SEA Of RED - 2008 Markets Year In Review

It would be a MASSive understatement to describe 2008 as just a 'tough' year for the GLOBAL Financial Markets and Financial Services Industry. Many are going further than that and are already referring to 2008 as the most difficult and trying U.S. market environment since The Great Depression of the 1930's. Rigorous academic discourse and hyperbole aside, here are some eye-opening STATS courtesy of Bloomberg to tie a ribbon on things + put the 2008 GLOBAL financial FALLout in some perspective :


* Global stock markets lost about 1/2 of their value in 2008, or $30.1 TRILLION !


* In the U.S., $7.2 TRILLION of shareholder value was wiped off the books, as the Standard & Poor’s 500 Index fell 39% through Dec. 30 and the Nasdaq dropped 42%


* The Amex Securities Brokers/Dealers Index (fyi, the Broker/Dealer Index is comprised of 12 of the most widely known firms in the brokerage sector...the ticker is XBD) hit a high of 267.69 on June 1, 2007...as of Dec. 30, 2008, the index stood at 74.26 (down 72%!)


* The wave of writedowns and losses that swamped financial institutions around the world reached $720 Billion this year.


* During 2008, the global financial-services industry announced 220,360 JOB CUTS.


* According to the FDIC, there were 25 Bank FAILURES in 2008, the most in 15 years.


* Lehman Brothers (the artist formerly known as LEH)., with assets of $639 Billion, filed the LARGEST bankruptcy in U.S. history on September 15th, 2008...its creditors may have lost as much as $75 Billion, the firm’s chief restructuring officer said.


* In the Largest U.S. bank failure in history, Seattle-based Washington Mutual (the artist formerly known as WM) collapsed in September with approx $307 Billion in assets.


* New York-based Citigroup Inc. (C), whose shares lost 78% of their value this year, needed $20 Billion in U.S. bailout funds in November on top of an earlier $25 Billion infusion of capital. The government was also forced to guarantee $306 Billion of the bank’s troubled assets.


* The U.S. government was forced to rescue the WORLD's LARGEST insurance company, American International Group (AIG), with a $152.5 Billion package of investments, loans and capital infusions

* General Motors (GM) and Chrysler LLC will get $13.4 Billion in federal loans to stay afloat until President-elect Barack Obama’s administration can devise a rescue plan of its own.


* Overall, the U.S. Federal Government has committed $8.5 TRILLION of stimulus in 2008 in order to jumpstart the U.S. economy


* Global merger activity fell to $2.5 TRILLION in deals announced in 2008 vs. the record 4.1 TRILLION worth of deals announced in 2007 (down 39%)


* Hedge funds lost 18% of their value for the year through November, the worst year since record-keeping began in 1990, according to Chicago-based Hedge Fund Research Inc. Morgan Stanley estimated that, by year end, at least 620 hedge funds will have closed.


* According to Investment Company Institute, a Washington-based firm, individual investors pulled $215.7 Billion from stock market mutual funds during the first 11 months of 2008...this compares to a net inflow of $91 Billion during the same period in 2007



bloomberg.com/apps/news?pid=20601109&sid=ataVotdLreS0



Data Courtesy: Bloomberg

The Fed's December 2008 FOMC Statement

Posted below is The Federal Open Market Committee's STATEMENT following its December 15-16th meeting on U.S. Interest Rate policy :

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"The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.

Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent."

www.federalreserve.gov/newsevents/press/monetary/

Data Courtesy: FederalReserve.gov

Bernie Madoff's List Of VICTIMS (aka Clients)

VICTIMS Of Bernie Madoff's $50 Billion Ponzi Scheme :




(This list is copied + pasted from: cnbc.com/id/2823)

* Fairfield Greenwich Advisors - An investment management firm...more than half of Fairfield Greenwich's $14.1 billion in assets under management, or about $7.5 Billion was connected to Madoff

* Tremont Capital Management - The fund-of-funds business run by Tremont Capital Management had invested $3.3 Billion with Madoff

* HSBC (HBC) - The British bank has potential exposure of about $1.5 Billion, the Financial Times reported, citing unnamed people close to the situation. The exposure is from loans it provided to institutional clients, mainly hedge funds of funds, that wanted to invest with Madoff, the FT reported.

* Banco Santander (STD) - Spain's largest bank said its investment fund Optimal has a $3.05 Billion (2.33 billion euro) exposure to Madoff Securities.

* Bank Medici - The Austrian bank had two funds with $2.1 Billion (1.5 billion euros) invested with Madoff

* Ascot Partners - According to a Wall Street Journal report, the U.S. hedge fund where former GMAC chairman Jacob Ezra Merkin is a money manager has an exposure of $1.8 Billion.

* Access International Advisors - According to a report by Bloomberg, the New York based investment firm has an exposure of $1.4 Billion.

* AXA (AXA) - The French insurance company said it has negligible exposure to Madoff, well below 100 million euros.

* Barclays (BCS) - Any exposure for British bank Barclays Plc to Madoff would be "minimal,'' a person familiar with the matter said, but Barclays declined to comment.

* Man Group - The United Kingdom hedge fund said it is exposed through RMF, its institutional fund of funds business, which has approximately $360 million invested in two funds that are directly or indirectly sub-advised by Madoff Securities.

* BBVA - Spain's second-largest bank said its international operation has about 30 million euros exposure to Madoff, and it sees a maximum potential loss from Madoff-linked investments of 300 million euros ($404 million).

* Union Bancaire Privee - Swiss bank that invests in funds of hedge funds has lost about 1 billion francs ($850 million), according to Le Temps, citing unnamed banking sources.

* Royal Bank of Scotland (RBS) - Said it had exposure through trading and collateralised lending to funds of hedge funds invested with Madoff, with a potential loss of around 400 million pounds ($597.9 million)

* Natixis - The French investment bank said it could have a 450 million euro ($602 million) indirect exposure to Madoff

* BNP Paribas (BNP) - France's largest listed bank said it has a potential 350 million euro ($464.3 million) exposure.

* Reichmuth & Co. - Swiss private bank said its fund of funds Reichmuth Matterhorn had an exposure to investments linked to Madoff that amounted to about $325 million.

* Nomura Holdings (NMR) - The Japanese brokerage firm said it had a 27.5 billion yen ($303 million) exposure related to Madoff, but the impact on its capital would be limited.

* Unicredit SpA - Italy's second-biggest bank said its own exposure is around 75 million euros ($101 million), while in its Pioneer Investments unit, some funds ``are exposed to Madoff indirectly through feeder funds.''

* Societe Generale - The French bank said its exposure is negligible, below 10 million euros.

* Maxam Capital Management - The Connecticut-based fund has lost about $280 million on funds invested with Madoff, according to a Wall Street Journal report.

* EIM Group - Le Temps reported that EIM Group, a European fund of hedge funds, said it has a $230 million exposure.

* Fairfield Sentry - The $7.3 billion hedge fund run by Walter Noel's Fairfield Greenwich Group had accounts with Madoff Investment Securities.

* Kingate Global Fund - The $2.8 billion hedge fund run by Kingate Management Ltd had invested in Madoff Investment Securities.

* UBS (UBS) - The investment bank unit of the Swiss financial group has a limited and insignificant counterparty exposure, its spokesman told Reuters.

* Benedict Hentsch - Swiss private bank said its exposure to products linked to Madoff amounted to 56 million francs ($47 million), or less than 5 percent of assets under management.

* Bramdean Alternatives - UK asset manager, headed by well-known fund manager Nicola Horlick, said almost 10 percent of its holdings were exposed to Madoff. Bramdean said it had two holdings that maintain trading accounts with Bernard L. Madoff Investment Securities that represented 9.5 percent of its net asset value at end-October.

* Banesto - Said it has insignificant exposure, but declined to disclose the size of exposure.

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* Please refer to the below Bloomberg article for some background information regarding Bernie Madoff's $50 Billion Wall Street SCANDAL :


bloomberg.com/apps/news?pid=newsarchive&sid=atUk.QnXAvZY


Data Courtesy: CNBC and Bloomberg

China Will Grow Money Supply 17% In 2009

In a monetary policy effort designed to counter slowing domestic growth in the world's 4th Largest economy, China's State Council plans to INCREASE the country's M2 Money Supply by 17% in 2009 (money supply: the total amount of money existing in an economy at a particular time...M2 money supply: those types of monies including all physical cash reserves and banking deposits...FYI + if you're curious re the different classes/types of money supply, please refer to my 3/16/08 post titled 'Components Of Money Supply').

According to the People's Bank Of China, China's Money Supply grew to $6.7 Trillion in November 2008...a 14.8% increase over November 2007.

bloomberg.com/apps/newsablWg2RUlVmk

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* In addition to boosting its Money Supply, the Chinese government also plans to INCREASE financial institution lending activity by $584 Billion in 2009 (4 Trillion Yuan)

* The Chinese Central Bank's key one year lending rate is currently at 5.58% (down from 7.47% as recently as in September)

bloomberg.com/apps/news?pid=newsarchive&sid=ah_2uEppubgU

Data Courtesy: Bloomberg

New York - 165,000 In Job Losses Thru 2010

Per a CNBC television interview earlier this morning with New York City Comptroller William C. Thompson Jr. (click on the below link for the video interview) :

http://www.cnbc.com/id/28140388

* New York is forecasting additional NY job losses of 165,000 through 2010

* Wall Street job losses are expected to make up about 35,000 (or approx 20%) of the 165,000 jobs lost

* New York state doesn't expect to see a bottom in the current economic downturn until at least the beginning of 2010


Data Courtesy: CNBC

The OMINOUS November 2008 JOBS Report

According to the U.S. Labor Dept's monthly November 2008 JOBS Report:

* The U.S. economy lost 537,000 jobs in November (vs. the consensus forecast for a loss of 'only' 335,000 jobs)...537K represents the country's largest single month JOBS decline in 34 years (December 1974)

* Since the beginning of 2008, the U.S. economy has lost a total of 1.91 million jobs...the 1.9 million jobs lost in the current Housing Bubble-induced RECESSION, which officially began back in December 2007, now exceeds the total amount of job losses that resulted from the 2001 Dot Com RECESSION (1.6 million)

* The current unemployment rate is 6.7%...this is the country's highest unemployment rate since October 1993

* The country's 'under-employment' rate (includes part time workers and those who are without jobs who have been discouraged + stopped looking for work) rose to 12.5% from 11.8%...12.5% is the all-time high for this measure since records began in January 1994

* The average employee's work week shrunk to 33.5 hours...this is the shortest avg work week since records started back in 1964

* In addition to the U.S. economy's ridiculously large loss of 537K jobs in November, the labor department also revised higher its unemployment figures for both September and October. The revisions brought the 3-month job loss total to 1.3 million...this is roughly equal to 2/3 of this year's total job losses and is the 3rd Highest Three-Month Job Loss Total since World War 2

- September: Job losses were revised higher to 403K from 284K (up 119K or 42%)

- October: Job losses were revised higher to 320K from 240K (up 80K or 33%)

Data Courtesy: Bloomberg and CNN Money

A Lights OFF View Of General Electric

A couple of weeks back, a colleague of mine who previously worked in finance for U.S.-based General Electric (GE) sent me a link to the below fascinating Seeking Alpha article titled 'General Electric: Genuine Risk Of Collapse?'. Despite the risk of perhaps providing TOO Negative and dreary of an outlook/view on the current challenges being faced by one of America's most highly regarded institutions (...FYI + according to Yahoo.com/finance, GE employs approx 330,000 employees worldwide), I decided to include the link on ETB because the November 17th dated article was simply too compelling, informative and well-written to ignore.


General-Electric-Genuine-Risk-Of-Collapse


Make NO mistake about it, GE already has (the stock is down 60% year to date to about $16/share) and will continue to face significant operating headwinds in 2009 and perhaps 2010 assuming the current near-consensus forecast of a gloomy, global macroeconomic environment (FYI - The U.S.'s National Bureau of Economic Research just officially announced today that the U.S. economy entered its ongoing recession in December 2007).

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* Anecdotally predicting + in terms of consequences, expect General Electric to make some 'Citigroup-esque' sized JOB CUT announcements in order to stay competitive during the Recession (a total of 50,000 in CUTS is definitely NOT out of the question given GE's employee base of 330K).

*Snapshots of GE's Balance Sheet + post 2004 Stock Buyback program:

Data Courtesy: Seeking Alpha + National Bureau of Econ Research