The most recent suprime casualty came from Barclays (BCS) and Wachovia (WB) sent market sharply lower again. BCS has 10Bil. write down and WB has 1.1Bil off. These push the total losses above 60+ Billion.We have another tough day, but I don't think markets can decline much further from here. It is unlikely that market will create new lows comparing August, but the process may need longer time.
How many more write down in the pipe line? We don't know yet. But the total could reach 200 to 250 billion. The write down is on going process and will repeat during years to come. Until the issues completely resolved Financial World will continuously feel the pain. It hurts a lot sometime, but patient needed. During the process, we will see more market turbulence like today, it is positive for the long run to get financial train back on track.
I may under estimate about Naz's near term bottom yesterday. It is reasonable to assume Naz could reaches it's 200DMV around 2580 to 2600. Naz has been a safe heaven of financial crisis in past two months. Because of that it outperform Dow and S&P. But recent Tech company's ER does not show the outstanding returns that market needed to advance further. In general, tech sector as whole has average ERs except some bright spot as AAPL, GOOG, RIMM and MSFT. Be richly valued Naz index put itself in vulnerable position to the downside.
The real risk comes from devalued dollar. It could tie up FED's hand to further rate cut as needed. Fed still has weapon to cut discount window rate from current level without worsening dollar situation. But Fed will not act as aggressive as before, this will reduce the chance for market to get catalyst as before which may slow down the market recovering from the decline.
I may go ahead of market a bit yesterday. For the investment the safty is alway first. So wait outside market until it run it's course. But don't panic, and don't short unless you are daytrader. Don't buy either, until it settle.
Take care.
