It Looks Foreboding; U.S. Job Rates Weak; Global Stock Indeces Showing Structural Weakness

MWF (Wednesday) Briefing:

The Global Economy is looking not too healthy.  Increasing food commodity costs has gotten the IMF involved, complaining to the G-8 about the G-8. The IMF's greatest fear right now is that vulnerable countries are at a point where they cannot maintain stability.  This down cycle is shaping up to be one for the history books.  One good note: Leona Helmsley left a $5-$8 billion dollar estate for animal welfare.  It's going to the dogs.

• The most populous BRIC, China and India have dropped precipitously this year, down 53 and 36 percent, respectively, from their peaks last year.WSJ

• U.S. jobs will continue to see accelerated weakness in 2009. NYT

• "Mr. Strauss-Kahn takes a broad view of the International Monetary Fund’s mandate. Earlier today, he spoke at an event highlighting the effects of high food and fuel prices, a problem that has become a central part of his agenda. Some governments are at a “tipping point” beyond which they may not be able to feed their people and maintain economic stability, he said. Mr. Strauss-Kahn asserted that the fund can and should help poor countries to guarantee their food supplies, so that recent gains in economic growth are not lost in a spiral of civil unrest. You can see his remarks in this video (Windows Media only)."International Herald Tribune

• Leona Helmsley's dog, Trouble received death threats last year after inheriting $12 million, required $100,000 worth of security. The remainder of her estate, $5 to $8 billion worth of it, will help dogs by supporting animal-welfare charities. Economist

• In every cycle, there is a time to take risk and a time to protect capital. In this cycle, we are experiencing the grand-daddy of all down cycles, one which is clearly destined to occupy its own very tragic chapter in American History, as what is emerging now is far worse than a recession. The phrase ‘systemic collapse’ is rarely used in financial circles, but with housing collateral values in continued decline, there is an enormous financial margin call rippling through the system. Financial Sense

• Coal and mining companies have been some of the top performing stocks this year, but since the start of July (1 and a half trading days), many of these names have gotten hit with declines of 10% or more.  Massey Energy (MEE), which was the top performing S&P 500 stock at the end of the second quarter, is down 14.05% in July. James River Coal (JRCC), which was the top performing Russell 3,000 stock at the end of June, is down 13.43% in the last two days.  This big selloff in the top performing names indicates that money managers and other institutional investors were most likely holding onto these names for window dressing purposes through the end of the quarter, only to take profits in them at the first chance they had. Bespoke Investments