Canestsal

tomorrow is going to be an a$$ kicking.

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"None are so hopelessly enslaved than those who falsely believe they are free" Johann Wolfgang von Goethe

capt_nemo

Recession fears could end bull market By Herbert Lash
Mon Jan 21, 2:49 PM ET



NEW YORK (Reuters) -This week could mark the end of the bull market for Wall Street, with U.S. stocks likely to join a global equity market plunge triggered by fears of a U.S. recession.

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Cash equity markets were closed on Monday for Martin Luther King Jr. Day. But index futures fell more than 4 percent, suggesting a sharply lower open for Wall Street on Tuesday, after routs in Asian and European stock markets on Monday.

Investors said last week a $150 billion White House rescue plan was too little too late, as more and more data signaled the U.S. economy was headed for recession.

If U.S. stocks open at the levels futures were indicating, it would push major indexes dangerously close to bear market territory -- or a 20 percent drop from their peak in October. That would mark the death of the bull market that was born in early October 2002.

"What we are seeing today are more signs that the shock waves from the U.S. are still expanding throughout the world, and we are still in the eye of the storm as far as credit issues are concerned," Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto, said on Monday. The slide will continue on Tuesday, he said, adding that the global equity market rout was due to economic problems in overseas markets as well as in the United States.

The slide could be halted, however, if bellwether companies such as Apple and United Technologies engender hope that the U.S. economy can avert recession.

A slew of major corporations, also including Bank of America Corp (BAC.N), Microsoft Corp (MSFT.O) and AT&T Inc (T.N), will release quarterly earnings in a shortened trading week that has scant economic data scheduled for release.

"Whether or not we end up in a prolonged bear market depends not only on whether we go into a recession but also on how long the earnings weakness plays out," Kumar said.

Dow Jones industrial average futures on Monday dropped 546 points or 4.5 percent. Should the Dow close lower on Tuesday by the amount the futures suggest, it would rank as the fourth-largest point loss ever for the blue-chip index.

S&P 500 futures were down 62.5 points, or 4.7 percent. Nasdaq 100 futures slid 77.5 points, or 4.2 percent.

The Standard & Poor's 500 index closed on Friday down 15.33 percent from its peak close on October 9. A fall into bear market territory for the S&P 500 would mean the end of the second-longest bull market for the benchmark index since 1929, according to the Stock Trader's Almanac.

One major stock index -- the Russell 2000 Index (.RUT) of small-cap stocks -- entered a bear market last week.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the Russell 2000 is one of the most overvalued major indexes in the world and could tumble perhaps another 40 percent.

On Friday, the S&P 500 fell 8.06 points, or 0.60 percent, to a 16-month low of 1,325.19, capping its worst week in five years. Both the Dow Jones industrial average (.DJI) -- off 59.91 points, or 0.49 percent, at 12,099.30 -- and the Nasdaq Composite Index (.IXIC) -- down 6.88 points, or 0.29 percent, at 2,340.02 -- hit 10-month lows.

For the week ended January 18, the Dow fell 4.02 percent and the Nasdaq 4.10 percent.

In light of the economic outlook, companies are going to be cautious regarding their guidance, said Owen Fitzpatrick, head of U.S. equities at Deutsche Bank Private Wealth Management.

In addition, the sharp sell-off of recent weeks might not be over, Fitzpatrick said.

"The market seems to be to some extent capitulating," he said. "I think we're finding a bottom, and that's not to say we might not find another one."

Among companies slated to report are financial heavyweights Bank of America and Wachovia Corp (WB.N) on Tuesday; technology bellwethers Apple (AAPL.O), on Tuesday, eBay Inc (EBAY.O) and Motorola Inc (MOT.N) on Wednesday, and AT&T, on Thursday. Among major industrials and big oil, UTX (UTX.N) and ConocoPhillips (COP.N) report on Wednesday and Caterpillar Inc (CAT.N)Friday.

All eyes will be on bank stocks after enormous losses linked to subprime write-downs at Citigroup and Merrill Lynch.

Companies that make up the S&P 500 are expected to post earnings growth of 15.3 percent in 2008, according to Reuters Estimates. At the beginning of the week, the S&P 500 was trading at 13.82 times forward earnings, Reuters Estimates said, below a historic average of about 15 percent.

Investors will sift data to assess the pulse of the nation's economic health from first-time claims for state unemployment insurance benefits and existing-home sales for December, both to be released on Thursday.

The forecast for new jobless claims is 325,000, while the pace of existing-home sales is expected to show an annual rate of 4.95 million, according to Reuters polls.

(Additional reporting by Kristina Cooke and Caroline Valetkevitch; Editing by Leslie Adler and Steve Orlofsky)

(The Stocks Outlook column appears every Sunday. Comments or questions on this one can be e-mailed to herb.lash(at)reuters.com)

Recession fears could end bull market - Yahoo! News

__________________
All ambitions are lawful except those which climb upward on the miseries or credulities of mankind.
Joseph Conrad,

Use your own mind on what to buy and sell!!

capt_nemo

Black Monday as biggest FTSE crash since 9/11 wipes off nearly £60bn in shares
Last updated at 16:22pm on 21.01.08

Traders at the London Stock Exchange have seen the FTSE drop since the beginning of January
The stock market was in meltdown today as nearly £60billion was wiped off London shares.

A combination of poor economic figures and the worsening global credit crunch sent the FTSE 100 plunging.

At one stage the drop was the biggest since 9/11 in 2001, although the index of Britain's biggest companies later clawed back some of the losses. At lunchtime the Footsie was down 250.1 points to 5647.8.

That means the FTSE 100 has now fallen by around 10 per cent in the last 10 days, by around 15 per cent over the last month and is well on the way to being off 20 per cent since its most recent high of 6754 in July - before the world's banking system was sent spiralling.

It is also the worst start to the year for the stock market since records began in 1936. "I smell the acrid stench of fear and uncertainty," said markets commentator David Buik of BGC Partners. European markets also tumbled.

The fall in the Footsie came after figures revealed a record government borrowing deficit for December of £7.8billion.

Howard Archer of forecasters Global Insight said: "The Chancellor's target of cutting public sector borrowing next fiscal year now looks like wishful thinking."

Big fallers included Wolseley, the building supplies company, which reported a 40 per cent drop in profits.

Scroll down for more...



Pointing the way: A trader signals the direction of UK and European indices after the biggest single fall in Japan since 9/11


It came as Asian markets fell overnight after leading shares on Wall Street's Dow Jones Industrial Average slipped into the red on Friday.

Investors were left unimpressed by the US government's tax-relief plans to stimulate the economy.

The Footsie is now down 10.5 per cent on the opening mark of 6456.9 this year - the worst opening since records began in 1936.

The grim economic outlook comes as Gordon Brown has announced a rescue plan for the ailing Northern Rock.

The Treasury aims to sell millions of Government-backed bonds which will effectively prop up the bank, a move which is likely to make it more attractive to private investors.

The news sent shares in the stricken bank soaring this morning.

Mark Outten, senior trader at GFT Global Markets, said: "There is a general nervousness in the markets at the moment over an economic slowdown."

Last week, the index dipped below the 6,000 barrier for the first time since the start of the credit crunch in August.

Earlier this morning, the Footsie was almost 170 points lower, touching levels not seen since August 2006.

Just a handful of shares were in positive territory, including Friends Provident, which was buoyed by talk of a bid for the life assurer.

Markets also fell in Europe, with the CAC-40 in Paris down more than 3 per cent and the Dax in Frankfurt down almost 3 per cent as they digested the news from across the Atlantic.

On Friday, President George Bush unveiled plans for a special package of measures worth billions of dollars to help avoid a downturn in the US economy.

He said the growth package would have to be big enough to make a difference to the "large and dynamic" US economy.

But US shares turned sharply lower following the announcement, with some market participants saying that Mr Bush's plan did not go far enough.

__________________
All ambitions are lawful except those which climb upward on the miseries or credulities of mankind.
Joseph Conrad,

Use your own mind on what to buy and sell!!

capt_nemo

Oil sheds $1.63 a barrel - below $89
Crude prices fall on fears of weakness in the U.S. economy, doubts that OPEC will boost production.



See all CNNMoney.com RSS FEEDS (close) January 21 2008: 1:47 PM EST


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Mark Zandi, Chief Economist of Moody's Economy.com says that policy makers need to be more aggressive to stimulate the economy.
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SINGAPORE (AP) -- Oil prices fell sharply Monday as fears over the U.S. economy drove down stock markets in Asia and Europe.

Further pressure came from concerns OPEC won't raise crude production levels.

Light, sweet crude for February delivery fell $1.63 to $88.94 a barrel in electronic trading on the New York Mercantile Exchange by the afternoon in Europe. The contract rose 44 cents to settle at $90.57 a barrel on Friday.

In London, Brent crude futures fell $1.33 to $87.90 a barrel on the ICE Futures exchange.

Oil prices have now retreated more than $10 from a record above $100 a barrel early this year on worries a flagging U.S. economy would dampen fuel demand. Prices had gained Friday on hopes that U.S. President George W. Bush's economic stimulus plan would work.

But most stock markets have since reacted pessimistically, uncertain Bush's plan is enough to stave off a severe economic downturn in the world's largest oil consumer.

Asian markets plunged Monday, with benchmark indexes in Hong Kong and China both dropping more than 5 percent. By afternoon in Europe, London's FTSE 100 Index was down 4.1 percent, the CAC-40 in Paris was 5.2 percent lower and Frankfurt's DAX was 5.9 percent below Friday's close.

On Friday in the U.S., the Dow Jones industrials fell 0.5 percent after Bush announced a $145 billion tax relief package.

"The run out of equities continues very strongly and the high correlation seen recently between equities and oil prices means that the risk remains high for oil prices to take the directional clue from the Dow," said Olivier Jakob of Petromatrix in Switzerland.

Jakob, however, concluded that growing demand for oil in Asia and the Middle East could help compensate for lower U.S. demand and keep oil prices from plunging.

"Prices are eroding but not yet collapsing due to the belief that pent up demand in emerging countries will create a stronger than expected floor," Jakob said in his daily market report.

U.S. markets are closed Monday for Martin Luther King Jr. Day.

For sale: Greenhouse gases by the ton
The Organization of Oil Exporting Countries should increase its oil output to meet growing demand, U.S. Energy Secretary Samuel Bodman told Saudi Arabia's oil minister Saturday.

The Saudi Arabian oil minister, Ali Naimi, said earlier last week his country would raise production levels only when the market justifies it. The current inventory seemed normal, he said.

Bodman's visit to Saudi Arabia, which has the world's largest supply of oil, comes just before a Feb. 1 OPEC meeting in which the oil cartel could consider increasing oil production.

"At this point, the market really does not expect an increase in output although there could still be a surprise," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

OPEC isn't likely to raise output "because the upcoming spring season is a period of weak demand," he said.

Bodman's comments were made less than a week after Bush raised the same concerns in Saudi Arabia. Bush said oil prices were very high and "tough on our economy."

OPEC oil accounts for about 40 percent of the world's needs and OPEC ministers often follow the lead of the Saudis when discussing whether to increase production.

Heating oil futures fell 3.19 cents to $2.4755 a gallon while gasoline prices dropped 2.99 cents to $2.2735 a gallon.

Natural gas futures fell 10.7 cents to $7.886 per 1,000 cubic feet.

Oil sheds $1.63 a barrel - Jan. 21, 2008

__________________
All ambitions are lawful except those which climb upward on the miseries or credulities of mankind.
Joseph Conrad,

Use your own mind on what to buy and sell!!

whizknock

Yep. Tuesday looks like a rough open. I read reports that the major index futures were down big even though the markets were closed. Dow was off by over 500 at one point.

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whizknock

whizknock

There are some companies with a decent balance sheet that are being punished along with the many that are exposed to risk. Somewhere along the way bargain hunters will make a killing. I'm waiting to see what shakes ou't with Bank of America. As far as sub prime goes they supposedly liquidated any positions they had that might put them at risk some time back. However their credit division could still suffer from exposure just because alot of consumers used credit cards to help get through some of the crisis they incurred by having sub prime mortgages through other lenders.

Sure would be nice to see the US show some strength. All the talking heads were stating that the world economy was not as dependent on the US as in the past. From my vantage point the evedence suggests otherwise.

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whizknock

capt_nemo

Pimco's Gross Says Fed Rate Cut a `Sad Testament' (Update3)

By Kathleen Hays and Deborah Finestone

Jan. 22 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve's emergency cut in borrowing costs today is a ``sad testament'' to the state of the U.S. economy.

The central bank cut the target overnight lending rate to 3.5 percent from 4.25 percent after stock markets tumbled from Hong Kong to Paris amid increasing signs of a U.S. recession. Policy makers weren't scheduled to gather until next week. Gross expects the rate to fall as low as 2.50 percent.

``It's a sad testament to think the Fed has to cut interest rates eight days in front of a meeting to salvage the equity markets,'' said Gross, the founder and chief investment officer of Pacific Investment Management Co., in a Bloomberg Television interview. ``The U.S. economy is in a rather sad state of affairs in that it depends on housing and stock prices to keep going.''

Today's rate cut is the biggest single reduction since the central bank began using the rate as the principal tool of monetary policy around 1990.

The central bank has reduced its target for the overnight lending rate between banks four times from 5.25 percent since September. Gross predicted on Jan. 4 the Fed will eventually lower rates to around 3 percent.

He declined to specify whether he expects policy makers to lower interest rates again next week.

`Sooner The Better'

``We need a fed funds level at 2.5 percent to 3 percent,'' Gross said. ``The sooner the better.''

The $112.7 billion Total Return Fund earned 12.1 percent in the year through yesterday, outperforming competitors in the intermediate bond fund category, according to data from Morningstar, the Chicago-based research firm.

Gross has predicted since September 2006 that the Fed would lower borrowing costs and was bullish on Treasuries. The central bank cut rates for the first time in four years this past September.

Ten-year Treasury yields fell to 3.48 percent, the lowest since June 2003. Yields on two-year notes, more sensitive to changes in monetary policy, dropped the most since 2001 today to 2.04 percent.

Treasuries of all maturities have returned 2.3 percent since Jan. 1, the best beginning of a year since at least 1986, according to an index compiled by Merrill Lynch & Co.

``You would have to think the Treasury rally is almost over,'' said Gross. ``It's a safety-only type of vehicle. It certainly doesn't provide an attractive return.''

Gross runs the Total Return Fund for Newport Beach, California-based Pimco. The firm, a unit of Munich-based insurer Allianz SE, manages about $744 billion.

To contact the reporter on this story: Kathleen Hays at khays4@bloomberg.net ; Deborah Finestone in New York at dfinestone@bloomberg.net

Last Updated: January 22, 2008 16:09 EST

__________________
All ambitions are lawful except those which climb upward on the miseries or credulities of mankind.
Joseph Conrad,

Use your own mind on what to buy and sell!!