Wall Street was poised for a lower open on Tuesday as investors fretted over grim earnings and the health of the banking sector, highlighting difficulties facing U.S. President-elect Barack Obama.

Optimism over a plan by Obama, who will be sworn in later on Tuesday, to push for a fresh stimulus package to stave off a worsening economy could help cushion the market.

But the banking sector could weigh heavily, taking a cue from global markets after Britain’s Royal Bank of Scotland on Monday posted the biggest loss in U.K. corporate history, even as Britain launched a second bank rescue plan.

Banks have been at the epicenter of the credit crunch and resulting economic slowdown that has spread around the world. Among laggards before the bell were Citigroup , which was down 4.9 percent at $3.33, while Bank of America lost 10.9 percent to $6.40.

“As excited as we are about the change in (the U.S.) administration and the history that we’re making in this country and what fiscal stimulus might look like, we’re also, unfortunately, realistically taking a good hard look at the earnings power of corporate America,” said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.

“If last week was any early indication, it won’t be a very attractive earnings reporting season.”

S&P 500 futures fell 13.40 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were down 93 points, and Nasdaq 100 futures lost 9.50 points.

Shares of State Street Corp dove 35.2 percent to $23.56 before the opening bell after the financial services company posted rising unrealized losses in its commercial paper program and investment portfolio, as well as lower fourth quarter profit.

Dow component Johnson & Johnson fell 2 percent to $56.30 after the company posted a rise in fourth-quarter profit even though its sales fell nearly 5 percent.

Energy companies could also come under pressure as the price of oil slid below $34 a barrel after a deal between Russia and Ukraine cleared the way for the resumption of gas supplies to Europe. Shares of Exxon Mobil were down 2.7 percent at $76 in pre-market trading, while Chevron fell 1 percent to $71.02.

In the auto sector, Italy’s Fiat took a 35 percent stake in Chrysler as part of a venture designed to secure the U.S. automaker’s future. The fate of the ailing sector has weighed on Wall Street, as a failure of one or more of the Big Three Detroit car makers would likely have repercussions throughout the economy.

Shares of Intel could weigh on the Nasdaq after a report that the world’s largest chip maker has cut the price of some processors by as much as 48 percent. Intel was off 1.2 percent to $13.57.

NEW YORK, Jan 20 (Reuters)

Gross domestic product (GDP) in the 15-nation Eurozone probably contracted by 0.1% in the third quarter after shrinking 0.2% in the second, the European Commission said. The executive branch of the European Union also lowered its 2008 forecast 1.2% as the economy contracts another 0.1% in the fourth quarter.

For all 27 EU countries, the commission expects the economy to expand 0.2% next year.

“The economic horizon has now significantly darkened as the European Union economy is hit by the financial crisis that deepened during the autumn and is taking a toll on business and consumers,” EU Economic Affairs Commissioner Joaquin Almunia said in a statement. “In 2009, the EU economy is expected to grind to a standstill.”

The EC predicted economic growth in the region will be a paltry 0.1% in 2009.  However, many analysts – including those with BNP Paribas SA (OTC: BNPQY), Citigroup Inc. (C) and Royal Bank of Scotland PLC (RBS) – believe even that figure is generous.

“A recession in 2009 seems now unavoidable,” Jacques Cailloux, chief Eurozone economist at Royal Bank of Scotland, told Bloomberg. “Today’s new GDP forecast of 0.1% for 2009 by the European Commission still looks too optimistic to us.”

The Eurozone Purchasing Managers’ Index – a measure of manufacturing output, new orders and volume of new export orders – fell for the fifth consecutive month in October, hitting a record low 41.1. A reading below 50 for the index represents contraction.

Unemployment in the Eurozone remained stagnant at 7.5% in September, but the EC expects the jobless rate to soar as high as 8.4% in 2009.

It’s likely that Germany, France and Italy have already entered into a recession, as their second-quarter GDP fell 0.5%, 0.3% and 0.3%, respectively.

The EU acknowledged that its forecasts for the Eurozone, as well as the economy of the 27-member European Union, could worsen if the credit crunch continues unabated.

Even slightly higher borrowing costs could significantly restrict the amount of credit available to households and “trigger an outright recession, a decline of 1% of GDP in the euro area,” the EC said.

The only silver lining is what the EU predicts will be a marked cooling of inflationary pressures. Slackening demand has driven down the prices of commodities across the board, dampening inflation, at least for the short term.

The EC said yesterday that inflation would ease from 3.5% this year to 2.2% in 2009. With inflation on the decline the European Central Bank has the opportunity to cut interest rates to promote growth, which it is expected to do Thursday.

Analysts say the ECB, which raised rates in July, could cut its benchmark interest rate by a half a point Thursday. Should the economic downturn persist into next year, the central bank could cut the current 3.75% rate to 2.5% by April.

That would make for the fastest round of rate cuts in the central bank’s 10-year history. It would also mark a deviation from the ECB’s original mandate.

A New Role for the ECB

The ECB’s primary objective is “to maintain price stability,” and after that to “support the general economic policies of the Community.” However, as the global financial crisis has deepened, the role of the European Central Bank has expanded well beyond this initial mandate.

Like the Fed, the ECB has taken the opportunity presented by the financial crisis to broaden its role.

Last month, the ECB offered a $6.4 billion loan to Hungary and Hungarian Prime Minister Ferenc Gyurcsany said he’s lobbying policymakers to allow the ECB to provide liquidity outside the euro area.

The ECB has increased lending to Eurozone banks to more than $1 trillion.

The central bank also set up currency swaps with Denmark and Switzerland. The ECB gave Denmark access to about $15 billion (12 billion euros) in an effort to “improve liquidity in euro short-term markets.”

All of these measures lie outside of the ECB’s stated objectives.

“The ECB is at times playing the role of lender of last resort for the whole European financial system,” Guillaume Menuet, a senior European economist at Merrill Lynch & Co. (MER), told Bloomberg. “Its mandate is being implicitly expanded.”

While ECB President Jean-Claude Trichet clearly holds sway over the 15 nations that use the euro, no other institution or authority exists to offer financial assistance to the outlying members of the European Union.

However, given the steps taken by the ECB to assist countries such as Hungary, Trichet could soon find himself with authority and influence over a much larger territory. And perhaps a new mission.

“My dream is that the ECB gets a financial stability mandate, which is not the case so far,” Natacha Valla, a former ECB economist at Goldman Sachs Group Inc. (GS), told Bloomberg. “The ECB really has demonstrated it can fulfill such a mandate.”

Source: Likely EU Recession Paves the Way for Greater ECB Influence

RBS analysts have warned clients to brace for a full-blown crash in the global stock-and-bond markets over the next three months as the conflicting realities of slowing growth and rising inflation paralyze the world’s major central banks – causing “all the chickens [to] come home to roost,” Great Britain’s Daily Telegraph newspaper reported.

The report, which first surfaced late Wednesday, raced across the Internet yesterday (Thursday), though it appears that European news organizations are giving it much wider play than their U.S. counterparts.

The predicted swoon would cause the U.S. Standard & Poor’s 500 Index – already down 15% from its trading high of 1,576.09 reached Oct. 11 – to nosedive all the way down to 1,050 by September. For the closely watched, broad-based U.S. stock index, that would represent an additional decline of 22% from yesterday’s close of 1,342.83 – and a total decline of 33% from its Oct. 11 apex.

This is the worst forecast of any investment bank survey followed by Bloomberg News.

“The Europeans, in general, tend to have much-more conservative banking systems and financial vehicles than we have here in the United States,” said Keith Fitz-Gerald, investment director for Money Morning. “They’ve been through centuries of economic and financial conflict. For that reason, they are much more pre-conditioned and predisposed to listen to major warnings like this one.”

The sell-off that RBS expects to deepen started last fall after the U.S. subprime-mortgage crisis turned into a full-blown credit debacle even as it took on a worldwide reach. Banks and brokerages have written off roughly $400 billion in assets. But that torrent of write-downs may get even worse: At a conference in Monaco yesterday, New York hedge fund manager John Paulson estimated that this amount will triple to $1.3 trillion – a reality that will clearly exacerbate the decline of the financial markets worldwide, Bloomberg reported.

The predicted “contagion” will spread across Europe and will afflict the emerging markets, including the fast-growing economies in Asia, the RBS research team wrote to clients in a June 11 report. RBS is Britain’s second-largest bank.

A sell-off of that breadth and magnitude would represent one of the worst bear markets the world has seen over the last century, and would clearly have implications reaching beyond stock-and-bond prices.

“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, 42, a U.K-based credit strategist for RBS.

In the credit markets, high-grade corporate bonds would see their trading values soar, while their lower-grade counterparts would see their own values plunge, thanks to a “renewed bout of panic on the [global] debt markets,” the Daily Telegraph reported, citing key excerpts of the internal RBS report.

Addressing the fallout that RBS expects to see in the bond markets, Janjuah wrote to clients that he couldn’t “be much blunter. If you have to be in credit, focus on quality, short durations [and] non-cyclical defensive names.”

The credit analyst – who became an industry star after his grim warnings about the current global credit crisis played out as he predicted – also counseled clients that “cash is the key safe haven. This is about not losing your money, and not losing your job.”

RBS expects the U.S. stock market to rally into the early part of July, thanks chiefly to the boosts provided by the aggressive rate-cutting campaign that the U.S. Federal Reserve launched last September and from the tax-rebate checks that were initiated by the Bush Administration’s economic-stimulus plan. Those benefits will soon sputter and the real damage from soaring food-and-energy prices will finally become apparent.

Unfortunately, the world’s leading central banks may not be in the position to help out this time around. In fact, both the Fed and the European Central Bank (ECB) face a so-called “Hobson’s choice” as workers start losing their jobs en masse and lenders continue to cut off credit, the Daily Telegraph said.

Usually, the central banks would just cut interest rates or employ some other form of monetary stimulus to help their economies regain positive momentum. That’s not an option this time around: The soaring food-and-energy prices are already pushing inflationary pressures to levels that will destabilize stock-and-bond markets.

The bottom line is that the U.S. economy could end up with stagflation, the rare but hard-to-eradicate one-two punch of high unemployment and high inflation.

“The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation,” Janjuah said. “The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets.”

And Europe won’t dodge the bullet, RBS debt-markets chief Kit Jukes said.

“Economic weakness is spreading and the latest data on consumer demand and confidence are dire,” Jukes told the newspaper. “The ECB is hell-bent on raising rates. The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB.”

”What is being discussed here is absolutely within the realm of possibility and is a possibility that we’ve been discussing here in Money Morning for quite some time, now,” Fitz-Gerald, the Money Morning investment director, said in the interview yesterday. “And we’ve never wavered in that conviction. In situations like this one, the best offense is a good defense, which consists of an appropriately structured and diversified portfolio of holdings that emphasize stability and balance, and current income derived from global markets. That kind of portfolio may well weather this kind of storm much better than a U.S.-based portfolio in isolation.

“This report – and others like it – may be extremely unsettling to individual investors. But the historical record is unequivocally clear that the best profit opportunities come when everyone thinks the skies are darkest. Savvy investors at this point in time can take steps to help them avoid this even if the rest of the world sinks into an economic cataclysm.”

Source: Financial Fears Sweep the Globe After RBS Predicts Worldwide Stock Market Crash

U-turns on rights issues, never-ending writedowns – there’s been plenty of badly handled mishaps to choose from.

But even by the low standards of the banking sector, Bradford & Bingley (LON:BB) has been particularly hapless. In fact, its latest bombshell managed to wipe £2.8bn off the value of the UK’s six biggest banks, even though B&B itself only started the day with a market cap of barely half a million.

So how did such a small bank cause such a big reaction?

The reasons behind Bradford & Bingley’s shocking share price slump

Bradford & Bingley has had a dreadful few months. In the middle of April, rumours arose that the bank was on the verge of launching a rights issue. At the time, B&B denied it strongly. However, within a few days, Royal Bank of Scotland had announced its plans for a rights issue, which was closely followed by HBoS.

With the floodgates open, B&B apparently changed its mind in mid-May, saying it would be raising £300m from shareholders, with new shares placed at 82p a pop, way below the share price at the time.

At the time there was no suggestion of a profit warning, but with the housing market deteriorating, and management under a cloud because of the U-turn, investors were clearly worried. B&B’s share price slumped as investors fretted over the state of the bank’s finances, until on Friday, B&B was trading at just 88.5p a share.

Then, on Sunday, chief executive Steve Crawshaw, whose position was probably already untenable, resigned due to health problems. Then yesterday, the bank finally issued the much-expected profits warning.

And what a warning it was. The group plunged into an £8m loss in the four months to April, compared to a £108m profit for the same period in 2007. Profit margins have dived as funding costs grew, while bad debts have rocketed – more on that in a moment. The group also wrote down a further £89m in sub-prime related assets.

The good news – what little there was – was that US private equity group TPG has picked up a 23% stake in the bank for £179m. But even so, the rights issue had to be entirely revised. Under the original deal, if the share price had fallen below 82p, there would have been no incentive for anyone to buy into the stock and the underwriters (UBS and Citi, the investment banks who undersigned the deal) would likely have been left on the hook for the whole £300m.

Obviously, this wasn’t something either UBS or Citi would have appreciated. Reports in the papers suggest that they might even have found reason to pull out if necessary. So the deal has been changed. Shareholders will now be offered 19 shares for every 25 owned, at the price of 55p a share. Rather than raising £300m, B&B aims to raise £258m.

But why did the other bank shares fall?

The chaos and the grim news on profits sent B&B’s shares diving 24% to 67p, and it’s certainly a messy situation. But why did other banks take such fright? For example, HBoS sank 10%, while Alliance & Leicester fell 5.2%.

Well, the main worries for other banks were in B&B’s trading update. The group – which is Britain’s biggest buy-to-let mortgage lender – saw bad debts on its buy-to-let mortgages jump by a staggering 50% between the start of the year and the end of April. More than 3,000 of B&B’s buy-to-let customers are now at least three months behind in their mortgage payments, from less than 2,000 at the start of 2008. Buy-to-let accounts for nearly 60% of the bank’s mortgage book.

Things will only get worse, said the bank. “The tougher economic environment will continue to push arrears beyond the current level.” As Sandy Chen at Panmure Gordon put it: “This is not the bottom. The UK housing market – not just buy-to-let – is turning south.”

And although the bank has been raising its mortgage costs, it’s not seeing the benefit feed through to its profits, because it can’t write enough of the new mortgages. As Derek Chambers of Standard & Poor’s tells The Telegraph: “I think the hope had been at Bradford & Bingley, probably at HBoS as well, that as they re-priced new mortgages they’d be able to pass on these costs.” But in fact, they are “stuck with more mortgages at low rates which are probably low margin or even negative margin, and they’re not able to free up capital to lend at the new higher rates.”

The trouble is, this is just the beginning of the housing market upheaval. The Bank of England reported yesterday that in April mortgage approvals hit their lowest level since the Bank started recording the data in 1993. Capital Economics reckons the data suggest we could be looking at “house price falls that are well into double digits by the end of the year”.

So all of the banks can expect their bad debts to rise from here on in, for quite some time. Any shareholders in B&B, RBS, or HBoS pondering whether to buy into their rights issues needs to forget their current shareholding and ask themselves: “Given the choice of all the stocks in the stock market, would I put my money in a bank right now?”

And for anyone with anything less than the strongest risk appetite, then in the current economic climate, the answer has to be no.

Source: Why the Buy-to-Let Carnage is Just Beginning

UK consumer confidence has now plunged to its lowest point since Margaret Thatcher was ousted from office, according to GfK this morning. And the CBI Distributive trades survey reports that retailing is suffering a severe squeeze.

Bank shares are plumbing new depths, with the Royal Bank of Scotland yesterday falling to its lowest level in eight years and Bradford & Bingley hitting an all-time nadir.

But at least some people in Britain still have big smiles on their faces. Tucked away in the Bank Holiday news last weekend was yet another City bonus bombshell… with the startling story that a staggering £13.2bn has already been forked out in 2008 in Square Mile bonuses.

Despite the real world pain, this year’s total is a mere 1% down on the same stage twelve months ago, when bonuses of some £13.3bn were paid out.

Indeed, bankers and financial traders were handed £12.6bn bonuses in the first three months of this year alone, according to figures from the Office for National Statistics, smashing last year’s record for the same period by more than £500m. To put this into context, for 2006’s first quarter, £9.7bn was shelled out.

Among those celebrating most will be hedge fund managers at Goldman Sachs, where dozens of traders trousered £5m each, with one lucky chap collecting over £10m, said the Telegraph.

But obviously, the big difference between this time and previous years is that stacks of flak have been flying around the financial markets recently, with many of the major players being badly burned by their dodgy debt deals.

Several of our biggest banks have had to scurry round, cap in hand, to the Bank of England to swap some of their so-called securities for top-notch Government bonds simply to keep their balance sheets in order.

And, though you won’t need much reminding, there was the hardly-minor matter of Northern Wreck, which overextended itself so far that the only people who could be forced to bail it out were poor old British taxpayers. Not that they had any say in their cash being used.

But still the bankers have had their bunce, though several commentators reckon that the City’s bonus culture is a key credit-crunch culprit. CBI director general Richard Lambert believes the system “encourages some employees to take spectacular short-term risks, confident that if things work out well they will reap huge rewards, and that if they don’t they won’t be around to pay the price”, while George Soros says “there’s a real problem with incentives for the banking and the hedge fund community.”

To be fair, Bank of England governor Mervyn King has been on the case. He recently told a Treasury select committee that “banks have come to realise they’re paying the price for having designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks.”

But what about their customers? It seems they don’t have a lot of clout right now, either. It’s pretty galling watching your bank paying its hotshots multi-million pound bonuses while at the same time telling you that the cost of your fixed-rate home loan has gone up again, or that your house is being repossessed as you can’t afford the repayments, because the money markets have now got the jitters due to all those sub-prime losses.

Like when Barclays hands Bob Diamond a £35m payout, despite his bank writing off £2.2bn in bad debts. Maybe the bankers will attempt to justify the huge payouts by reminding us that they enjoyed a fairly good start to 2007 before the credit crunch began to bite. Though ironically, the overall bonus totals are so high that they almost completely cover the £15bn deficits recently suffered by British banks.

Trade unionists are already up in arms. GMB general secretary Paul Kenny has called for the government to stand up against the financial services industry: “There can no longer be any doubt that the multimillionaire elite who run the City and the financial sector are out of control and divorced from economic realities.” The GMB wants an urgent enquiry to see if that taxpayer-funded bank bailout is being used to fund bonuses.

That’s a fairly predicable reaction, and unlikely to carry too much weight. But as consumers and home-loan borrowers come ever more under the cosh from the credit crunch, those bonuses are likely to spark increasing anger.

Yet while much of the fury is fully understandable, the whole bonus issue may well prove to be self-correcting, in the way that markets normally resolve excesses if they’re allowed to. If central banks can manage to stay away from the money-printing press, whose overuse pumped up the credit bubble in the first place, there’ll be much less money made by the traders in 2008.

So the chances are that bankers’ belt-tightening will begin in earnest later this year. The next bonus round will start in December and run into 2009. One leading think-tank, the Centre for Economics and Business Research, recently forecast that the next set of City bonuses would be down by as much as 40%. And by that stage, the way the economy is going now, we’ll probably find we all have plenty of other things to get stirred up about.

Source: Credit Crunch? Not when it comes to City Bonuses

Because unfortunately for George the elder, he did end up raising taxes. And even voters – who are a forgiving and undemanding bunch a lot of the time, given the way that politicians generally mess them about – wouldn’t stand for such a blatant U-turn, especially when it meant money coming directly out of their pockets.

None of the UK’s banking chief executives have actually said: “read my lips – no big rights issues” in so many words. But after merrily hiking dividends and generally strutting around like the credit crunch was water off a duck’s back, they might as well have.

Yet now – according to press reports – it seems that the Royal Bank of Scotland is about to go to shareholders, cap in hand. Shareholders – like voters – are also a pretty passive bunch a lot of the time.

But they might be demanding some heads on plates in return for their cash on this occasion…

RBS close to launching a rights issue

Royal Bank of Scotland (RBS) is apparently set to raise between £5bn and £12bn in a rights issue. The bank hasn’t commented yet, but we’ll be getting the full details next week at the interim trading statement.

Before anyone starts worrying about their savings, remember that as Justin Urqhart Stewart tells the BBC, “this is not a customer issue, it’s a shareholder issue”.

Basically, the bank needs to raise more money to give itself a bit of breathing room. RBS is one of the most ‘thinly capitalised major lenders’ in Europe, as Richard Fletcher puts it in The Telegraph. It has an equity tier one ratio of just 4.25% (the UK average is 5.5%, and it shouldn’t drop below 4%). Banks need to keep a “certain cushion of cash relative to the amount of risk on their balance sheet”, as Alex Potter of Collins Stewart explains to the BBC. The reason that RBS’s is so small, is mainly down to its takeover of Dutch group ABN Amro last year – a fight which Barclays must be thanking its lucky stars it lost.

The timing is perhaps the most interesting thing. Reports of the capital raising comes after Gordon Brown’s big meeting with the banks earlier this week. The Government is trying to get the mortgage markets moving again – voters don’t like falling house prices, after all – and it seems that in return for pumping more money into the markets, it expects banks to start clearing the air around their opaque balance sheets.

Other banks are likely to follow suit

RBS is extremely unlikely to be the last bank to have to raise further capital. The Telegraph quotes one ‘senior banker’ as saying: “Almost every British bank is going to be thinking about a rights issue at the moment and the next three to four weeks will be crucial.” The good news for the other banks is that once RBS has blazed the trail and taken the initial wave of criticism, the way will be open for them to follow suit.

The reality is that up until now, banks have been scared to admit to any problems – and they may have had a point. The massive slump in HBoS’s share price last month on the flimsiest of rumours showed just how ready investors were to panic.

If one of the smaller, more widely-scrutinised former building societies had been the first to announce a rights issue, there may well have been a much more dramatic reaction – people are still primed for another Northern Rock going off.

But the meeting with Brown has given them an excuse. And RBS is also a much more stable bank in the public perception – the chances of people misinterpreting headlines about fund raisings and forming a queue outside their nearest branch of RBS are pretty low.

Is this the beginning of the end of the credit crunch?

And indeed, the stock market this morning has actually sent RBS’s shares higher. Normally you’d expect them to fall – after all, a rights issue means more shares, which means existing shareholders are diluted. But clearly investors hope that this is the beginning of the end of the credit crunch – now that RBS has broken the ice, banks will start to bite the bullet, and things might start to improve.

It’s a nice thought. But even if this marks the beginning of a clear-out, there’s a long way to go. The US banks started this process a while ago, and they’re still coming up with regular writedowns. Yesterday Merrill Lynch said it was open to raising more funds, after writing down another $9.7bn in its first quarter, even though it said it didn’t need more money just a fortnight ago.

And along with the writedowns, chief executive John Thain warned that he was “concerned about the risk of the market problems seeping into the real economy.” Where’s he been for the past year, I wonder? The ‘real economy’ in the US is now almost certainly in recession.

And it’s only going to get worse, both there and over here. As the writedowns keep rising, so do the job losses. The Telegraph reports that London is likely to see more than 3,500 City job losses announced today. “Recruitment experts said the scale of the job losses was the worst since the dark days of the 1991 recession.”

Source:http://www.moneyweek.com/file/45614/are-uk-banks-starting-to-face-up-to-the-credit-crunch.html

Swiss bank UBS makes front-page news on The Wall Street Journal for its thumping quarterly loss of more than $12 billion on write-downs of $19 billion. The losses have claimed chairman Marc Ospel.

– USA 2008: The Great Depression

Brit newspaper The Independent leads with “dismal projections” that in the fiscal year starting in October, 28 million people in the US will rely on government food stamps to survive, the highest level since the food assistance programme was introduced in the 1960s.

– Paulson plan will be DOA

Paulson plan will be “dead on arrival”, according to The New York Times, as “lawmakers and lobbyists from an array of industries” oppose to the plan to create a new financial regulatory system in the US.

– London stocks lift despite UBS writedowns

Shares in UBS and British banks Barclays, Royal Bank of Scotland and Alliance & Leicester rise in London, despite heavy writedowns for the Swiss banking giant.

– Worst month for hedge funds since LTCM collapse

Figures from Chicago-based Hedge Fund Research show that the average fund tracked by its HFRX index was down 2.4% in March, its worst month since the collapse of Long Term Capital Management in 1998.

– Gas prices at record high

High crude oil prices are being passed on to US consumers. From Rueters: “The U.S. retail price for gasoline set a new high of $3.29 a gallon after rising 3.1 cents over the last week, the federal Energy Information Administration said on Monday.”

– Oil slides, dollar climbs

Oil is back at $101 a barrel as the euro fell to a six-day low against the greenback.

– Gold falls for fourth day

The yellow metal fell for the fourth consecutive day to $896.75 a troy ounce.