Shanghai Shares Rebound Nearly 4 Percent (Forbes)
Now that the world takes its cues from the Shanghai stock exchange, we might as well keep leading off with its performance. After looking like it might plunge again -- it fell 1.3% on the open -- shares rebounded, leading to gains of 4%. The government did its best to make investors happy. It promised no major policy changes, no new taxes, or anything else that should upset the market. Instead, it simply renewed its commitment to stability. If you thought traders in the US had a rough day yesterday, the stress felt by Chinese government officials was almost certainly ten times worse. Not to denigrate our finest, but nobody wants to be in charge when a full-scale riot of a billion people breaks out, which is what would happen after a few more days of a market collapse.
World Markets Plunge Across Much of Asia for Second Day Amid Global Jitters (AP)
Meanwhile, the rest of Asia did not get its reflexive snap back. Several markets gave up at least 3%, following the drop in Shanghai and the US. Like the Chinese government, several other governments tried to sound bullish, but it was no use. Everyone knows that these people don't have the power that Chinese officials have. Who cares if the president of Japan says the economy is fundamentally sound? What's he gonna do about it?
Oil Falls on Concern Stock Market Drop May Signal Slower Growth (Bloomberg)
There are always bright spots during times like these. For one thing, if the economy goes in the tank, then it means Ben Bernanke is likely to cut interest rates -- always a popular move. And if the economy slows down, oil should continue to fall (just in time for summer driving season!). The crude stuff came off its highs of the year, lowering to just over $59 following the swift downward action in global markets. Seems like it could come a lot further, seeing as it was a lot lower not so long ago. Guess we'll need to take our stock market lumps for that to happen.
A Recession That Arrived on Cats’ Paws (NYT)
The great thing about a sharp drop in the market is that it can be incredibly clarifying. Suddenly, a lot of issues that you sort of kept in your periphery come squarely into view. And then you start to wonder why you weren't focusing on those things the whole time. So, for example, there's a lot of ugly stuff going on in housing right now, which is a real old story, but really got heightened a couple weeks ago when HSBC announced bad results. And traditional economic numbers aren't looking so hot. The manufacturing index has been veering towards contraction for some time, but nobody really noticed until yesterday, or today as the case may be, if you're reading the Economix column of the times. So all of the sudden, with the issues more clearly at hand, we can put on hold the talk about goldilocks and soft landings, and ask whether we can build a case for a recession.
La Nina's Brewing, Forecasters Warn (AP)
The wonderfully mild winter that we got through January was probably caused by El Nino, even if Gore & Co. wanted you to think it was the result of man-made global warming. Now, El Nino is officially over, so bring on La Nina. It's not really clear what La Nina is going to do to us. It might bring about more Atlantic hurricanes, and forecasters think it could result in a, get this, "mild spring". What on earth is a mild spring? Also, it may lead to drought-like conditions in much of the country, although there's always a drought everywhere across the plains. These farmers just have to admit that they live in the midwest, not in the rainforest, and then they can stop calling the natural state of things a drought.
Chrysler to Offer Workers Up to $100K (AP)
Chryslers is the latest to ask its employees to just scram already. The company will pay any one of 49,600 blue collar workers $100,000 if they would just leave. Sounds like a good deal. We'd take it, if only we could get hired there.
Markets Find It Hard To Break the Greenspan Habit (WSJ)
Yesterday morning we linked to an article that proved to be woefully premature. We noted that Greenspan didn't have the same effect on US markets as he used do, as evidenced by the mild reaction to some pessimistic comments. But, as things would later show, it would appear he's still taken seriously. This of course presents something of a problem, since he's no longer the fed chief. He can do damage, but he probably can't step in and reassure us, since he has no official capacity to do so. That was always part of his charm, that he could play both sides of the fence, and keep people happy no matter what he said. Now it's up to Bernanke to play the good cop to Greenspan's bad one, but it's not clear whether people trust him as the good cop.
Boo Hoo (Crossing Wall Street)
If you put yesterday's drop into perspective, it wasn't that bad. It was only the 12th worst day in the last 10 years. And it only puts the market down 1% on the year. We actually pointed this out to a friend last night, who was pissed off about the losses. He asked "how does that help me?". Yeah, guess it doesn't.
European Shares Extend Global Slide (Reuters)
Not that you really care so much, but markets in Europe (that continent on the other side of the Atlantic that's north of Africa and west of Russia) slid too. Shares fell by around 2%, pushing the markets down into negative territory for the year.