Even emerging market orders are slipping now, despite the China build being aided by the Olympics. In the aggregate, specific regional orders are down by 30% to 60% vs. growth rates of six months ago.
Another Mess for Mother Merrill
Thirdly,
Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) disclosed that its so-called Level 3 assets rose by over 70%, to $82.4 billion. Not a mention in the "media."
Fannie Mae Lives in the Red
Fourthly,
Fannie Mae's (FNM Quote - Cramer on FNM - Stock Picks) lot is deteriorating, with losses four times larger than consensus and reported exposure to subprime and Alt-A of $51 billion and $344 billion, respectively. Meanwhile, the dividend is cut and the company plans to raise at least $6 billion of new capital.
Moody's downgraded the company's strength to "B," seeing nearly $10 billion of losses in 2008-09. And, by the way, the company sees the housing depression continuing into next year.
Don't Like What I See Ahead
All these things said, we appear to be back to an investment landscape that is characterized by chasing price, and, in the fullness of time, the cost to investors might be large. Bulls scoff at this negativity, as they are wont to do, expressing the view that the market is looking over the credit/economic valley.
I respectfully suggest that I, too, am looking over the valley, and I don't like what I see.
Doug Kass is the author of The Edge, a blog on RealMoney Silver that features real-time shorting opportunities on the market.
Doug Kass
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