Friday, January 22, 2010

It Was Ugly Overnight

Following on the heels of the rout in U.S. markets. Markets were slammed overnight.

Japan's Nikkei 225 fell 2.6%, Australia's S&P/ASX 200 lost 1.6%, China's Shanghai Composite dropped 1%, South Korea's Kospi gave up 2.2%, Hong Kong's Hang Seng Index shed 0.7% and Taiwan's main index shrank 2.5%. India's Sensex declined 1.1% and Singapore's Straits Times lost 1.1%.

Commodity-linked shares and financials were particularly hard hit. Rio Tinto closed down 3.5% and Macquarie Group fell 3.2% in Sydney. Posco dropped 4.1% and Industrial Bank of Korea fell 4.9% in Seoul. Trading house Mitsubishi Corp. fell 4.5% in Tokyo, while State Bank of India dropped 1.5% and Tata Steel fell 3% in Mumbai trading.

The Dow Jones Industrial Average closed down 2%, or 213.27 points, yesterday, for its biggest fall since Oct. 30.


  1. Robert - for what its worth, the DJI, NAS and S&P500 had a combined percentage drop on June 15 and 16 of 2009 that exceeded that which occured on Jan 20 and 21 of 2010. In addition, the June drop was on higher volume and with broader participation. And after that drop the equity market continued down about 8% before returning to an uptrend. There are lots of data points and just as many conjectures. But the most important data point may be the rise of Paul Volcker which you very quickly identified. What problems might he cause?

  2. @Efinancial

    Good question. I am actually tossing around in my head what more influence by Volcker would mean. I would imagine that if he ends up at the Fed on an interim basis, he would possibly do some kind of huge drain. I have to think he hates the huge explosion in the Fed's balance sheet.

    I don't know if he holds my view that the excess reserves will be automatically drawn down when the credit facilities are wound down.

    I will do a ful post on him in a couple of days after I do some more thinking and research on it, and make a few calls.