Stimulus Plan Votes: Will They Help Stocks Today?
Stock prices are a bit squishy this morning. There is little on the data front, with wholesale trade at 10 a.m. the only number to watch today.
Congressional votes late yesterday approving an economic stimulus plan should be a psychological boost. Treasury Secretary Henry Paulson,. in comments ahead of the weekend's G7 meeting, says the package could add 0.7 percent to GDP for 2008. Paulson also plans to tell the G7 that the U.S. economy is fundamentally healthy but real estate continues to be a problem.
San Francisco Fed President Janet Yellen, speaking last night in Hawaii,said she was "not confident" the economy would dodge a recession. She also said the Fed would remain focused on protecting against the downside risks to the economy.
Stocks are mixed in Europe, and the euro is weaker against the dollar. Oil prices are slightly firmer.
Commercial mortgages has become a new area of concern for the markets. There has been talk in the credit markets all week about real estate developer Harry Macklowe. Today is his deadline to refinance $7 billion in loans for some major New York properties. The Wall Street Journal this morning reports that Macklowe has struck a tentative deal with Deutsche Bank that could give temporary control of the properties to Deutsche Bank but the deal is not finalized.
What a year
A colleague mentioned that its been a year since HSBC became the first major financial institution to take a bad mortgage-induced writedown. CNBC's Chief Number Cruncher Ariel Nelson thought it would be interesting to look at the market's performance since then so we thank him for the following information.
For those of us who have watched every painful twist and turn, it is not surprising to see that the Dow is down 3.1 percent from this date last year and the S&P is down 7.7 percent. The Nasdaq is down 7.9 percent.
Also not surprising--the S&P financials are down 26 percent since then. Some of the stock casualties look like this: Countrywide down 84 percent; Ambac down 87 percent; Washington Mutual down 59 percent.
In the same time frame, the best stocks in the S&P has been Consol Energy , up 119 percent and National Oilwell Varco , up 100 percent. Amazon.com is up 92 percent and Deere , up 67 percent.
As you might guess, gold is up 39 percent and oil is up 48 percent. The 10 year was yielding nearly a point higher--at 4.73 percent. It was at 3.77 percent today, and the two-year was way up there at 4.87 percent. Its now at 2.06 percent. See more stats here.
I looked up the Financial Times story from this day a year ago. The paper reported that HSBC acknowledged its risk management and other controls were not so good at U.S. consumer lender Household Finance. In the same story, there was a reference to a comment form J.P. Morgan CEO Jamie Dimon who had said a week earlier that the subprime mortgages was one area of the economy "which looks like a recession." Dimon also said J.P. had unloaded a lot of its holdings in that area.
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