Stocks plunge on bailout fatigue

Now that the 7000 floor on the Dow has been shattered in less than 2 weeks, it's hard to think anything but down, down, down. On a series of negative news stories, stocks sank in the first half of the session & remained on the floor in the PM. Dow dropped 299 to 6763 (52% below the peak in Nov 07), decliners over advancers 11-1 & NAZ fell to 55.


S&P 500 FINANCIALS INDEX hit another new low, 31 below the low in late Nov which was thought of as THE low.

Value 94.24

Change -6.91

% Change -6.8%

The Alerian MLP Index had one it's worst days in history (any decline in double digits), down 12½ to the 177s where it started 2009 . The Dow Jones REIT Index hit another multi year low, down 7 to 91. Junk bond funds sank & VIX roared ahead 7 to 53.

Oil had a terrible day on negative sentiment in financial markets.

CLJ09.NYM

..Crude Oil Apr 09

..40.08 3

.. 4.68 ......(10.5%)

Two once powerful generals in the Dow have similar stories, dismal. OK General Electric is stronger financially but the way things are going, who knows how long that will last!

•GE Declines Below $8 a Share for First Time Since 1994; Immelt Buys Shares
•GM, Chrysler May Report Sales So Low That Recovery Is 'Difficult to See'


Last night while watching guests talking about financial markets coming apart in Asia, somebody brought up a new concept called bailout fatigue. That describes where the markets are today. 6 months ago, around Sep 15 when the major bailouts began, there was talk about the economy hitting a brick wall & demand stopped. The reference was to retail sales hitting a brick wall. That reasoning can also be used to describe financial markets hitting a brick wall.

In 2008 AIG & Citigroup were 2 enormous financial powerhouses, that's why they were in the Dow. Today all that's needed to buy one share of each of the 2 stocks is $1.50! In the last 6 months, they've been thru a number of bailouts with seemingly no end in sight. The list of similar problems at other large banks around the world seems endless. Nobody is quite sure of how many $B were spent or much money will be needed going forward. That describes bailout fatigue which markets are going thru.

General Motors, another Dow stock & higher priced than than Citi today, has to solve whopper size problems to stay alive. It's huge problems are small change compared what the financial market giants need. Where do we go from here? I don't know, nobody knows because the problems are that big! More dreary days lie ahead.


Dow Jones Industrials - 6 months