Monday, September 03, 2007
Bernanke Noises
Stocks finished August on a high note. On Friday the Dow was up 110.01 to end on 13,357.74. The SPX was up 16.35 to close at 1473.99.
On Friday Bernanke spoke and the markets liked what he had to say. The head of the US Central Bank delivered a speech at the central bank’s annual conference and said that the Fed was ready and WOULD act to prevent further harm to the economy. That seemed to confirm recent hopes for a rate cut at the next FOMC meeting on September 18. He also mentioned the dramatic change in economic conditions since the August 7th meeting. At that meeting the primary concern was inflation. A little over a week later the Fed said there was a dramatic shift in market conditions and now economic worries were the top priority. By referencing that dramatic shift again and the shifting focus to the economy rather than inflation he also telegraphed a potential rate cut.
To sum up the Bernanke speech it was a blunt assessment of deteriorating conditions with an implication of action but no actual commitment. However as one analyst says "it was the best confirmation Bernanke could give that a rate cut was coming without actually saying he was going to cut rates."
Reassuring words to subprime mortgage holders from President Bush also seemed to help early trade. President Bush delivered a speech and said that the government’s Federal Housing Administration stands ready to help those that have fallen behind on mortgage payments by allowing them to refinance at more favorable rates. Mr. Bush is also seeking to help some of the struggling homeowners by making changes to the tax code and through stricter enforcement of "predator" lending laws.
Markets are shut today for Labor Day.
Until next time.
On Friday Bernanke spoke and the markets liked what he had to say. The head of the US Central Bank delivered a speech at the central bank’s annual conference and said that the Fed was ready and WOULD act to prevent further harm to the economy. That seemed to confirm recent hopes for a rate cut at the next FOMC meeting on September 18. He also mentioned the dramatic change in economic conditions since the August 7th meeting. At that meeting the primary concern was inflation. A little over a week later the Fed said there was a dramatic shift in market conditions and now economic worries were the top priority. By referencing that dramatic shift again and the shifting focus to the economy rather than inflation he also telegraphed a potential rate cut.
To sum up the Bernanke speech it was a blunt assessment of deteriorating conditions with an implication of action but no actual commitment. However as one analyst says "it was the best confirmation Bernanke could give that a rate cut was coming without actually saying he was going to cut rates."
Reassuring words to subprime mortgage holders from President Bush also seemed to help early trade. President Bush delivered a speech and said that the government’s Federal Housing Administration stands ready to help those that have fallen behind on mortgage payments by allowing them to refinance at more favorable rates. Mr. Bush is also seeking to help some of the struggling homeowners by making changes to the tax code and through stricter enforcement of "predator" lending laws.
Markets are shut today for Labor Day.
Until next time.
# posted by Paul @ 4:22 AM 
