Economic Week In Review

The Economic Week in Review, after a 3 month long hiatus, is back.

Today the markets are closed in observance of Good Friday.

• Yesterday the market rose 262 points(2.2%) after a better than expected Philly Fed Manufacturing Index report. The financial stocks led the way, although I want to point out that, as a whole, this has been a very volatile week. The bottom line seems to be that traders are looking for any positive sign to try and bring back the bull. The other factor was quadruple witching and it appears that alot of buying to cover short positions was occurring.

• The Fed cut it’s key lending rate 75 basis points to 2.25% and this spurred a rally in the dollar, much needed as it had reached it’s lowest level since 1973. The rate cut also set off one of the biggest commodity collapses in 40-50 years. Commodity prices had been spiraling upwards on inflation fears. Gold, for example, had reached $1033.90 per ounce on March 17th, came down, over 3 days, to $920.ounce. Crude Oil closed at $101.84, down from $110 on Monday……I remember the days when $70 per barrel seemed high.
• Both the 10 and 30 year notes(3.33% and 4.17% respectively) closed at their lowest yields since June of 2003. This is troubling because it is not indicative of a rebounding economy. Rates, in theory, tend to be going higher on the long end if things are improving, not always the case but many times that’s the pattern.
• Last Friday, in order to avoid the bankruptcy of the nation’s 5th largest brokerage house, the Fed stepped in and bailed out Bear Stearns by devising a plan for JP Morgan to buy them out at $2 per share(52 week high $170/share), with the Fed providing all of the funding. Additionally, the Fed is allowing securities firms to borrow money at the same interest rate as banks. This is huge and represents the first time, since the Great Depression, that the central bank has helped institutions.

• Single family home starts and permits hit lowest levels since 1991.

The Economic Week Ahead:

• Existing Home Sales (Monday)

• Consumer Confidence, Case Schiller Home Price Index (Tuesday)

• New Home Sales, Durable Goods Orders (Wednesday)

• Jobless Claims (Thursday)

• Personal Income and Outlays,Consumer Sentiment(Friday)

Have a great weekend!

This entry was posted on 21. March 2008 at 19:48 and is filed under Economic Market Reports, Blogroll. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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