You knew it was not going to be a good day when the morning's newspapers called it Blue Monday . The most depressing day of the year when Christmas debts catch up with you, your job and relationship looks intolerable and you have given up on all your New Year resolutions.
But it turned out much worse than that!
On the Stock Markets it turned out to be the worse day since 11th Sept 2001. The FTSE100 ended down 5.5% at 5578. The US markets were closed today but everyone is forecasting a significant fall there later today. Indeed, last week, I learned that a 'Bear Market' could be declared officially when it had fallen 20% or more from a previous high. NASDAQ was 2839 in early November 2007 and closed Friday on 2340. When it hits 2288 - which it surely will today - tech will be officially a Bear.
Indeed the UK SITS market - as measured by the FTSE SCS Index - did go into Bear territory on Monday; falling another 4.8% to 486. That's down 10.8% in 2008 so far and down 23% from the High of 628 hit on 2nd Nov 07. We should remember that these highs were less than 3 months ago! The fall in the first few trading days of 2008 so far has been steep and painful - apparently the worst start to any trading year "since records began".
I reproduce below an update of the share indices that I follow (the first time I've done this for a Monday!) You can see that actually the support services, hardware and media sectors in the UK have been even harder hit. Technology in Europe is now down 18% YTD.
What now?
Back just two weeks ago in my 2008 Outlook Statement I forecast a 15% decline in H1 from end 2007 levels before we started to experience a rally in H2. It now looks as if I was too optimistic. Today I'd revise that to 25%. I still believe we will have a rally in H2. But I now doubt we will get back to where we started 2008.
Footnote - One of my only criticisms of my customers and readers over the years is that most seem to label me falsely as a gloom -merchant. The reality is that the outlook is ALWAYS worse than I originally predict! My 'problem' is that I am often the first to give the warnings. Customers/readers, of course, hope that I am wrong - which is why they always accuse me, at the time, of being too gloomy. My 'criticism' is that few seem to remember their original comments later when faced with the reality!
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