Last post for 2008.. happy holidays!!

Happy holidays.. 

I decided to spend part of my holidays with a couple of friends  in Detroit, drive down to Philly, and next to Virginia.. and finally home on Jan 2nd..  I hope it would be a nice break away from, hopefully, everything. As always, I try my level best to keep away from my laptop and mobile. :) .

For me 2008 was an exciting year. FInished my MBA, joined the hedge fund, doing what I am i nterested in doing, though still in the learning phase. 

Gone out to pick upi a friend from the airport. and am posting it today!! 

 *height of my laziness*. 

a period of hibernation..

Well,, a couple of my very close friends are visiting Dallas, so spending most of the evenings with them.

Hope I shall continue blogging sometime next week.. or may be during the office hours!!

Last week's missing posts..

Much of the monday's rallly and the last week's rally is either coz of the high expectations  on the Obama Package to kick start the economy or in the anticipation of it. Over the last weekend, Obama unvieled priliminary details of the stimulus package, including “making the largest single new infrastructure investment since the creation of the federal highway system in the 1950s”.

Some off-the-cuff thoughts :

- Building supplies groups

- Industrial equipment makers

- Construction firms

- Miners

- Crane manufacturers

- Engineering firms

- Plant hire firms

- Temporary power generators

- Catering contractors

Words of famous Bill Gross: "My transgenerational stock market outlook is this: stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates. That world, however, is in our past not our future. More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to – that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner."

Nervous investors on Tuesday paid for the privilege of owning US government debt, pushing interest rates on three-month Treasury bills to negative levels for the first time in postwar history, reports the FT. The implied yield for three-month bills briefly traded at negative 0.01% –  the first time since 1940, traders said. At that level, an investor is essentially paying someone to own the security. The flight to safety helped the Treasury sell $30bn in four-week bills at a discount rate of 0.0% for the first time. That auction followed the sale of $27bn in three-month bills at a discount rate of 0.005% on Monday.

Though a Treasuries bubble might appear unproblematic, however, its bursting could turn out to be more dangerous than the collapse of any other kind of bubble. If confidence eventually returned to other markets, investors would shun the low yields on Treasuries. The Fed would then face the choice of monetising most or all of the Treasuries market, as funds fled to higher-return investments, or else of allowing Treasuries yields to race higher. Because foreign holdings represent a significant proportion of the stock of Treasuries outstanding, a collapse in Treasuries prices might soon be reflected in a collapse of the US dollar, with the accompanying threat of hyper-inflation in the USA and depression elsewhere. At that point, many investors might wish they still enjoyed the comparative calm of the ‘credit crunch’.

Today:

Events in North America have dominated global credit markets in recent days and today was no different. Investors welcomed news that the US House of Representatives approved a $14 billion loan to the “big three” Detroit car makers. However, the bill will also need to be passed in the Senate, and noises from the Republican members suggest that this could be difficult. Several Senators have expressed their opposition to the bill, and many others are likely to be uncomfortable with the government using tax payers money to bailout failing companies.

Earlier, Labor Department reported initial jobless claims in the week ended December 6th jumped to 573,000, their highest level since November of 1982. Separately, a report from the Commerce Department showed that the U.S. trade deficit unexpectedly widened in the month of October, reflecting a notable decrease in exports amid the global economic weakness. Economists had been expecting the deficit to narrow to $53.5 billion compared to the $56.5 billion originally reported for the previous month.

Airlies stocks came under pressure as the oil had a biggest one day gain in 3 months, up about $4.67 to $48 dollars. Also it was reported yesterday taht the airline industry will suffer a $2.5bn net loss next year despite the big fall in the oil price, as carriers are overtaken by falling demand for air travel amid the deepening recession in several leading economies.

And the woes for financial firms do not seem to have come to an end. FT quoted that the biggest US financial institutions reported a sharp increase to $610bn in so-called hard-to-value assets during the third quarter, raising concerns about the hidden dangers on balance sheets.Translation: More write offs, and banks are hiding more and more assets on their balance sheets. WFC 

I had a discussion with Bill today about why the  market is not going down even though the data releasedlast week was gloomy. Seems market is oversold and most of the worst data is already priced in.The bull case being that the selling has levelled off and investors started buying large cap stocks, and the sooner the data gets worse, the fast is the recovery.. An excerpt from www. "SO REMEMBER IT IS NOT THE NEWS THAT MATTERS IT IS HOW THE MARKETS REACTS TO THE NEWS THAT MATTERS MOST AND FRIDAYS REACTION TO BAD NEWS SUGGESTS MOST INVESTORS HAVE DISCOUNTED PRETTY MUCH ARMAGEDDON."

 Well, I subscribe to the bearish case taht the market has not yet priced in the worse yet. Market is just trying to search a bottom, and in doing so, the investors are acting optimistic.

Let me write fo rmyself the data that was out last week.. (well, i do it coz I am short broad market, and I lost my gain and I am in red in my investment and yes, I am pissed. )

Beige Book: In no surprise, the Fed’s latest survey of economic conditions in all its districts indicated that through late November the economic downturn was worsening from the last report and spreading throughout the country. The consumer remained weak with big-ticket luxury spending pressured the most. Auto sales were down broadly with less fuel-efficient light trucks and SUVs under the most pressure. Residential real estate activity remained weak across all regions. As reflected in the ISM service index below, a number of service industries were hit hard. Labor markets were also under pressure across all districts and consistent with the government’s reports on falling payroll employment. While most of the above is nothing new, exports are now falling across all regions, which is likely to cancel out the expected positive contribution to GDP from the international sector. Commercial real estate is now weakening as well with rents falling and vacancies rising.

ISM Non-Mfg Index:The ISM’s business activity index dropped 11.2 points also to a record low. The detail indexes are just as bad, especially the big drop in the employment index (31.3 vs. 41.5), the lowest on record by far and consistent with sizable losses in service sector jobs. Backlogs (39.5 vs. 44.0) and new orders (35.4 vs. 44.0) were weak enough to expect more bad news ahead in the service sector.

Chain Store Sales: Consumers may have ventured out for bargains on Black Friday, but it looked like they stayed home for the rest of the month as year-over-year same-store sales at retail stores fell 2.7% in November, far weaker than expected and the biggest drop since the late 1960s. Excluding Wal-Mart’s results, sales would have been down 0.7%.

Auto Sales:total light vehicle sales fell still lower, to a 10.1 million rate with the  domestic Big Three down 40% year-over-year, led by Chrysler (-47%) followed by General Motors (-41%) and Ford (-30%). They managed to increase their market share from 47% to 49%.

However, the Japanese Big Three did almost as poorly—Nissan (-42%), Toyota (-34%) and Honda (-31%). But that just demonstrates how weak overall consumer demand is in the U.S. no matter who makes the car.

ISM Mfg Index: It fell a deeper than expected 2.7 points in November to 36.2, its lowest level since the early 1980's recession years. That was the fourth month in a row the index has been below 50, indicating contracting factory activity with each month  successively lower and consistent with a serious recession.also reached similar near record-low levels. Production (31.5 vs. 34.1) again made new lows while forwardlooking measures like new orders (27.9 vs. 32.2) and order backlogs (27.0 vs. 29.5) were in the 20s and

predicted continued weak production levels ahead. Inventories will be a drag on the GDP, and the employment index (34.2 vs. 34.6) indicated continued higher layoffs and lower hiring by manufacturers.

Factory Orders: Like all other factory reports over the past few months, overall factory orders for October fell 5.1%, nearly double the 2.8% decline expected by consensus forecasts. It was the third monthly decline in a row following significant declines of 3.1% and 4.3% in September and August, respectively.

Semiconductor Billings: Even global semiconductor billings, a good leading indicator for overall technology manufacturing activities, turned down in October. Total billings fell 2.13% and 2.43% sequentially and year-over-year, respectively.

Construction Spending: Overall construction spending was down 1.2% in October, weaker than the consensus 0.9% expected decline, and was down 4.6% from a year ago.

Employment Report: The big news of the week was the government’s November employment report and, as many feared, it was a shocker. Total payroll jobs fell by 533,000 following an upward-revised 320,000 October loss (from 240,000) and a 403,000 September drop (from 284,000). That brought the total job loss over the past three months to 1.256 million. The unemployment rate rose as expected to 6.7% from 6.5%, even though over 400,000 workers left the workforce.

The same in Pictures.. http://www.econbrowser.com/archives/2008/12/comparing_reces.html

And, today was no different either.. Mortgage default rates data was out, and it is not pretty in any way.. 

From Bloomberg:

Almost 53 percent of borrowers whose loans were modified in the first quarter of this year re-defaulted by being more than 30 days overdue, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today in remarks prepared for a housing conference in Washington....

The OCC’s survey represents institutions that service more than 60 percent of all first mortgages, or 35 million loans worth $6 trillion, Dugan said.

“In general, the third quarter report will show many of the same disturbing trends as other recent mortgage reports,” Dugan said. “Credit quality continued to decline across the board, with delinquencies increasing for subprime, Alt-A and prime mortgages.”

YET THE MARKET RALLIED!!!! 

Two catalysts that would decide the direction of the market.. 

The SEC report on mark-to-market accounting, due on January 2nd.  This might recommend reporting transparency, but some relief on the official asset calculation.  Or it might not.

Housing initiatives.  

The Treasury is hinting at a new plan to reduce mortgage rates.  The Fed has already acted.  We expect the market to be skeptical of both, so it may take some real evidence to change opinions.

Song: "Closer" - Travis. 

Mood: "very playful" :) 

contd..

What is suppoed to be a friday's post.. unedited!! 

Employers in the US cut jobs at the fatest rate in 34 years last month, bringing the unemployment rate to a 15-year high.

Payrolls shrank by 533,000 workers in November, the biggest loss since December 1974 and significantly worse than economists had forecast, according to figures released by the Labor Department. Economists were expecting a decline of 335,000 jobs, according to a Bloomberg survey.

The jobless rate rose to 6.7 per cent, and might break 8% by the end of the year.

http://blogs.wsj.com/economics/2008/12/04/fourth-quarter-layoffs-selection-of-job-cuts-by-major-companies/

And for corporate the things are going to get even worse. The next great financial crisis to hit the corporate world will not be credit cards, revolving credit facilities or China. No, what the world should really be worrying about are pension deficits. According to Magnus, $2tn has been wiped off the values of 401k US pension plans in less than a year. Worse, the PPA ( Pension Protection Act), requires defined benefit pension schemes to be 100 per cent funded by 2011, with funding targets of 92 per cent this year, 94 per cent in 2009 and 96 per cent in 2010.  If a company’s below the funding targets they’ll have to make cash contributions to their plans.  And should a plan’s funding fall below 80 per cent (the “endangered level”), then the company must make a cash infusion to get to the 80 per cent mark or start cutting retiree benefits. If it falls below 60 per cent it can’t pay out at all. BofA's Dennis COleman estimates that due to the PPA, many companies-including industry stalwarts Exxon Mobil, Johnson & Johnson, IBM (N/R), Proctor & Gamble (N/R) and DuPont-will soon need to begin funding underfunded pensions obligations.

Race to Zero.. Notice how good a job India is doing!! http://s.wsj.net/public/resources/images/P1-AN878C_Rates_NS_20081204202416.gif

.. and the saga continues!!

Rate cuts in Europe did little to improve market sentiment. The Bank of England reduced rates by 100bp, as expected. Bank rate now resides at 2%, the lowest rate since 1951. The ECB was a little more cautious, as befitting its hawkish reputation. The central bank cut rates by 75bp - the largest cut since its foundation - to 2.5%. Markit PMI survey data points towards a deep and lengthy recession, and the delays by both central banks in easing monetary policy now look costly. More rate cuts can be expected in the near future. And in US, the market had priced in a 42% chance of a 75 bps interest rate cut over Dec 16th FOMC meeting, and rest a 50 bps interest rate cut. The markets are pricing in a savage recession, and perhaps a depression. Economic data in the coming months is likely to point towards a gloomy scenario.

Dupont said it now expects a fourth-quarter loss and is forecasting that 2009 earnings will be well below consensus estimates. DuPont said it has seen a considerable drop in sales volume in the current quarter, supporting gloomy predictions from rival Dow Chemicals.

Trivia: Merriam-Webster's dictionary chose "bail-out" as its word of the year for 2008.

Though I didnt understand the implications of the artilce, except for the fact that China's slowdown is inevitable, an interesting piece on China from Brad Seter's blog: Most creditors believe that the debtor needs to take the lead in addressing their own problems. China is, apparently, no different. China now almost certainly has well over $1 trillion in US Treasury and Agency bonds, and probably close to $1.5 trillion in total dollar exposure.

And it is a universal trutht that most of the growth in China is export driven, and to keep the exports flowing China should make its goods cheaper for other countries. The only way to do it is to hold their exchange rate down. China in part is doing it by continuing to buy the US debt. This policy implies financial loss for China, as China is effectively overpaying for financial assets (dollar reserves) that it doesn’t need in order to support its export sector.

-------
and Noriel Rubini write for FT: (I am too lazy to summarize it)..

Deflation is dangerous as it leads to a liquidity trap, a deflation trap and a debt deflation trap: nominal policy rates cannot fall below zero and thus monetary policy becomes ineffective. We are already in this liquidity trap since the Fed funds target rate is still 1 per cent but the effective one is close to zero as the Federal Reserve has flooded the financial system with liquidity; and by early 2009 the target Fed funds rate will formally hit 0 per cent. Also, in deflation the fall in prices means the real cost of capital is high – despite policy rates close to zero – leading to further falls in consumption and investment. This fall in demand and prices leads to a vicious circle: incomes and jobs are cut, leading to further falls in demand and prices (a deflation trap); and the real value of nominal debts rises (a debt deflation trap) making debtors’ problems more severe and leading to a rising risk of corporate and household defaults that will exacerbate credit losses of financial institutions.

As traditional monetary policy becomes ineffective, other unorthodox policies have been used: massive provision of liquidity to financial institutions to unclog the liquidity crunch and reduce the spread between short-term market rates and policy rates; quasi-fiscal policies to bail out investors, lenders and borrowers. And even more unorthodox “crazy” policy actions become necessary to reduce the rising spread between long-term interest rates on government bonds and policy rates and the high spread of short-term and long-term market rates (mortgage rates, commercial paper, consumer credit) relative to short-term and long-term government bonds.

To reduce the former spread the central bank needs to commit to maintain policy rates close to zero for a long time and/or start outright purchases of government bonds; to reduce the latter it needs to spread massive liquidity, such as by direct purchases of commercial paper, mortgages, mortgage-backed securities (MBS) and other asset-backed securities. The Fed has already crossed that bridge with facilities that are aimed at reducing short-term market rates, such as Libor spreads; it has now moved to influence long-term mortgage rates by buying MBSs.

Traditionally, central banks are the lenders of last resort but they are becoming the lenders of first and only resort, as banks are not lending. Central banks are becoming the only lenders in the land. With consumption by households and capital spending by corporations collapsing, governments will soon become the spenders of first and only resort as fiscal deficits surge.

The financial crisis has already become global as financial links transmitted US shocks globally. The overall credit losses are likely to be close to a staggering $2,000bn. Thus, unless financial institutions are rapidly recapitalised by governments the credit crunch will become even more severe as losses mount faster than recapitalisation.

But with governments and central banks bringing private sector losses on to their balance sheets, fiscal deficits will top $1,000bn for the US in the next two years. The Fed and the Treasury are taking a massive amount of credit risk, endangering the long-term solvency of the US government.

In the next few months, the flow of macroeconomic and earnings news will be much worse than expected. The credit crunch will get worse, with de­leveraging continuing as hedge funds and other leveraged players are forced to sell assets into illiquid and distressed markets, leading to further cascading falls in prices, other insolvent financial institutions going bust and a few emerging market economies entering a full-blown financial crisis.

The worst is not behind us: 2009 will be a painful year of a global recession, deflation and bankruptcies. Only very aggressive and co-ordinated policy actions will ensure the global economy recovers in 2010 rather than facing protracted stagnation and deflation.


contd.... tomw..

----
Song: 'Stripped' - Rammstien
Mood: 'Surprisingly, excited!!'

When ever I listen to this song, it reminds me of a friend in Cyrpus. She once asked me to send her songs taht I think are a good listen over a drive. Among a couple I forwarded this was one.. Well, couple of hours later, I realized that the lyrics of this song go something like 'Let me see you stripped'. :) .. I dont think she ever minded it, as she still talk to me!!

US Economy - more data to support that its in kaka..

While the news was not particularly surprising, the Federal Reserve's Beige Book said Wednesday that overall economic activity has weakened across all Federal Reserve Districts.Reports from the districts indicated that Vehicle sales showed significant declines in most districts. most districts reported a contraction in activity in the services sector since the last report. All twelve districts reporting weaker manufacturing conditions. Nearly all districts reported weak housing markets, with most districts also reporting weakness in the commercial real estate markets.The Beige Book also indicated a contraction in lending, with many districts reporting reductions in residential, commercial and industrial lending and tightening lending standards.With regard to the labor market, the Fed said that several district reports showed signs of slowing labor demand. Well, every thing does sound familiar.. 

Earlier in the day, the Institute for Supply Management released a report showing that activity in the service sector contracted by more than economists had expected in November, marking the second consecutive monthly contraction in the sector. The ISM said that its index of activity in the service sector fell to 37.3 (Economists expectation - 42) in November from 44.4 in October, with a reading below 50 indicating a contraction in the sector.

Play: Short the borad market.. in light of last week's rally, this is the right time to short the market.. Buy BGX ( I did buy it today when the market was up 120 points.. and was up 10% after a couple of hours, and then by the end of the day ended flat... well, it would be immensely/preposturously optimistic of me to expect a 30% return on a single day!! :) ).Though the data is overwhelmingly negative, the stock market seems to pay no heed to it. The market acted as if worst of the worst news is priced in. It is interesting to see the market in green in light of the negative data around. 

However, Legg Mason's star stock-fund manager Bill Miller said on Wednesday the "bottom has been made" in U.S. equities and that the Federal Reserve should consider purchasing stocks and junk bonds to pull the United States out of the financial crisis. Well, I stil lbelieve that the market will test the earlier lows.. Dow would touch 7500 again.. if not 7000. 

The above data supports my view.. in addition, the European CDS benchmark, the iTraxx Crossover index, broke through the 1,000bp barrier for the first time in its four year trading history on Wednesday, meaning it would cost €1m annually to protect €10m of debt issued by mostly junk rated companies over a five year period. translation: more companies are going to go under. CDS spreads spread wider worldwide on Wednesday as low volumes and bearish sentiment drove the cost of both sovereign and corporate default protection to unprecedented highs. transaltion- More countries are in for more trouble.. 

Should write about this stuff tomw.:

30 year and 10 year treasury yield... and how/why to short treasuries... 

Gold, Gold Miner ETF, Dollar strength. Why the dollar would weaken.. . 

Feeling damn sleepy tonight.. btw.. Dada!! I am happy for you!!!! :) :) 

Song: 'Something in the way' - Nirvana. 

Mood: 'I wish the whole world is full of people like CnH (Carthik and Harish or Calvin and Hobbes)'

Today's crap.. written in a equally crappy mood!!!

Beats Vs Misses ratio:
This is the ratio of the companies that best the estimates to the ones that missed. Historically the ratio averaged 2.3.. and currently it stands at a mere 1.2, back to the 2002-03 levels.. Another reason why it is time to turn bullish.

China’s PMI release follows the fall in Japanese manufacturing activity in November for the ninth straight month in yet another sign that the Japanese economy, Australia’s biggest export market, is taking yet another blow from the global downturn. Economists expect US and European PMIs to point to very weak industrial production – probably weaker than China’s.Together, these PMIs paint a bleak picture for commodities and resource equities over the coming six months at least, and over this time frame the indicies might as well get oushed to 2001 levels.

Two important sources of liquidity or comsumer spending are 1. Jobs 2. credit cards. The data on both of them is gloomy. Today morning, the Department of Labor released its report on metropolitan area employment in the month of October. The report showed that 361 of the 369 metropolitan areas reported unemployment rates in October that were higher year-over-year. 13 metropolitan areas reported unemployment rates of at least 10.0 percent, while 98 metropolitan areas reported jobless rates of at least 7.0 percent. This friday, the much awaited Job data will be out.. and it would not be a shock/surpirse to the market if the unemployment rate is reported at 6.5-7%.. And the renowned Marideth Whitney, yday on CNBC predicted that the U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending. In addition, incresing Unemplyment and credit unavailability is a deadly combination!!!

The Federal Reserve extended the term of three emergency-loan programs (The Primary Dealer Credit Facility and Term Securities Lending Facility, created in March, and the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility) to April 30 from January 30. The three loan facilities, part of the central bank’s efforts to cushion financial markets from the worst crisis in seven decades, had about $304 billion in loans outstanding as of last week. The Fed already authorized other programs through April for supporting the commercial paper market and money-market funds and for swapping dollars with 14 central banks. Yet, there are few signs that the credit markets are improving.. Quoting Ben “Obviously, they have not yet returned private credit markets to normal functioning. But I am confident that market functioning would have been more seriously impaired in the absence of our actions.”


Todays GE action was, well, a bit surprising.. Yday a GOOD citi bank analyst downgraded GE with a target price of $16, as he predicted that the management would lower the guidance in the management's todays meeting. Before the markets opened, GE did lower the guidance, and obvously I thought that the stock would trade low.. But to my surprise the stock was up 2.11 (14%).. Speaking on the conf call, Neal laid out plans to delevarge the GE Capital's enormous balance sheet. GE Capital expects to lower its leverage ratio from a current eight to one to a more conservative six to one in the coming year. In addition, GE Capital will reduce the amount of credit it extends to customers. Executives anticipate GE returning to double digit growth by 2010. GE is a perfect long term investment. a guaranteed above 50% return in an year..

an article in Bloomberg on property/realestate prices..


The Detroit big three are back at the door step of the congress seeking a bail out. Today all the three companies presented their 'restructuring plan' to the congress. Among the stood out - Ford CEO took a pay cut to $1 PA, Ford planning to sell its corporate jets and the common being, their operations will be focussed on more 'less gas guzzling' vechicles.. As bad as fate can be, today the auto sales data was out. U.S. auto sales plunged 37 percent in November to the lowest annual rate in 26 years as the recession and Detroit automakers’ aid pleas kept buyers away from showrooms.
Ford’s November sales down 30.6%;
Toyota sales down 33.9%.
Honda sales down 31.6%
Volvo sales tumbled 46.5%
Chrysler U.S. sales fell 47%
GM falls 41%

and made to the list is Tata Motors, posted a 30% sales decline. (a consecutive second month drop)..

However, a positve note.. The most optimistic people/place .. India.. :) New chart from McKinsey global economic entiment survey showing that India is actually the least gloomy place on the globe with respect to thinking that the economy will weaken further from here.

GS, the financial institution to supposedly have dodged the turmoil, is no longer immune to the 'losses'. Today Bllomberg reported that GS might report a $5.00 loss per share.. Though GS traded down for the day, Citi was up!! Similar story with MOS.. they cut down the sales estimates and pulled back their guidance, reason being the uncertainity of commodity markets (and the fertilizer prices). This material sector is one of my hot favourites. It is yet another long term play..

Song: "Good People" - Jack Johnson.
Mood: 'I wish life had a rewind button'

US officially is (has been) in a recession.. .finally..

NBER topday has officially confirmed that US economy had slipped into a recession in December 2007. 

"U.S. economy entered a recession in Dec 2007 marking the end of the 73 months expansion that began in Nov 2001 (previous expansion of the 1990s lasted 120 months). The decline in economic activity in 2008 has met the standard for a recession. The 1.2 million fall in employment in 2008 was the biggest factor in determining the start of the contraction". 

Growth forecasts by OMF and OECD are evised downward.. and financial institutions, economists, fortune tellers have been predicting a gloomy Q4 and 1H 2009. Goldman Sachs forecatsed that growth would contract -5% in 4Q08; -3% in 1Q09  and -2% in 2Q09; 9% unemp rate by end of 2009.. Merrill Lynch is predicting that growth will shrink -4.5% in Q4-08 and -4% in Q1-09.. and the ever bearish Roubini makes an intimidating prediction that  U.S. will experience most severe recession since WWII, much worse, longer and deeper than 1970s and 80s recessions. Recession will continue until at least 2009-end with a cumulative GDP drop of over 4%, unemployment rate will likely reach 9%. And, gropwth figures from Bloomberg survey - -3% in Q4 and -1.5% in Q1-09 .. 

Over the weekend, I was talking to Shakib about the markets and told him that the worst is not yet over and last week's rally was a holiday euphoria... I did want to short the market on Friday, but well,, if only I had enjoyed a little less on Thursday night!! :) 

With todays drop of 679 points, DJ and S&P have given up most of the last week's gains.. Now, INDU stands about -39% YTD, NASDAQ -47% and S&P -44%. How far will the stocks fall from here!!.. well., at current levels the indices are still up about 9% from the october bottom.. And there is not sign of any good news from any corener.. Todays manifacturing data from both US and UK was pathetic.. US manufacturing data showed weakness not seen in 26 years, while the UK manufacturing sector suffered an "unparalleled blow" in November according to the latest report on the sector. For US, the report showed that the index of activity in the manufacturing sector fell to 36.2 in November from 38.9 in October, with a reading below 50 indicating a contraction in the sector.. 

In addition, news from the other corner of the world, China: Surveys of manufacturers suggest that the sector, which accounts for 40% of China's GDP, is in contraction as external demand for Chinese goods falls and domestic demand is depressed by the decline in housing prices and construction sector. Export orders, output and new orders all shrank. Crude steel (-17% y/y), electricity (-4%, the first fall in a decade).. Federation of Hong Kong Industries predicts that 10% of an estimated 60- 70K Hong Kong-run factories in the Pearl River Delta will close this year. 

The market, my view, would continue to test the support levels of October.. As Dow reaches 7500, I would start buying the 3X Etfs, though I do fear that even 7000 levels might be breached...

Like always, thought I will compensate for my long weekend posts.. but well.. 

Song: "Leave out all the rest" - Linkin Park. 

Mood: 'Need a hug!!'