Reply #3: From Bloomberg (which usually has a pretty good handle on these things [View All]

[NJmaverick]

Jan. 22 (Bloomberg) -- Equities and commodities declined for a third day on concern President Barack Obama’s plan to rein in banks and a possible interest-rate increase in China will stifle the economic recovery. Oil and gold retreated more than 1 percent and Treasuries headed for a third weekly gain.

The Standard & Poor’s 500 Index lost 1.1 percent at 2:15 p.m. in New York, extending its slide over the past three days to 4 percent and wiping out its gain for 2010. In Europe, the Dow Jones Stoxx 600 Banks Index sank 1.9 percent to an almost six-month low. The MSCI Emerging Markets Index declined 1.8 percent, heading for the biggest weekly loss since October. The yield on the 10-year Treasury note added less than 0.01 percentage point to 3.6 percent, trimming its weekly drop.

Obama’s plan to stem proprietary trading and hedge-fund investments at banks spurred concern that a recovery in S&P 500 earnings from a record nine-quarter slump will be threatened. China will raise interest rates by the end of June and increase banks’ reserve requirements, according to the median forecasts of 17 economists surveyed by Bloomberg.

“This may be the beginning of a bit of a correction,” said Michael Strauss, who helps oversee $26 billion at Commonfund in Wilton, Connecticut. “There are still questions on yesterday’s announcement from Washington. Is this something that’s going to limit balance sheet expansion of banks to make loans? Also, China is taking some steps to slow down a robust economy. On the corporate side, we don’t have enough details to say that top-line numbers are significantly better.”

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http://www.bloomberg.com/apps/news?pid=20601103&sid=aHlnrw6kydK0