Global Market Comments for November 6, 2008
1) The Obama hangover hits. Any doubts we are stuck in an 8,000-10,000 range for the Dow for the foreseeable future were washed away with the 1,000 point sell off in the Dow from yesterday's high. Reality is such a bitch! It didn't help that Cisco's John Chambers said that conditions were the worst that he had seen in his career. When the head cheerleader for the tech industry slashes his wrists on national TV you don't want to own stocks.
2) The Bank of England slashed rates a record 1.5% to 3.0%, the most since 1955, and is clearly aiming for a Japanese style zero interest rate policy. The ECB is still behind the curve, announcing only a 0.5% rate cut. The ECB's Trichet says the outlook for price stability has improved. Well duhhh! With all commodities having halved in four months, inflation disappearing down a rat hole is more like it. Best of all, Trichet said there is no credit crunch. What planet is he living on?
3) Another day of General Motors (GM) bankruptcy jitters, which appears to be burning cash faster than the $1 billion a month it indicated earlier. The company has an application in to become a bank holding company so it can qualify for federal bail out money. The government is trying to engineer a merger with Chrysler. But a merger of two zeros is tough to pull of. In the meantime GM is suspending development of all new models. GM has lost $50 billion in the last three years. Will someone please put a bullet through the head of this company?
4) Weekly jobless figures came in at 481.000. Most expect worse in coming weeks and are bracing for a terrible non farm payroll report tomorrow.