England's White Dragon

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Wednesday, 16 March 2011

“The World Greed’s”

“The World Greed’s” as the Markets take’s a dive as “Investors
do a runner to Safety”

The financial aftershocks from the earthquake in Japan
gathered force as investors fled from riskier assets like stocks, oil and gold
amid growing worries that the crisis could slow a global economy that only
recently seemed to be getting back on its feet.

Related Oil Price Falls as Investors Dump Commodities (March
16, 2011) but the prices are still go up at fuel pumps in feed our greed’s
hitting the poor motorists.  

Japan's Nuclear Crisis and earthquake aftermaths and things are
still getting worse?

Related in Opinion Room For Debate: What Aid Makes Sense for

Those doing a runner?

Moody's Corporation

Bank of America Corp

JPMorgan Chase & Company

Tiffany & Company

Morningstar Incorporated

Hitachi Ltd

BNP Paribas

General Electric Co

Credit Suisse Group A.G

Barclays PLC

To name but a few that see their profits taking a massive dive
in feed their greed’s

Traders on the floor of the New York Stock Exchange at the
opening bell,

Unnerved by a 16 per cent drop in Japanese shares in the
first two trading days of the week, stock markets slumped as investors sought
havens like United States dollars and Treasury bonds, pushing interest rates
lower and the Japanese markets will continue to take missives falls and losses.

By the close of trading in New York, shares of United States
companies recovered some of their losses after the Federal Reserve said it
would keep its accommodative monetary policy in place to stimulate the United
States economy.

The FED’s announcement brought calm on a day of market
turmoil that raised painful memories for some of 2008, when the financial
crisis froze capital markets and precipitated a similar rush for safety. “This
was a very scary day for global stock markets,” said Carl B. Weinberg, chief
economist at High Frequency Economics.

The roller-coaster session, the Standard & Poor’s
500-stock index, which at one point had been down 35 points, closed down 14.52
points, or 1.12 per cent, at 1,281.87. The Dow Jones industrial average fell
137.74 points, or 1.15 per cent, to 11,855.42. The NASDAQ fell 33.64 points, or
1.25 per cent, to 2,667.33. GREEDS

In Tokyo, markets regained some lost ground, with the Nikkei
225 rising 3.97 per cent in afternoon trading. But on Tuesday, the uncertainty
extended to energy markets, as analysts warned that diminished growth in Japan
could prompt a sharp decrease in oil demand. (But you get bet the prices at the
fuel pumps won’t come down now they have them up unless government intervene
and say enough is enough)

“We don’t know the extent to which the post-tsunami Japan is
going to grow, and whether or not there will be consequences for other
countries as well,” said Chris Lafakis, an energy economist for Moody’s

Amid the flight to safety, oil prices fell $4.01 to settle
at $97.18 a barrel, while gold dropped $30.70 to $1,395.70 an ounce. The
10-year Treasury note, meanwhile, rose 14/32, to 102 22/32. The yield fell to
3.30 per cent, from 3.36 per cent late Monday.

The central fear is that the disaster — especially the
danger of increased radiation exposure from stricken Japanese nuclear reactors
— could rip a big hole in the supply lines of the world’s third largest economy
and set back the global recovery.

Some of the first ripples reached the United States on
Tuesday as Subaru said it was cancelling all overtime at its plant in
Lafayette, Ind., which builds the Outback, Legacy and Tribeca models, to reduce
the chance that it will run out of some parts from Japan.

“The main economic shock is not the direct loss of business,
but spill over effects in terms of damage to the power and transportation
industries and disruptions to the supply chain,” said Ethan S. Harris, an
economist at Bank of America Merrill Lynch. “Specifically, many auto and
electronics firms rely on the affected region for parts.”

As a result of the volatility, several debt offerings were postponed,
while Toys “R” Us was forced to delay a planned syndicated loan.

The ultimate impact on world growth is likely to be small,
however. “The quake-ravaged economy, the world’s third largest, could lower
economic activity in Japan as much as one percentage point, and shave off
worldwide growth 0.2 percentage point in 2011,” said Bernard Baumohl, an
economist at the Economic Outlook Group.

The region affected by the quake accounts for only about 6 per
cent of Japanese gross domestic product, and economists calculate that the
short-term effects might be eventually offset as Japan spends hundreds of
billions to rebuild.

One major exporter, General Electric, which designed the
reactors at the Fukushima nuclear plant, fell for the second day in a row,
closing down 1.6 per cent at $19.61. G.E. has either built or licensed 92
nuclear reactors now operating worldwide — about 20 per cent of the global
total, according to Michael Tetuan, a spokesman for General Electric.

But nuclear power development remains a small part of the
company’s overall operation; it produces reactors in partnership with Hitachi.
The business accounted for just $1 billion in revenues in 2010 — a tiny
fraction of the $85 billion generated by its industrial supply business.

“Nuclear is not a major piece of the puzzle for G.E.,” said Daniel
Holland, an analyst with the investment research firm Morningstar. “This
doesn’t move the needle a whole bunch.”

Despite the problems in Japan, the Japanese yen
strengthened, as speculation increased that big Japanese investors like pension
funds and banks — Japan is the second-largest holder of United States
Treasuries — would dump their overseas holdings and buy yen to return cash

At the same time, there were signs that investors were
unwinding other trading positions. With interest rates near zero at home,
Japanese investors used yen to buy Australian and Canadian dollars, as well as
the Brazilian real, to invest in higher-yielding assets there. Other foreign
investors placed similar bets, bullish on those countries’ growth prospects.

But as demand for the yen picks up, those currencies have
weakened. The Canadian dollar fell 1.5 per cent on Tuesday morning, while the
Australian dollar fell around 2 per cent. The Brazilian real has fallen nearly
4 per cent since Friday.

Across Wall Street, traders said the initial reaction among
many hedge funds and institutional investors to the Japanese crisis were to
sell first and ask questions later.

“It’s definitely been risk-off since Friday,” said Ward
McCarthy, chief financial economist with Wall Street investment bank Jefferies
& Company.

“Uncertainty tends to breed a desire for safety. As it
becomes easier to assess what all of the ramifications are, I suspect that will

For instance, Robin Thorn, who oversees the $1.3 billion Pine
Bridge Global Equities mutual fund, decided on Sunday evening to cut the fund’s
9 per cent position in Japanese stocks in half.

With the help of his team of more than two dozen analysts in
Tokyo — many who have been sleeping in their offices — Mr Thorn sold off companies
that had exposure to nuclear-plant construction. “That turned out to be the
right thing in the shorter term,” Mr Thorn said.

But Mr Thorn said he and his team were also looking for
buying opportunities, saying he had increased the fund’s stake in companies
that will play a role in Japan’s rebuilding.

And on Tuesday afternoon as Japanese American Depositary
Receipts and exchange-traded funds rebounded sharply from early lows, Mr Thorn
said he expected Japanese markets to rally.

“We feel a lot of the emotional selling has been done,” Mr
Thorn said. “And it’s clear through the action of U.S.-based investors today
that people are now trying to look for bargains.”

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