The U.S. financial markets may have been closed due to the Martin Luther King Jr. Day observance, but stock markets around the world tumbled as worries over the U.S. economy took hold. Johan Stein, who manages about $14 billion at an asset management firm in Stockholm told Bloomberg, "It's the worst I've ever seen. The financial system is in terrible shape, and no one knows where this will end.''
Many investors are doubtful that President Bush's proposed growth package will help and many do believe a "recession is widespread". The NY Tmes also notes how some international economies which thought they were insulated from the U.S. woes are feeling otherwise, plus how some analysts are "beginning to make comparisons to Japan’s long stagnation of the 1990s."
Expect the stock market to decline a lot tomorrow. Morgan Stanley has been advising clients to "stay in cash"; according to Marketwatch, the firm said, "Our themes continue to be: patience, earnings recession, U.S. recession spreading global, bear market regime, don't be lured into value stocks as most are likely to be value traps, much more monetary easing. We expect flat but volatile markets just as in the 1989-92 period -- a real whipsaw environment for the market."
