent. In London, Barclays lost 6 percent. UBS of Switzerland was off 5.1 percent, while Santander of Spain gave up 3 percent.
Earnings from two companies helped to offset some of those declines. The conglomerate General Electric topped expectations despite a 19 percent drop in fourth-quarter income. For the quarter, G.E. posted net income of $2.94 billion, or 28 cents per share. That compared with $3.65 billion, or 35 cents, a year earlier. [Um, this is probably what investors find ‘disturbing’, that this year’s performance continues be worse than they did last year, ‘expectations’ be damned!]
And the fast-food restaurant chain, McDonald’s said fourth-quarter profit was $1.22 billion, or $1.11 a share, up from $985.3 million, or 87 cents a share, a year earlier. The company said sales overseas had helped to offset a weakness in American sales.
At mid-morning, the Dow Jones industrial average was down 18 points, or 0.15 percent, while the Standard & Poor’s 500-stock index was 3.5 points lower. The technology-heavy Nasdaq fell 15 points. [This particular article was captured roughly around midday…mostly because of their tendency to ‘disappear’ around 4:00 PM.]
Markets in Europe were also lower overall. In London, the FTSE 100 was down 50 points or 1 percent, and the DAX shed 1.1 percent or 63 points in Frankfurt.
President Obama’s announcement of tighter banking rules was taken as a sign that government leaders are looking beyond the financial crisis.
“It’s clear that politicians are starting to have enough confidence that the global economy has been saved and are starting to try to find ways of paying the bills,” analysts at Deutsche Bank said Friday in a research note. “The risk is that they do this too early and the timing of this announcement is unfortunate given it coincides with the escalation of problems in peripheral Europe and in a week where China has effectively tightened policy.” [One should never expect much from an ‘analyst’, they are wrong far too often because they tend to ‘talk their book’. (Yes, analysts aren’t traders, but, they get paid by people who need research done and, like everything else in this fucked up system, you don’t want to bite the hand that feeds you.]
The comments about peripheral Europe were a reference to the budgetary problems in Greece that have rattled bond markets here.
In Asia, the Nikkei 225 index, Japan’s leading market gauge, led the region’s declines with a drop of 2.56 percent. The Shanghai Composite index in mainland China fell nearly 1 percent, while the Hang Seng index in Hong Kong dropped 0.6 percent, with the international banks Standard Chartered and HSBC both down.
Garry Evans, global head of equity strategy at HSBC, was circumspect about the prospects for equities in Asia’s emerging nations, telling reporters in Hong Kong that it was “hard to see much room for any upside surprise” in that region, given that investors were already widely expecting — and pricing in — the fact that emerging Asia’s economies are set for solid growth this year. [Um, could this go tragically wrong? We’ll know soon enough.]
In fact, the prospect of higher rates across much of the region in coming months — in contrast to the United States and Europe, where the cost of borrowing is not expected to rise for some time — is helping to dampen investor sentiment in Asia.
HSBC’s economists believe the central banks of South Korea, India and Taiwan could all start nudging up interest rates this quarter. More rate rises are also expected in Australia.
Most economists do not expect a rate rise in China until the second half of the year, though the authorities have already started to rein in investment activity in a bid to quell rising prices, helping to send stocks lower this week.
Concerns are also mounting that China’s economic rebound comes with pitfalls and complexities, notably rising prices, that will be tricky for the authorities to manage.
Odd that the markets ‘tank’ in tandem with ‘tough talk’ out of the White House, yet analysis of the proposed new regulations show them to be largely toothless, at least as far as the ‘Too Big To Fail’ crowd is concerned.
It certainly has been quite the ‘theatrical production’ since the beginning of the year. The Democrats getting spanked, the Rethuglicans all excited about the hint of blood in the water.
Mr. Obama’s popularity rating heading in the same direction of the Presidency of the man he’s emulating…(it truly is looking like Bush’s third term!)
Funny how some pundits are calling the ‘Tea party Movement’ the foundation of a badly needed ‘third party’…when it’s actually the fifth or sixth party…
Which is bizarre how every newcomer claims the ‘third’ slot.
There’s isn’t a third party good citizen…truth be told there aren’t tow political camps anymore, there is only one and it is neither Democrat or Republican, it is corporate, even if they shy away from that label after yesterday’s Supreme court ruling…
If you have enough money, you can get whatever outcome you want. Which is exactly why governments are instituted by the citizens of a nation, to prevent their rights from being ‘hijacked’ by the ‘owners of money’.
Sadly, that’s not the way our bought and paid for ‘activist judges’ see it.
Thanks for letting me inside your head,
Gegner
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