Starry stary night

There were simply too many negative news spun off around the globe yesterday.

(i)Japan's GDP contraction was very severe.

Feb. 17 (Bloomberg) -- Japan’s economy, only months ago forecast to be the best performing among the world’s most advanced nations, has become the worst.

Gross domestic product shrank an annualized 12.7 percent last quarter, the Cabinet Office said yesterday. The contraction was the most severe since the 1974 oil crisis and twice as bad as those in Europe or the U.S.
(Click here to read more)

In desperate moment like this, the accused drunk Finance minister Nakagawa was asked to step down, certainly added to the dark clouds.

They were so pissed that they want hard assets. They knew gold is expensive and begin to chase for alternative cheaper metals - platinum for example.

Tokyo bullion dealers are reporting an unprecedented drought of platinum ingots and coins, blaming the economic downturn and dwindling faith in the Government for a rush by middle-class Japanese families to buy precious metal.

With dealers turning away would-be platinum customers for lack of stock, retail investment interest is turning towards the even rarer Canadian Maple Leaf palladium coin.

(Click here to read the rest)

(ii) Then we have European hard landing fear of banks exposing to emerging European economies defaults/write-down. Euro at 10-week low! Not a surprise to me but the market begin to pricing in risk.

(WSJ) NEW YORK -- The euro declined to a 10-week low versus the dollar Tuesday on concerns over the exposure of major European banks to emerging economies.

Depressed overall risk appetite also sent the euro lower against the safe-haven U.S. currency on a flight from risk. The Dow Jones Industrial Average closed down almost 300 points on the day.

The euro fell to $1.2563. It also slipped versus the safe-haven yen overnight to a session low of ¥115.65.

Tuesday afternoon in New York, the euro was at $1.2604 from $1.2797 late Monday, and the dollar was at ¥92.28 from ¥91.71, according to EBS. The euro was at ¥116.35 from ¥117.40. The U.K. pound was at $1.4260 from $1.4290, and the dollar was at 1.1676 Swiss francs from 1.1605 Swiss francs.

Moody's Investors Service Inc. published a report Tuesday warning that euro-zone banks with exposure to the Eastern European region may be downgraded, as these countries have now entered a "deep and long economic downturn, thus exposing West European banks' claims on East European institutions."

(iii) Overnight in the US, the news Warren Buffett reshuffled his portfolio. Trimmed some of defensive sectors ( Johnson and Johnson and P & G) to concentrate on fixed-income, mainly on preferred shares.

(Click here for the source)

The regional bank index ( KBW bank Index hit new low) signals they really think Geithner is very complacent and not addressing the bank toxic assets. The longer he plays the poker game, the market is going to think the problem is so big that it could not be solved. I was publishing the photos of happy faces just to poke fun - either they are really knowing what they are doing that they can sit back and relax or they are dead complacent. ( Ben seems to think he is done and off the hook, now it's Geithner turns)

Volatility is back, so be very careful on your bet sizing!