Ratan, it is mixed, but I would think that another record decline in S. Korea would keep a lid on this market. S. Korea is in VERY bad shape. The new president said that he was exasperated when he was briefed on the condition of the country and couldn't believe it got in such bad shape in such a short period of time. This does not bode well for Asia. It seems the news gests worse every day.
Many fund managers are not actively managing the portfolios now becuase it is the end of the year. The assistants are watching while they take it easy for the holidays (this is what I'm told). This means trading around the world is lighter than normal, and the fluctuations could be greater because of the stocks being lightly traded. I hope to go short today on any significant rallies. I was disappointed that I missed shorting yesterday's ralley. I just keep missing good positions recently.
Right now the s&p is about 964.40b & 965.00a. If it weren't for all the retirement money/savings going into stocks, our market would probably be down at least 20%. I still think the small investor must be scared out of stocks before this market can really go down to the levels it should for any prolonged period of time. The fact that bonds are so strong (that is where the "smartest" big money is going) and, therefore, lowering interest rates, is also helping prop up the market, since lower interest rates make bonds relatively more attractive.
Germany is also up strong this morning (2%+). That is certainly giving mixed signals to our markets. Germany is rising on low volume.
Article on S. Korean problems:
<<Tuesday December 23, 5:42 am Eastern Time
FOCUS-Kim Dae-jung remarks fuel S.Korea crisis
(Updates with market closings, loan rollovers, analyst comment)
By Robin Bulman
SEOUL, Dec 23 (Reuters) - The crisis atmosphere in embattled South Korea worsened on Tuesday following comments by President-elect Kim Dae-jung that he was ''flabbergasted'' by the country's economic troubles.
Financial markets were unhinged by Kim's candid comments, quoted in Tuesday's edition of the leading Chosun Ilbo newspaper and later confirmed by a member of the political coalition backing Kim.
Stocks plunged a record 7.5 percent, while the won tumbled against the dollar and interest rates soared.
The central Bank of Korea and the Finance Ministry tried to reassure financial markets, especially the international investors who are crucial to South Korea's recovery, that the country was not facing sovereign default.
But investors whose nerves have been frayed by months of increasingly bad news were not easily calmed.
The heads of foreign banks operating in South Korea had an emergency meeting on Tuesday to decide whether they would roll over loans to the country's financial institutions, struggling with dollar shortages.
''We have received a positive response from headquarters (about the rollover),'' said one foreign banker, who declined to be identified.
The latest wave of jitters started with the Chosun Ilbo quoting Kim as telling his party members on Monday: ''We don't know whether we would go bankrupt tomorrow or the day after tomorrow. I can't sleep since I was briefed (about the financial situation). I am totally flabbergasted.''
''This is the bottom. It's a matter of one month, no, even one day. I just can't understand how the situation came to this. I can't help being angry,'' Kim said.
''The government did this to our country,'' Kim said. ''Our response to the crisis must be accurate and no single mistake must be allowed.''
He reiterated his commitment to implementing reforms mandated by the International Monetary Fund (IMF), which earlier this month arranged a record bail-out of South Korea's faltering economy totalling $57 billion.
Kim also said he had made a mistake when he suggested during the campaign he would seek to renegotiate the IMF's conditions for the rescue loans.
He won the presidency in a hard-fought election last week. It was the first time a South Korean opposition party had won a presidential contest.
Kim does not take office until February 25, but incumbent President Kim Young-sam has promised him a voice in national affairs until then.
Assistant central bank governor Lee Kang-nam tried to calm markets.
''Some news reports made the financial markets extremely unstable,'' Lee told Reuters. ''But given the current level of usable foreign currency reserves and expected money inflows from the World Bank and the Asian Development Bank, sovereign defaults will never happen.''
Lee said several Japanese banks had agreed on Monday to roll over loans to South Korean commercial banks, although it was unclear for how long the maturities had been extended.
Kim's National Congress for New Politics Party put out a statement quoting Finance Minister Lim Chang-yeul as saying that while South Korea was now ''troubled to repay short-term debts,'' it would be able to settle the debts.
But the markets focused on Kim Dae-jung's comments.
Stocks closed at 366.36 points, off 7.50 percent -- a record one-day plunge in percentage terms.
''His comments were frank and have made investors nervous,'' said Park Ki-pyong, a Hanyang Securities broker.
The won plunged to an historic low of 1,995.0 to the dollar, before recovering to close at 1,962.0, against Monday's close of 1,715.0 on Monday.
South Korea's currency has lost 57 percent of its value against the dollar this year.
A slew of ratings downgrades by Moody's Investors Service and Standard & Poor's (S&P) also dealt a blow to markets.
The downgrades lowered South Korea's foreign currency ratings to junk bond from low investment-grade status.
Interest rates on benchmark three-year corporate bonds with bank guarantees soared to a record 31.45 percent before falling back to close at 31.11 percent.
''These are volatile times and I don't think that volatility has begun to surface,'' said Keith Nam, branch manager at ABN AMRO Hoare Govett Asia. ''But I think in the early part of next year we will see those problems in earnest.
''It might be quite volatile both in the financial markets and in the fact that the Korean government has not established a viable welfare system for the unemployed,'' he said.
The militant Korea Confederation of Trade Unions threatened an ''all-out struggle'' if the government tried to make it easier for companies to lay off workers.
''We cannot accept the move to make workers a scapegoat while delaying reforms in chaebol conglomerates, which as the main culprit for the economic crisis,'' it said.
The group also criticised Kim Dae-jung for submitting to U.S. pressure and demanded the United States ''stop walking over South Koreans with an attitude of an occupying force.''
Kim said on Monday that layoffs were inevitable if that was the only way companies could survive.
In a possible sign of things to come, troubled Seoulbank said it would cut another 1,100 jobs on top of 750 already eliminated under a restructuring programme aimed at staving off liquidation.>>
Happy investing ! Short on strong rallies (8-10 pts if we get one again!). Shorting on strong rallies are almost a no-brainer. Even shorting now probably wouldn't be a bad idea, since I'm not sure this market will be able to come up with much better of a ralley than it already has this morning (up about 2pts).
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