Stocks, particularly financials, rose today for the fourth day in a row. Is this the bottom of the market? It's not clear, but the signs are more auspicious than they have been in a while.
1--Economic news this week, for the most part, has been poor, giving the Fed cover to lower rates.2- Federal Reserve Chairman Ben Bernanke has signaled that the economy, as well as the credit crises, is a source of great concern.
3--Treasury Secretary Paulson is working on a planwhere mortgage lenders would voluntarily refrain from resetting ARMs when the teaser rate expires.
If Paulson doesn't act, the Congress might. The Senate Judiciary Committee is holding a hearing next week and Banking Chairman Chris Dodd (D-Conn.) has a bill to let judges restructure mortgages in Chapter 13.
The Street does not want the mortgage crises resolved by judges; the Paulson plan is far more preferable. An industry initiative to freeze teaser rates would steal much of the momentum from the Chapter 13 plan by providing a less controversial way to keep borrowers in their homes.
Everyone wants something to happen:
--It would keep homeowners in homes.
--For mortgage holders, it would be far better to restructure than foreclose.
Dow Industrials up 3.0%
S&P 500 up 2.8%
NASDAQ up 2.5%
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