Asia is in Pain, and So is Big Bro US

Published on January 21, 2008

Asia is in Pain, and So is Big Bro US

January 21, 2008

Unless something miraculous happens tomorrow, prepare for a down day. Probably a big one. As of this post’s writing, US futures are down over 400 points! Asia’s pain first:

  1. Start performer India’s Mumbai Sensex down 7.41%. At one time it was down over 2,000 points i.e. nearly 11%.
  2. China’s Shenzen down 5%.
  3. Hong Kong’s Hang Seng down 5.49%
  4. Japan’s Nikkei Down 3.86%
  5. Singapore’s Strait Times Index down 6%

London’s FTSE is down over 4%. I expect US stocks markets to open sharply lower. How low? For Dow, if 12,000 is penetrated, which I expect it will, next support level will be roughly 11,600, followed by near 11,000. S&P 500 is even worse situation, 1,275 followed by 1,200. Nasdaq 2,260 followed by 2,000. Russell 2000, if 660, followed by 600 before reaching 550-570 area.

Take all this with grains of salt, all this may happen tomorrow or in coming days. One thing will certainly make it happen, FOMC meeting on Jan 30th. If Uncle Ben doesn’t cut rates by say 75 basis points (Yes I am upping my estimate), it’s all set to head south.

There is one potential bankrupt in the making, ABK, oouch! I am sure there will be huge efforts to save ABK, simply because Ambac insures $556 billion of bonds, including securities issued by state and local governments and repackaged consumer debt. ABK is facing additional review by Moody’s and Standard & Poor’s. FYI, Bond insurers strive to maintain a triple-A financial strength rating because their business is effectively transferring that rating to lower-rated bond issuers, who use the higher rating to get better pricing in the bond markets. Net, not a good picture ahead.

Oh By the way, did I say BAC has to go through lot of pain by acquiring CFC, guess what, the stock is down nearly 30% since Aug 23 post in addition to nearly 1/3 of 2 Billions loss of CFC investment. We’ll see how much they have lost or about to lose when they report on Tuesday. We’ll also get hints about consumer spending. If you can, don’t forget to listen to their conference call.

Have fun trading, Fasten your seatbelt for safe landing,

OP

2 Comments

  • Avatar Charlie says:

    Looks like it might by time for the U.S. to reconcile it’s huge debt. Any chance the meltdown is caused by a fiat currency that is continually devalued by our own elected officials. Dow to 5000 and gold to $5,000 an ounce over the next five years coupled with a nice burst of the housing bubble in the U.S. should help fuel a nice economic recession to make the 30’s look insignificant.

  • Dude look at my trades

    DXD SKF etc

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