When there seems to be a silver lining of recovery, Obama administration warned that some banks will need more government aid and bankruptcy may be the best option for General Motors Corp. and Chrysler LLC. That was more than enough to make you jittery.
The Obama administration demanded the resignation of GM Chief Executive Officer Rick Wagoner after deciding he was unable to craft a rescue . It commented that Chrysler will get $6 billion in aid only if it completes a partnership with Italian carmaker Fiat SpA within 30 days.
GM sank 10 percent to $3.24 in German trading.
“There is no magic fix for the economy,” said Stephen Docherty, Edinburgh-based head of global equities at Aberdeen Asset Management, which has $158 billion. “We have had a few days without any bad news so people started to get optimistic. Trying to call the bottom for the market is impossible. We are not going to get anything sustainable until we get a solution to the financial system.”
“There is a lot of skepticism and caution in the market where the recent rally is concerned,” said Andreas Nigg, who helps oversee about $39 billion at Vontobel Asset Management in Zurich. “GM and Chrysler are in my eyes bankrupt, that state just hasn’t been declared yet. In the short term that will put of lot of pressure on the market. For banks, nobody expects any good news from the first quarter.”
Investors should sell U.S. stocks after the S&P 500’s recent rally because earnings are likely to keep weakening, Morgan Stanley said.
(Extract from Bloomberg news)
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