Betfair Official Blog

Bears hunted down as panic hits Wall St

Daily View - 17th March

So where the hell do we start? It is very difficult indeed to get anything positive out of the Bear Stearns implosion. For those who love to hear about banker woes, read on.

However, before you all start grinning with schadenfreude (whats the German for schadenfreude by the way,) this will all mean fewer jobs in the UK economy as a whole, plain and simple. From retail, advertising, building, financial etc, the cry will be, "make do with what you have and cut back where you can." No room for, "please sir, I need new budget approval for more staff." I have been asked many times over the past weeks and months about my expectations for market direction. It has been difficult (as readers of this comment will know) to be anything other than pessimistic even when we get bullish days.

Speculation will now focus on the other weak investment banks. Mere rumour was enough to do for BS as deposit holders rushed to extract their funds. Now we actually have a factual failure. Who is going to risk being a deposit holder in the next domino to fall? In this scenario we could see the destruction of several institutions over a very short period of time and the eventual rise of just a few 'super' entities.

The markets are likely to open significantly lower this morning with the FTSE called down another 100 points and the Dax already trading 150 lower than Friday's close. The Nikkei lost 450 points, the Hang Seng another 1000 and the Dollar has fallen to yet a new all-time low vs the Euro. Even worse for the UK, the Pound, which just recently had been holding its own against the greenback, has actually managed to fall vs the Dollar since Friday. We are also at a new all-time low vs the Euro at 0.7851-0.7853 (100 pips worse than Friday's record low close!) So if all this banking turmoil has left you in urgent need a of a break, there is more bad news given that holidays on the continent are starting to look a tad expensive!

As the fear over asset values continues to sweep across the world, Gold powers on unabated. It is trading $27 higher than Friday's close, an impressive move in anyone's language. Momentum in commodities is likely to accelerate again today on initial opens, and if the US allows the deterioration in the Dollar to continue unabated, we will see continued inflationary price pressure.