Tuesday, March 03, 2009

A String of Falls and Records



As I sit and observe the ticker flicker across the screen, it dawns upon me that chart is eerily resembling the one that outlined the Great Crash of 1929-1932 (Exhibit 1) when the Dow plunged roughly 3500 points (87.5%) from a peak of 4000 to a trough of 500.

While the trough for the Super Duper Crash of 2008-2009 is still to be ascertained as the market is still trending downwards as I tap the keyboards, it is worth noting that within a span of 6 months (since September 2008) the Dow had fallen an amazing 4300 points (38%) (see exhibit 2) !! And if the time line is stretched to its peak of 14164 (see exhibit 3)then the drop is a whopping 50% within a 11/2 year period equivalent to the time frame when the market of 1929 attained half its value. In simple terms the market with its latest reading as at 27 February is back to its pre 1997 levels, a helluva of a collapse!!
In terms of segments of decline the 2007-2009 market fast exceeding the trend set in 1929-32 which had seven major segments while the former market has roughly 9 major segments already, (exhibit 3).

So what gives, the miniscule readership that has followed this blog would have noted that I had predicted this would be the worst economic crisis ever. Here: http://syamil-revert.blogspot.com/2008/10/as-i-blog-this-is-latest-on-crude-oil.html i had gazed into the crystalball and predicted some goodies for Malaysia (which is still in denial shit as the statement by the 2nd Finance minister attests) besides mentioning that the tempest would be due in December which was precisely what happened with the fall in quarterly growth and exports. More worryingly, other figures indicate that both private sector borrowing and especially personal borrowings (-ve territory) have trended downwards as exhibit 4 attests ( focus on bank lending) which does not augur well for consumption patterns in the months ahead:

KUALA LUMPUR, Feb 27 (Reuters) - Malaysia's broad money measure, M3, grew 9 percent in January from a year earlier, compared with 11.9 percent in December, the central bank said on Friday.
Total annual loans outstanding grew 11.7 percent in January from a year earlier, compared with 12.8 percent in December, Bank Negara said in a statement.
MALAYSIA MONETARY AGGREGATES: (Percentage change at end of period, year-on-year)
Jan 2009 Dec 2008 Nov 2008
M1 4.5 8.3 11.1
M2 10.7 13.4 14.4
M3 9.0 11.9 12.5
M1 - Money in circulation and cash on deposit in banks
M2 - M1 plus time, savings and foreigncurrency deposits
M3 - Broad money

Bank landing indicators (Annual growth in %)
Jan 2009 Dec 2008 (Overall loan applications)
-21.0 -18.8 Jan09 Dec 08
Business loan applications -21.1 -33.7
Household loan applications -20.8 3.2

And other indicators are none too optimistic either as exhibit 5 and table 2 indicates: (full details: http://www.statistics.gov.my/eng/index.php?option=com_content&view=article&id=342:malaysia-economic-indicators-leading-coincident-and-lagging-indices-december-2008-&catid=48:malaysias-economic-indicators-&Itemid=12

Exhibit 5

Malaysia Economic Indicators - Leading, Coincident And Lagging Indices December 2008
The Coincident Index (CI) dropped 1.6% from 121.1 points to 119.2 points in December 2008. All the components of CI posted decrease, mainly in real gross imports (-0.6%) and real sales in manufacturing sector (-0.4%). The six-month smoothed growth rate of CI in the current month slipped to -6.0% from -3.5% in November 2008.
The Leading Index (LI) which monitors the economic performance in advance, dropped by 0.2% in December 2008 and reached the level of 155.9 points from 156.2 points recorded in the previous month. The decline in the index were attributed by the ratio of price to unit labour cost (-0.9%), real total trade of eight major partners (-0.5%), number of new companies registered (-0.2%) and Bursa Malaysia industrial index (-0.1%). The six-month smoothed growth rate of LI depreciated to -2.9% in December 2008.
Current movements of the leading components showed that there is no clear indication for the Leading Index (LI) to grow consistently upward in the months ahead. Supported by continuous decline in the Coincident Index (CI), these provide signals that economy is likely moving towards an economic recession.

(The complete indicators on Leading, Coincident and Lagging Indices is shown in the following Table 2)

Revert: The dawn of Islam is Near and the kuffar are gonna pay big time unless they repent! Takbir!!

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