“There’s no clear trajectory for moving us out of a recessionary environment,”

[Letsbereal]

U.S., Global Stocks Drop as MSCI World Falls Most in 2 Months
15 June 2009, by Jeff Kearns and Sarah Jones (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9gDIYDbNy9A

June 15 (Bloomberg) -- U.S. stocks extended a global slide, sending the MSCI World Index down the most in two months, as falling oil and metal prices weighed on commodity producers. Treasuries rose and the dollar strengthened.

Alcoa Inc., Caterpillar Inc. and DuPont Co. lost at least 4.2 percent as a weaker-than-expected report on New York’s economy also dragged stocks lower. Freeport-McMoRan Copper & Gold Inc. slid 5.4 percent as copper sank by the daily limit in Shanghai on speculation supply may outpace demand in China, the largest consumer of the metal. Benchmark indexes for Europe and Asia sank as BP Plc and BHP Billiton Ltd. tumbled.

“There’s no clear trajectory for moving us out of a recessionary environment,” said Wayne Wicker, who oversees $33 billion as chief investment officer at Vantagepoint Funds in Washington. “Given the shellshock of the last year and a half, you have a lot of people who don’t think this market is sustainable.”

The S&P 500, which had climbed 40 percent from a 12-year low on March 9, decreased 2.5 percent to 922.32 at 1:02 p.m. New York time. The Dow Jones Industrial Average, which last week erased its 2009 loss, tumbled 194.31 points, or 2.2 percent, to 8,604.95 as all 30 of its companies declined. Seventeen stocks fell for each that rose on the NYSE. The MSCI World Index of developed nations plunged 2.8 percent, the most since April 20.

Europe’s Dow Jones Stoxx 600 Index lost 2.5 percent after Group of Eight finance ministers, who met in Italy over the weekend, began drawing up contingency plans for rolling back budget deficits and bank bailouts as the economy shows signs of recovery and investors start worrying about inflation.


Empire Manufacturing

The VIX, the benchmark gauge for U.S. stock volatility, jumped the most since May 21 as the Federal Reserve Bank of New York’s general economic index fell to minus 9.4 from in June from minus 4.6. Readings below zero signal manufacturing is shrinking. Economists in a survey predicted minus 4.6. U.S. stocks fell even as the International Monetary Fund raised its outlook for the U.S. economy.

The S&P 500’s rally since March left the index valued at 14.9 times its companies’ earnings, near the highest level since October. Last week, the Dow average became the latest major U.S. stock gauge to give investors a profit for the year amid growing optimism the worst recession since World War II is ending after the government and Federal Reserve pledged $12.8 trillion to revive economic growth.


‘Wariness’

“We’re starting to see wariness in the markets about where we go from here,” said James Gaul, who helps oversee $1.5 billion at Boston Advisors LLC in Boston. “We’re still in a recession and we’re still losing jobs. The economy’s struggling.”

The MSCI World Index has rebounded from a 13-year low in March. The rally pushed the index’s value to 18.2 times the earnings of its 1,655 companies, the most expensive level since December 2004, weekly data compiled by Bloomberg show. The Stoxx 600 Index trades at 25.4 times the earnings of its companies, the most in five years.

The dollar strengthened to a three-week high against the euro after Russian Finance Minister Alexei Kudrin said the U.S. currency is in “good shape,” further affirming there’s no substitute for the world’s reserve currency.

“It’s too early to speak of an alternative,” Kudrin said in an interview two days ago in Italy after meeting officials from the G-8 nations.


Treasuries Gain

Kudrin’s comments helped U.S. Treasuries climb for a third day, the longest streak in a month, even after international holdings of long-term U.S. financial assets rose at a slower pace in April as China, Japan and Russia trimmed holdings of bonds. Purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington.

Exxon Mobil Corp., the biggest U.S. oil company, lost 1.7 percent to $72.56, while rival ConocoPhillips retreated 3.9 percent to $42.62.

Crude oil for July delivery dropped as much as 3.4 percent to $69.58 a barrel in New York Mercantile Exchange trading as the stronger dollar limited the appeal of commodities as a hedge against inflation.

Freeport-McMoRan, the world’s biggest publicly traded copper producer, slid 4.1 percent to $56.11 as gold declined to a three-week low.

Inventories of copper in Shanghai warehouses grew for a second week to 60,647 metric tons last week, the highest since the week of March 20, 2008, the exchange said after the market closed June 12. China’s imports of the metal and its products increased 6 percent in May from April to 422,666 tons.


Wal-Mart Slumps

Wal-Mart Stores Inc. lost 3 percent to $48.36 after Goldman Sachs Group Inc. cut the largest retailer to “neutral” from “buy,” saying it sees “little near-term positive catalysts to drive shares higher.”

The S&P 500 may struggle to reach a so-called golden cross as trading volume decreases, according to a technical analyst at RBC Capital Markets.

A golden cross, considered a buy signal by analysts who make predictions based on patterns in price charts, occurs when the 50-day moving average, which is currently at 889.24 for the S&P 500, rises above the 200-day moving average, which is at 911.65, according to Bloomberg data. The U.S. benchmark index ended last week at 946.21.

The major stock indexes “are back above their 200-day averages, and it’s increasingly tempting to conclude that a new bull market is under way,” Toronto-based Ray Hanson wrote in a report dated June 12. However, the S&P 500 “has not yet achieved a golden cross” and “the steadily declining volume since early May suggests caution,” he said.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, added 8.7 percent to 30.61. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November yet above its 20 average over its 19-year history.


To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Sarah Jones in London at sjones35@bloomberg.net;

There's no clear trajectory for moving us out of a recessionary environment US,Global Stocks&MSCI World Index Drop http://tinyurl.com/la4rvl

[egypt]

I agree -- no clear projectory.  This would not be so alarming if, at the same time, they were not chopping us down wherein it could be handled.

Worst case scenario for survival, would be the same as what happened in Russia.  People went back to the farms... {after they were completely stripped of all the society possessed.}  There are so many gorgeous Russian artifacts available on the market, now.

Root them OUT!  If we have to go back to rural, community living -- hey, it's a good life.  Americans are extremely resourceful, thinking and entrepreunerial.   We used to have lots of fun with it.  People are so angry now..

Additionally, if we really had to get down to grass roots living, there are so many children who are products of the evil System, that could heal in this environment.

Love, e

[Revolt426]

"We are in a thermo-dynamic collapse of the entire world economic system" - Webster Tarpley

"If the perceived value of the dollar collapses it will blow up every economy in the world instantly" - Lyndon LaRouche.

[Letsbereal]

I don't agree with LaRouche saying "blow up every economy in the world instantly" and even if that happens some will survive much more easily than others.

The countries who have production, gold and other commodities have a big advantage after a diminished or even blown up dollar over many other countries.

The U.S.A. fundamentals are really bad.

After WOII U.S.A. had the advantage of a completely destroyed industry around the world except in the U.S.A.

Free ideas from Nazi Germany who catapulted the Rocket and turbo engine industry in the U.S.A.

Maybe the stupid evil masters want to pull the same trick again in destroying half the world in a world war III?

[Revolt426]

I don't agree with LaRouche saying "blow up every economy in the world instantly" and even if that happens some will survive much more easily than others.

The countries who have production, gold and other commodities have a big advantage after a diminished or even blown up dollar over many other countries.

The U.S.A. fundamentals are really bad.

After WOII U.S.A. had the advantage of a completely destroyed industry around the world except in the U.S.A.

Free ideas from Nazi Germany who catapulted the Rocket and turbo engine industry in the U.S.A.

Maybe the stupid evil masters want to pull the same trick again in destroying half the world in a world war III?

If you look at the dollar denominated debt crisis, it actually would blow out the world system with the exception of a few self sufficient nations - the rest of the world has been globalized and each nations depends on another for food/necessities, it was designed this way. If the U.S. Tanks - Europe Tanks, if Europe Tanks, Russia and China tank, and Brazil and India may be left in a severe death plaqued Depression. The rest of the world will be in mayhem. If you consider the amount of U.S. Debt and Dollar Denominate debt including derivatives, it's really all dependent on which nations depend on each other and which nations are involved in finance capital.