Here we go again. Generalised bank panic (Citigroup, Deutsche), some fresh sovereign stress (Ireland, Greece) and then a set of DREADFUL retail sales figures in the US have combined to rupture New Year confidence.
And British stocks are getting it in the neck – the FTSE 100 down more than 6 per cent during mid-afternoon trade in London, while European stock markets were broadly 4 per cent lower and the Dow and S&P 500 lost 3.5 per cent apiece.
The problem for the UK, of course, is the asset size of banks like RBS (down 17 per cent) and Barclays (off 15 per cent). Oh, and also the heavy Footsie weightings of miners like Xstrata (losing 13.4 per cent) and Rio Tinto ( down 12 per cent).
As for the US retail sales, here’s a quick take from analysts at Goldman Sachs:
Initial thoughts on US retail sales :: Retail sales are an absolute disaster, ex autos -3.1%mom vs consensus -1.4%. We will most lilely have to rethink our 4Q GDP number, but more importantly the multiplier effect means we will also probably need to reassess our 1Q GDP forecasts too.
Q4 Control annualised change in goods other than vehicles, building materials and gas was previously -5.1% but now -8.2%… this puts significant downside risks to Q4 fcst currently -5%. These numbers do tend to get revised downwards too. The path on consumer spending is clearly in a steep downtrend and we should look for more downward revisions to consumer spending going fwd.