Wednesday, October 15, 2008

From Exuberance To Business As Usual

Back To Business As Usual
Monday we had the huge stock market rally on the heels of the news coming out of Europe over the weekend, which took us into the pre-open announcements in the US on Tuesday, which led into a continuation rally, at least at the open of trading on Tuesday (the open was the high). We are now back to the basics of the market, trading on uncertainty, prospects for a recession of undetermined length that will have a large impact on corporate earnings as well as a slew of economic data being released today and down the road.

At this point, although it is the stock market that tends to get all of the headlines, the performance of the stock markets are secondary to the functioning of the credit markets and the hope for renewed willingness on the part of the banks to lend. Given the magnitude of the injection of liquidity by the central banks around the world in addition to all of the other moves being made, this should happen.

On The Docket For Today

Today we will be seeing the release of retail sales for September, wholesale prices for September, a read on the health of manufacturing activity in October, business inventories for August and the Fed's Beige Book that gives a read on economic activity. With the backwards looking nature of most of these numbers they are not all that important, but will have some impact.

Health Of The Credit Markets

In a continuing trend of the past couple of days, the LIBOR rate is slowly moving down, set this morning at 4.55%, down about 6bp from yesterday. Still very high, compared to the 2% range prior to the Lehman fallout, but it is definitely moving in the right direction. For those not familiar with LIBOR, it is the London Interbank Offered Rate and is the rate that many loans around the world, such as mortgage loans, are set off of.

We continue to watch and listen. New addition on the blog: current stock and mortgage rate quotes on the right side midway down, brought to us by SaneBull. Let me know if you think this is good to have there.

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