Friday, October 3, 2008

Bail-Out Waiting Game

The Bail-Out Waiting Game continues. The equity markets want to rally, and the knee-jerk reaction just might be a short lived(1 week if we're lucky) rally. A major benefit of the 700 billion pkg is to inspire confidence in the capital markets.

Unfortunately, all I heard all week was the dire warnings from Pres. Bush, and the other "leaders", threatening economic chaos, doom, and no other plan behind the bail out. "this cannot fail...", "we must get this done..." does not inspire confidence.

Here goes the vote - on the 700 Billion dollar bill + 100 billion in additional "pork spending".
Knowing that the risk exposure is 50 - 100 Trillion, depending on who you ask. This bail-out Bill is - much to little and way to late, but it might buy this administration a couple months at best.

Thursday, October 2, 2008

Bush and the Bail-Out - Video

Economic Update

Stocks ended Wednesday with mild losses amid negative auto and manufacturing news after two volatile sessions. The Dow industrials ended 19 points lower, the Nasdaq Composite fell 12 points and the S&P 500 lost 3 points.

The Senate fairly easily approved a revised $700 billion U.S. plan to stabilize the financial industry, just two days after the House of Representatives rejected it. The House may now consider it on Friday, according to House Majority Leader Steny Hoyer.

The revamped Senate bill sticks to the core plan developed by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to have the government buy and hold toxic mortgage assets, freeing up funds for banks to begin lending again. It gives Paulson the $700 billion in phases, with $250 billion up front, then $100 billion pending presidential approval and another $350 billion pending congressional approval.

Meanwhile, the Securities and Exchange Commission said it would extend the short-sale ban to as long as Oct. 17 - or up to three business days after the passage of the bailout plan-- but won't make it permanent.

Jobless claims remained at their highest level in seven years, the Labor Department reported Thursday, as people in the hurricane-hit states of Louisiana and Texas filed for benefits. For the week ended Sept. 27, seasonally adjusted first-time claims for unemployment benefits rose 1,000, to 497,000 - the highest level since late September 2001

The European Central as expected held interest rates at 4.25%. Jean-Claude Trichet, president of the ECB, acknowledged a deteriorating European economy while still warning that inflation risks remained.

The euro touched a one-year low vs. the dollar. Crude oil futures fell $1.99 to $96.54 a barrel.
Excerpts from Steve Goldstein, MarketWatch. Oct 02/08

Monday, September 29, 2008

Global Chaos

As I write this the Dow is down 320 points, with gold UP $27.00. The FED is announcing yet
another massive USD liquidity injection. US Problems have clearly become Global.

With the historic volatility that the markets have been experiencing, FEAR is in the eyes of our leaders both in Washington and Wall Street. The Dow Jones Industrial average had notched triple-digit moves each day and for many, the question was becoming whether the U.S. government's bailout efforts, which caused an impressive rally on Thursday and Friday, would be enough to fight off a long-term move lower. The fact that the major indexes were trading below the long-term resistance of their respective 200-day moving averages suggested that there was a lot of work that needed to be done in order for the downtrend to reverse any time soon.

Voltatility continued this past week, as more changes were seen within financial institutions across the U.S. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) changed their charters to become commercial banks in an attempt to stabilize their capital positions. A huge purchase of equity in Goldman Sachs by Warren Buffet after this news helped push Goldman a bit higher. Washington Mutual (NYSE:WM), a large thrift bank in the U.S., was seized this past week and purchased from the Federal Deposit Insurance Corporation by J.P. Morgan Chase (NYSE:JPM). This just added to the fear that seems to be spreading to investors across the country about which bank will be next.

Charts (NYSE, Russell, Dow, Nasdaq) are all trading below the 50 & 200 DMAs, indicating more downside.

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