Thursday, September 18, 2008
Save The Banks
What an unbelievable few days we are seeing. The Fed said Thursday to the markets "Don't worry boys - we will save the day" and the markets zoomed up.
The Dow added 410.03 points to close the session at 11,019.69. The SPX gained 50.12 points to finish 1,206.51. And the Naz was up a massive 100 points!!
After a volatile session, the major market indices moved decidedly higher the last hour of trading. The catalyst was a report on CNBC that the Treasury is looking at putting the Resolution Trust Corporation [RTC] back in business. Apparently, the RTC was created back in the late 90’s due to the problems from the savings and loan crisis. The RTC would allow banks to push bad debt off their balance sheets. As a result, banks could return to borrowing money, which should lead to a quicker recovery in the housing sector.
Another big story on the session was the move by the SEC to further curb short selling on financial shares (which has in fact now been enforced today, Friday). In fact, CalPERS, the giant pension fund, announced it would no longer loan out shares of Goldman Sachs (GS) or Morgan Stanley (MS). At the same time, Britain’s FSA has banned short-selling on financial stocks until Jan. 16. Shares of GS fell 5.68 percent to $108.00, though MS shares gained 3.68 percent to $22.55.
In economic news, jobless claims rose 10,000 to 455,000 which was 15,000 higher than expectations. The four-week moving average rose by 5,000 to 445,000, pointing to further weakness in the jobs market.
The only good news came from the Philly Fed Survey, which showed a reading of 3.8 when a figure of -10.3 was expected.
Today should see another bullish day. On the back of the Fed confirming that short selling in Financial Stocks is to be suspended the SPX Futures have shot up 39 as I type.
Until next time.
The Dow added 410.03 points to close the session at 11,019.69. The SPX gained 50.12 points to finish 1,206.51. And the Naz was up a massive 100 points!!
After a volatile session, the major market indices moved decidedly higher the last hour of trading. The catalyst was a report on CNBC that the Treasury is looking at putting the Resolution Trust Corporation [RTC] back in business. Apparently, the RTC was created back in the late 90’s due to the problems from the savings and loan crisis. The RTC would allow banks to push bad debt off their balance sheets. As a result, banks could return to borrowing money, which should lead to a quicker recovery in the housing sector.
Another big story on the session was the move by the SEC to further curb short selling on financial shares (which has in fact now been enforced today, Friday). In fact, CalPERS, the giant pension fund, announced it would no longer loan out shares of Goldman Sachs (GS) or Morgan Stanley (MS). At the same time, Britain’s FSA has banned short-selling on financial stocks until Jan. 16. Shares of GS fell 5.68 percent to $108.00, though MS shares gained 3.68 percent to $22.55.
In economic news, jobless claims rose 10,000 to 455,000 which was 15,000 higher than expectations. The four-week moving average rose by 5,000 to 445,000, pointing to further weakness in the jobs market.
The only good news came from the Philly Fed Survey, which showed a reading of 3.8 when a figure of -10.3 was expected.
Today should see another bullish day. On the back of the Fed confirming that short selling in Financial Stocks is to be suspended the SPX Futures have shot up 39 as I type.
Until next time.
# posted by Paul @ 7:13 AM 
