So Much For Santa
A confluence of bad news combined to drive down stocks today.
First, and most important, was the assasination of Pakistani opposition leader Benazir Bhutto (subscription required). This reminds everybody of the high level of geopolitical risk in our globalized economy. (If you haven’t already, check out Barron’s cover story profiling English historian Niall Ferguson’s views on geopolitical risk, “Wake Up Call” (subscription required), Monday March 12, 2007).
If that wasn’t enough, there were three other negative economic reports:
- Durable goods order for November came in weaker than expected
- Oil stocks decreased more than expected, putting additional upward pressure on oil prices (subscription required)
- Goldman Sachs analyst William Tanona increased his estimates for mortgage securities related writedowns at Citi, Merrill and JP Morgan to $18.7 billion, $11.5 billion and $3.4 billion from $11 billlion, $6 billion and $1.7 billion, noting that new CEOs at Citi and Merrill would want to mark everything down as much as possible to create a starting point for moving forward (subscription required)
This all added up to a bad day for stocks – though volume was light.