Asia stocks fall as credit crisis fears persist

[Dr.Phool]

Source: Reuters

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks fell and government bonds rose on Tuesday in a sobering realization the U.S. takeover of Fannie Mae and Freddie Mac has addressed some risks stemming from the financial crisis but has not solved it.

Large bank shares underperformed the rest of the market after a broad global financial sector rally on Monday, while currencies association with safety and stability such as the yen and Swiss franc strengthened.

"It was a knee-jerk reaction yesterday, but the long-term outcome is that you are not going to expect the U.S. economy to improve if the housing market does not fix itself," said Lucinda Chan, a division director with Macquarie Equities Ltd in Sydney.

Japan's Nikkei share average .N225 fell 1.3 percent, led by shares of companies associated with the technology sector or consumer demand, such as Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) and Fast Retailing Co Ltd (9983.T: Quote, Profile, Research, Stock Buzz).

Stocks of large banks such as Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) fell, though Merrill Lynch recommended buying Asian bank shares in part because they outperformed strongly after the U.S. federal government stepped in during the meltdown of hedge fund Long-Term Capital Management in 1998.

Read more: http://www.reuters.com/article/hotStocksNews/idUSHKG25798620080909

---

Translation:

Freddie giveth and Fannie taketh away.

After all the hoopla about the gov't takeover of Frannie and Freddie, investors are starting to figure out just WTF is going on.

It ain't gonna be pretty today folks.

[Ghost Dog]

1. Didn't take long, did it.

Some who made a killing on especially going long bank stocks last night will be going short already overnight tonight.


European Factors - Shares seen mixed after strong rally

PARIS, Sept 9 (Reuters) - European shares were seen mixed on Tuesday after
the Monday's strong rally, as renewed economic worries offset the positive
impact of lower oil prices and a weakening euro.

Financial bookmakers, or spreadbetters, in London expected Britain's FTSE
100 .FTSE index to open between 3 and 4 points higher, the German DAX .GDAXI
down 2 to 16 points, and the French CAC 40 .FCHI down 3 to 10 points.

...

"The initial cheer we saw especially in the U.S. financial sector could
prove short lived. Confidence is already falling in Asian markets and with
little fundamental news due for release today, the sentiment information will
likely dominate instead," Matt Buckland, dealer at CMC Markets, wrote in a note.

/... http://www.reuters.com/article/marketsNews/idINL926500920080909?rpc=44

Funny how little mention is made of London's stock market and ICE futures exchange being offline most of yesterday, isn't it. Feel the fear. :freak:

[Trajan]

2. Knee jerk reaction giveth ...

Knee jerk reaction taketh away ...

[Ghost Dog]

3. Jerky indeed in Asia. Let's see: Asian Stocks Decline as Growth Concerns Eclipse Fannie Rally

Sept. 9 (Bloomberg) -- Asian stocks fell, paring gains a day after the benchmark index's biggest rally in seven months, as concern that global economic growth is slowing drove down materials, shipping and financial companies.

...

``Yesterday's rally wasn't sustainable,'' said Daphne Roth, Singapore-based head of equity research in Asia at ABN Amro Private Bank, with about $30 billion of Asian assets. ``The slowdown emanating from the U.S. has spread to the rest of the world and shipping companies are feeling the effects.''

The MSCI Asia Pacific Index dropped 2.1 percent to 118.80 as of 3:22 p.m. in Tokyo, following yesterday's 3.9 percent surge. About five stocks declined for each one that rose, sending all but one of the 10 industry groups lower.

...

Japan's Nikkei 225 Stock Average lost 1.8 percent to 12,400.65. Taiwan's Taiex Index fell 3.5 percent, the region's biggest decline. BNP Paribas cut its rating on the country's equities to `neutral,' saying valuations are `no longer cheap' compared with Asian peers.

...

All other regional benchmark indexes declined apart from China and New Zealand, which was little changed. Standard & Poor's 500 Index futures were down 0.4 percent recently.

...

Sell Into Strength

Andrew Garthwaite, chief global equity strategist at Credit Suisse Group, said in a note dated yesterday investors should sell into the share rally sparked by Fannie and Freddie as U.S. and European economies will remain weak.

Global equity rallies fueled by U.S. government action have petered out in the past. When the Federal Reserve cut its discount rate in August 2007, global stocks climbed for two months, only to have those gains wiped out by January. The process was repeated with the March bailout of Bear Stearns Cos., with the MSCI World Index advancing 13 percent in the following two months, before losing 19 percent by the end of last week.

``The relief package doesn't spell the end for falling home prices in the U.S.,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo. ``The government is now assuming the financial risk for Fannie and Freddie to the detriment of its own balance sheet.''

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=awp52KJep.Pg&refer=asia

[Hugin]

4. K&R

This is what it's all about.

:kick:

[GliderGuider]

5. Real US Housing Losses Are $6 Trillion

Real US Housing Losses Are $6 Trillion

Actual losses in the US real estate market are much higher than what you have been reading in the newspapers recently. Using a combination of official government statistics and the most widely used index of housing values, we will demonstrate that the US real estate market has lost a total of $6 trillion in value in the last two years. We will show that an average house that was worth about $226,000 in 2006 is, once you adjust for inflation, down to a real value of only about $160,000. To put what a $6 trillion loss is into perspective, we will show that when all factors are taken into account, the two year drop in US real estate values is equivalent to wiping out the entire retirement savings of all 78 million Baby Boomers, and annual housing losses are close to the annual GDP of China.

This ain't over by a long shot.