Wednesday, October 22, 2008

Argentina Throws the Markets in the Crapper Today

So Japan was down 7% pre-market. Bottom line there is that the Japanese Yen, their currency, is SOARING vs. the EURO and U.S. $$$ so their exports and economy are going to get pinched in a big way. Either they sell for less profits overseas or increase prices. Their economy is PURELY export related. Their economy is NET savings (they loan their $$$ to the U.S. via gov't bonds), another reason why their currency is appreciating.

Then, as the day went on we get word that Argentina privatizes their pension funds for $30 billion. This is VERY interesting given that they are negotiating to re-structure their debt. Over 10,000 layoffs were announced today as well. Then the stock market started sliding and finished down 5% on the day.

Watch CBS Videos Online;_ylt=AjjrskeJsxVE0RGrFxe4LZCyBhIF

So here are a few other thoughts. Let me know re: your opinion.

1) Spain is a big trade partner/banker of Argentina, going back to colonial days. Their banks are in danger if Argentina defaults on $150 billion in debt. Seems like a reasonable thought/concern.
2) What is Citigroup's exposure?

3) I keep watching this video and think, the bank he won't mention by name is Citigroup. BAC is 10% international revenue, JPM about 25%-30% and Citigroup about 50%. If Citigroup goes belly up the counterparty risk WORLDWIDE would go through the roof and the entire world banking system could seize up......Yikes! I keep thinking....Citigroup, Citigroup, Citigroup..... Your thoughts?

Watch CBS Videos Online

I also need to publish this link re: someone mentions Citigroup and a few line items in their financial statements that were published earlier this year. Basically they had TONS of assets subject to being written down.

Dan Ross

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