Lots of worries about a very bumpy day ahead on the US markets. Nouriel Roubini reckons that the US is already on steps 10-12 of his 12-step financial meltdown sequence. As the FT’s Gillian Tett puts it,
The western financial system is caught in a trap. On the one hand, there is an urgent need for clearing prices to be established for impaired assets to restore confidence; on the other hand, if this is done in a mark-to-market world, there is a risk that some banks will run out of capital. Policymakers are in the unenviable position of knowing almost any step they take risks denting sentiment further.
Meanwhile, FT investment editor John Authers’s broadcast on FT.com yesterday is not exactly cheery either:
Welcome from New York, where a lot of people are very scared … On face value, what the markets are telling us is that the US is headed for absolute disaster.
Commodities are continuing to go bananas as the dollar weaken. While the greenback is at a record low against the euro, crude is close to $106 a barrel (an all time high, needless to say), and gold still sticking near its record high of $991.90 a troy ounce. But the thing to watch this morning is the US monthly employment data, due in about one hour’s time (1.30pm GMT); Roubini reckons it will contain some very unpleasant surprises…
Update: yep, it’s a lot worse than expected: the biggest monthly decline in jobs for almost five years (63,000 non-agriculural jobs lost last month, compared to market expectations of a rise of between 25,000 and 40,000). Now let’s see how that goes down on an already very jittery stock market – which opens in NY in about half an hour.
