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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (18630)	9/13/2001 9:50:11 AM
From: Jerry Olson	Respond to of 52237

Right Gersh... there are major holes everywhere..people need to stand aside ASAP...

To: Gersh Avery who wrote (18630)	9/13/2001 11:18:38 AM
From: stockman_scott	Respond to of 52237

Guardians of Global Economy Calm Markets Thursday September 13, 9:59 am Eastern Time By Peter Nielsen LONDON (Reuters) - Guardians of the global economy stabilized shaky financial markets and shored up business and consumer confidence on Thursday to prevent worldwide recession from becoming a self-fulfilling prophecy. Although the European Central Bank kept its key interest rates unchanged, it pumped in fresh money to avoid a cash crunch in banking systems unsettled by Tuesday's terror attacks on the United States. In a statement the ECB signaled its readiness to act in concert with other major central banks to defuse any economic impact from the attacks by hijacked aircraft on landmarks in New York and Washington. Underlining their concern that European banks could face difficulties, the ECB and the Federal Reserve agreed to a swap arrangement, under which the ECB would be able to draw up to $50 billion, while the Federal Reserve Bank of New York will get an equivalent amount of deposits in euros. Markets remained broadly stable on Thursday with very thin trading volumes, calmed by injections of some $120 billion of cash by central banks so markets could continue to function. European stocks were slightly higher in an uncertain mood without a lead from Wall Street. U.S. Treasuries, trading for the first time since Tuesday, surged in anticipation of fresh Federal Reserve rate cuts to fend off recession. As the smoke clears from the rubble of the collapsed World Trade Center and the damaged Pentagon, it is becoming apparent that global economic growth will be affected due to the disruption of financial markets and the serious blow to the confidence of U.S. consumers. The only question is how much. So far the International Monetary Fund expects limited impact, but longer term it depends on the U.S. political and military response to the attacks. ``Our present assessment is that, despite the scale of the human tragedy, these terrible events will have only a limited impact on the international economy and global financial system,'' IMF Managing Director Horst Koehler said on Wednesday. The world economy was already facing its first serious downturn in a decade before Tuesday's suicide attacks on U.S. landmarks and economists fear a large-scale reaction by the U.S. could push it over the edge. ``The attacks come at a time when the outlook for both the global and U.S. economy was finely balanced between a (subdued) recovery, versus a deeper slowdown or even recession,'' investment bank Credit Suisse First Boston said. ATTACKS SEEN AS BLOW TO CONSUMER CONFIDENCE Before the attacks, the IMF had already revised downwards its global growth forecasts several times, most recently to 2.7 percent this year, down from almost five percent last year. The terror attacks are expected to deal a heavy blow to the confidence of U.S. consumers, who were looked to as a counterweight to the decline in corporate investment. ``The risks for the (US) economy must therefore now be seen as tilted toward the pessimistic scenario,'' CSFB added. While a limited reaction by the U.S. against terrorist groups would have little economic impact, all bets are off if the response is more widespread. ``In contrast, a conflict that directly involves another nation state -- particularly an oil producing nation -- would have much more serious ramifications,'' investment bank J.P. Morgan said, describing the attack as a significant but very temporary blow to the economy. RIPPLE STARTS TO HIT ASIA Asian companies were already starting to feel the ripple impact on Thursday, with delays ranging from stock market listings to billion dollar plane orders. The Asian Development Bank said recovery will be delayed. ``We were relatively confident of a turnaround in the first quarter of 2002 but the catastrophe will have a dramatic impact, delaying the global recovery by a couple of quarters,'' assistant chief economist Nagarajah Gnanathurai told a news conference. Japan's economy, the world's second largest, remains on the verge of recession with a member of the Bank of Japan board saying the economy continued to move backwards. Europe's economy is also showing feeble growth, with the euro zone economy growing by 0.1 percent in the second quarter of this year compared to the first quarter, for an annual rate of 1.7 percent, down from 2.4 percent in the first quarter. FIRST SIGNS OF FINANCIAL STRESS The closure of U.S. financial markets since Tuesday has cut trading volumes, some saying by up to two thirds. This has dried up trading in many other financial instruments, such as Asian bonds and credit derivatives, which use Treasuries to hedge interest rate exposures. The first warning of stress in the financial system came from Tokyo where traders encountered minor problems settling some dollar trades in New York, leaving banks to unexpectedly cover short positions because matching funds had not arrived. The foreign exchange settlement systems, which under normal circumstances handle volumes of some $3.0 trillion daily, are the backbone of the world financial system and any problems could quickly lead to total global gridlock. But the Bank of Japan said there were no notable problems and international payments' experts played down the impact, saying authorities had anticipated all sorts of problems stemming from disruption of trading systems at the Word Trade Center. AUTHORITIES COORDINATE RESPONSE Leading central banks and governments are coordinating their response to the financial effects of the terror attacks. The ECB said that while normal market conditions were expected to prevail in the period ahead, it would continue to monitor developments in financial markets and take action if necessary. ''The Eurosystem is coordinating its activity with the Federal Reserve System of the United States and other major central banks of the world,'' it added. The outlook for the annual meetings of the IMF and World Bank in Washington on September 29 and 30 were unclear with Germany saying they may not take place. ``At the moment one does not see oneself in the position to let the IMF meeting take place in Washington on the scheduled date,'' a spokesman for the German finance ministry said. The same applied for the G7 meeting, he said. G7 finance ministers and central bankers issued a statement on Wednesday saying they were ``committed to ensuring this tragedy will not be compounded by disruption to the global economy'' and they ``stand ready to take further action as necessary.'' Fed Chairman Alan Greenspan was back at his desk in Washington on Wednesday, having hitched a lift from Switzerland on a military flight, and markets were awash with talk that he would arrange an emergency cut, perhaps in the next few days. The Fed's next scheduled meeting is on October 2 but the bank is not shy of taking aggressive action and has already twice cut rates between meetings this year. (Additional reporting Wayne Cole)