Markets
Posted at 9:16am on Mar. 18, 2008 Steady As She Goes
Markets looking ok this morning
By blackhedd
Markets are looking healthy and happy so far this morning.
Goldman Sachs and Lehman Brothers both announced earnings last night that were putrid, but not as bad as expected and both will rise sharply when the stock market opens. (Goldman should rise about 6%.)
The worry about Lehman is that they’ll be the next to get what Bear Stearns got. But I heard no rumors yesterday that anyone is pulling short-term funds out of Lehman or that anyone major is refusing to trade with them.
JP Morgan is going to open up another 4%. The market is confirming my interpretation that they stole Bear Stearns.
Asian and European stock markets all up. Oil, gold, and grains are all back up somewhat after yesterday’s plunge. The dollar is up against the yen (the Japanese are breathing easier since it didn’t break down below 95 yen) and flat against the euro.
We have a regular scheduled meeting of the Federal Reserve’s Open Market Committee today. I expect they will drop the Fed funds rate a full percentage point. That news will be out around 2:15pm EDT.
It’s too early to express the hope that the death of Bear Stearns was the climax of a really bad quarter and things will stabilize from here. But as long as you remain wary, I won’t blame you for hoping.
Let the debate begin as to whether the Federal Reserve did the right thing by extending to Wall Street firms the emergency liquidity facilities normally used by banks. To me, it's very clear that they did the right thing.
Steady as she goes.
-Francis Cianfrocca ("blackhedd")
Posted in Bear Stearns | Economy | federal reserve | Markets — Comments (28)/ Email this page » / Read More »
Posted at 2:23pm on Jan. 22, 2008 Financial Markets Take a Panicked Swoon [Updated]
By blackhedd
Financial-market participants returned from the holiday in a foul mood this morning. Following the lead of markets in Europe and Asia yesterday and overnight, US stock markets opened down about 5% this morning, the worst decline in at least five years.
The Federal Reserve announced a huge emergency cut in interest rates just before stocks opened this morning. The bond market has reacted semi-predictably, with the short end of the yield curve sharply lower. The 10-year note is slightly higher on the morning, with yield down to 3.53%.
The price of crude oil has plunged to below $88/barrel.
On balance, this appears to be a burst of panic-selling. The selling is broad-based. Early word on sentiment is that fears of a US recession have spooked investors around the world. The action in Chinese stocks has been terrifying. The Federal Reserve rate cut did not make the opening any easier, but it may settle down some nerves as things progress.
The following statement is NOT intended as a market prediction, but I expect stock markets to continue volatile and eventually stabilize as we make our way through the day.
Stay tuned for more analysis as the day progresses.
Update: At midday, market action is relatively calm. The US stock market has recovered much of its initial 465-point (4%) decline. Trading is choppy and volatile, but not disorderly.
Interest rates are up considerably at the short end and mildly in the middle (but all are still down for the day). Money is trickling slowly from bonds back into stocks.
One of the best-performing sectors today is financials, many of which are up several percent, after two weeks of continuous slaughter.
The word on the Street is that Ben Bernanke showed fear rather than confidence this morning. Not good.
Posted in Economy | federal reserve | Markets — Comments (50)/ Email this page » / Read More »
Posted at 9:49am on Jan. 18, 2008 What The Financial Markets Are Telling Us About the Economy
Should we Stimulate? "We're All Keynesians Again."
By blackhedd
The question on all lips in this week's edition of the political fights is: should the Federal government apply a Keynesian stimulus to the US economy, in order to forestall a recession?
You've read no end of answers this week here on RedState and other places. I'm even guilty of stirring the pot myself. I happen not to believe that the kinds of packages being discussed ("fast-acting, targeted at the hardest-hit") will necessarily do anything to improve conditions in the near term, and certainly not in the long term.
But what are the financial markets telling us about the outlook this gloomy Friday morning here in New York? They're telling us they're scared.
Read on...
Posted in Crude Oil | Economy | Markets | Stimulus — Comments (77)/ Email this page » / Read More »
