Home The Big Picture Daily Blog About Us Free Trial Subscribe F.A.Q.
Premium Content: $ Current Portfolio $ New Trades $ Trade Updates $ Watch List
Daily Blog -02/09/09- 2:09 P.M.

World Waits For Stimulus

The U.S. markets churned sideways on both sides of zero as the world waits for news on the U.S. stimulus package. This past weekend brought news that a compromise had been reached on Friday night but by Sunday the Obama administration doubted it would have enough votes to pass the stimulus package. Treasury Secretary Tim Geitner was due to unveil the Obama plan on the financial system and how the government was going to address the credit crisis and toxic assets. Geitner's speech has been postponed until 11:00 a.m. Tuesday so that Obama might have more time to drum up more votes by lawmakers.

The Senate is due to report on their version of the bill this afternoon and Obama is trying to get the 60 votes necessary to pass it. Meanwhile the global markets were looking to the U.S. and waiting on the Geitner speech and the stimulus package. Both Chinese markets were up today but Japan's NIKKEI was down about 1.3%. All of the European markets closed higher but gains were mild with the major markets clocking in at a 0.4% gain.

London-based Barclays was grabbing the spotlight with the stock up sharply (+10%) following the company's earnings report. Barclays announced that profits were only down 1% and this seemed to lift some of the European financial socks. Across the English channel there was news from France where the government has announced a bailout for two major automakers. Both Peugeot and Renault would receive $3.9 billion each in loans to prop up the industry.

Another surprising gain this morning was crude oil. Oil surged more than 5% this morning to $42.43 a barrel on new comments out of OPEC that the cartel might cut production again at their March meeting. Unfortunately for any oil bulls the rally is fading. Also fading are gold and the U.S. dollar. Normally these two move in opposite directions. Today they're both moving down. The GLD is off 1.7% to $88.00.

Speaking of declines one of CNBC's guests today was jokingly called a "prophet of doom" but his market outlook is very bearish. He expects another 20% decline in stocks. While we might see a strong bear-market rally in the second quarter this year it's not going to last. He suggested that the crisis will last until 2010, another twelve months from now. But wait, there's more... he also expected another $2.6 trillion in write downs on top of the $1 trillion that has already been announced since this credit crisis began.

Moody's released a little note on real estate, the section of our economy that actually started this recession. Moody's is expecting another 11% drop in home prices across the country but is forecasting that the downturn will probably end by the end of 2009. Not to be cynical but we have heard calls for a bottom in housing for at least two years now. Another 11% drop would bring the average cumulative decline in homes to about 36 percent. Previous boom markets in the country could see total declines of 50% to 70% in home prices as the pendulum swings back too far.

The U.S. market remains rangebound. The DJIA is down 16 points to 8264. The S&P 500 is up one point to 869. The NASDAQ Composite is virtually unchanged at 1591. The small cap Russell 2000 index is down about two points at 468. Stocks are probably stuck trading sideways until we get news on the Senate stimulus vote later today or hear Geitner's comments tomorrow at 11:00 a.m.

Copyright 2008 - 2023 ArrowTrader.com.
Do not duplicate or redistribute in any form.

Privacy Statement             Disclaimer             Terms of Service