Market Tumbles Again as Troubling Data Continues

Here we go again. After a down session yesterday, the markets experienced another drubbing today in the wake jobless numbers that were worse than expected. By the end of the day, the Dow Jones index had lost 443.48 points, or about 4.85 percent, and the S&P 500 and Nasdaq were also down, 5.03 percent and 4.34 percent, respectively. As expected, the Bank of England cut its key rate by 150 basis points to 3 percent, the lowest since the last year Winston Churchill was prime minister, 1955. The European Central Bank lowered its rate by 50 basis points to 3.25 percent, and the Swiss cut their key rate by the same margin. Will it help? The headwinds buffeting the developed world’s economies are something fierce. The International Monetary Fund said today that GDP will shrink by the following percentages in the following places in 2008: in the U.S., by 0.7 percent; in the U.K. by 1.3 percent; in the euro-zone by 0.5 percent; and in Japan by 0.2 percent. Grim times for the U.S. retail business as it lurches nervously toward the holiday season. Retail same-store sales declined 0.6 percent in October for about 40 retailers reporting monthly results today, according to consultancy TNS Retail Forward. October’s result is down from a 1.3 percent increase reported last month and down from the 1.7 percent increase in October 2007. “Shoppers are focusing on necessities and on finding the best deals as they cut back their spending,” said Frank Badillo, senior economist at TNS Retail Forward. “And that will continue through the holidays.” Not quite every retailer is taking it on the chin these days, however. The the economy turns bad, people turn to–where else?–Wal Mart Stores Inc. Same-store sales at the retail behemoth were up 2.4 percent in October, compared with the same month last year. Blackstone Group L.P., less than two years ago in the catbird seat as the architect of the biggest real estate buy-and-flip ever–the Equity Office deal–has suffered a $340.3 million loss in 3Q08. “Lower carrying values of portfolio holdings across corporate private equity, real estate and marketable alternative asset management contributed to the negative revenues,” Blackstone said dryly in a statement. Still, the firm isn’t likely to flounder any time soon, with some $1.13 billion cash in hand, plus another $1.29 billion in liquid funds. Somewhat happy news today, if you happened to be a Wall Street exec: your bonus is not going away completely, but only drop by 20 percent to 35 percent, according to the latest Wall Street compensation survey from Johnson Associates Inc., though execs at the very top might see as much as 70 percent less. But why any bonuses at all, in this time of Wall Street-induced panic? Inquiring minds want to know, especially that of New York Attorney General Andrew Cuomo, who has demanded, and is receiving, information on pay for this year, and 2006 and 2007, from nine major banks. Expect official anger at the remaining bonuses from Cuomo’s direction before long.”Given this economic situation, how do you justify any performance bonus at all?” Cuomo asked rhetorically in the New York Times. Likewise, members of Congress overseeing the bailout have demanded that money from the government not go to bonuses. Pleading that the bonuses will go for necessary lifestyle expenses, such as the place in the Hamptons, the Learjet or first-spouse maintenance, will probably fall on deaf ears.