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Abigail with attitude: Will low mark 666 be revisited?

Markets are volatile but not in a good way. Professionals are losing money. Hedge funds are having a gruesome summer and investment banks are not faring much better. Last year, the big trade was to buy bank stocks: heavy hitters such as John Paulson, David Tepper and Paul Ruddock of Lansdowne Partners all rushed in. The rationale was that economies were improving, we were in a cycle of global growth and the banks would outperform. So far, this has been a truly terrible trade and there are blood, guts and vomit on the street. For the layman, like myself, this poor performance is odd since the overall S&P 500 index is flat on the year. And if you were feeling that this might be a case of the summer blues, I have news for you. There could be worse in store. A former colleague who is one of the best traders in the markets, and has an ability to see clearly when others are blind, is gloomy. Top Trader recently told me that he was 99% certain that 2012 would be a bad year for stocks and 65% certain that stocks would fall below the 2009 low of 666 on the S&P, before bottoming in the first quarter of 2013. That is a doomsday scenario that very few are prepared for. If it occurs, it would make 2008 look like a picnic because the central banks have already unleashed most of their ammunition. I am also worried because David Rosenberg, chief economist of Gluskin, Sheff, is on record as predicting that the US will revert to recession next year. Rosenberg was the only main North American economist to foresee the fall in the US housing market. I find it hard to believe – even in this era of ebullient emerging economies – that if the US is in recession global growth will blossom. 

Bankers deliver a sombre, sobering soliloquy  

Mid-level bankers begin to fume at top bosses’ pay 

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