Saturday, October 18, 2008

Dow 4,000?

We think we will see 10-12% unemployment, a 4-5% decline in GDP, and the equity markets could drop at least 70% from peak to trough.

J. Kyle Bass of Hayman Advisors, 14 October 2008. (htp: "Dearieme")

This source reckons LIBOR is out of sight, not because of counterparty worries, but because banks simply haven't got the money to lend.

Less pessimistically - just - George Slezak (quoted on Jesse) thinks the Dow could possibly go as low as 6,000.


Anonymous said...

I was watching CNBC and Melissa Francis was commenting on DOW 4,000 possibly with a female trader by the name of Yamada on the 2-3 pm hour and she was commenting there is more bad news ahead, so Dow 4,000 is possible, but Jim Cramer has it at its lowest at between 5,312-5,321 due to all bad case scenarios with all 30 Dow components.

Sackerson said...

Thanks, Anon. I agree there may be countervailing factors - esp. the growing importance of institutional investment. Also there is the issue of nominal vs inflation-adjusted values - it may take quite some time (with bear market rallies on the way there) to reach the bottom. I understand that Jim Cramer's opinion is not universally respected, but I don't follow him so can't comment further.