RBS Issues Global Crash Alert/FedEx misses

Good Morning to all

Its another red day on Wall St. as the recession deepens. There were some big headlines in the news today including a warning of a global stock market crash.

Some highlights:

"RBS issues global stock and credit crash

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

RBS warning: Be prepared for a 'nasty' period

I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.

"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.a slide on world bourses would amount to one of the worst bear markets over the last century."


Quick Take:

If thats not a headline then I don't know what is. All I can say is wow. When you start reading stuff like this its pretty scary. Some traders like to use such headlines as a way to call a bottom. Unfortunately, I do not think this is one of those times.

These warnings should have been out a long time ago. I have said all along that cash will be king in this market. Now is a time where you try to protect what assets you have versus looking for high returns.


FedEx Warns of a rough 2009

Here is the Scoop on the FedEx warning:

"FedEx has been unable to raise surcharges fast enough to keep pace with fuel costs that have almost doubled the past year, while a cooling U.S. economy is curbing sales of the company's more expensive shipping options. The results at FedEx, often considered a proxy for the U.S. economy, suggest fuel expenses and slowing demand will continue to erode growth prospects in industries ranging from shipping to airlines.

The coming year will be ``very difficult due to the weak U.S. economy and extremely high fuel prices,'' FedEx Chief Financial Officer Alan Graf said in a statement."

Final Take:

Always pay attention when FedEx warns. They are a great bell weather to use when you are looking for signs of a weakening economy. People stop shipping things when times get tough.

A global slowdown combined with high gas prices is a big one two punch for FedEx.


Bottom Line:

I see no signs that we are bottoming here folks. You can smell the fear on Wall St. I think the current dose of inflation is about to take this economy down.

Companies from all industries are raising prices right and left. Southwest is out warning of rising air fares. Something has to give when you try to do this to a consumer thats already on its knees.

I think our economy is going to buckle before inflation has a chance to recede due to decreased demand.

Play defense and ride out the storm. This one isn't close to being over yet.