Monday, October 13, 2008

Stocks, Credit Markets and the Man

Who Is The Man?

I am watching and listening, trying to figure it out. Watching the markets and the news flow. Listening to the politicians, government spokespeople and the talking heads of business news. If I can figure this puzzle out, it will tell me where we are going. Then I will tell you.

LIBOR

Watching LIBOR, the indicator of banks willingness to lend to each other, I see a 7 bp move down to approximately 4.75. This is the largest move down in many months, but I would have hoped for a little bit more given the fact that the governments in Europe have pledged to guarantee the loans made between banks. Maybe we are waiting for the US to make the same pledge.

Interim Assistant Secretary for Financial Stability

This morning I was listening to Interim Assistant Secretary for Financial Stability Neel Kashkari talk about the plan and implementation, and to be honest it sounded like an incredible amount of new government bureaucracy that will hopefully work better than some of the other government bureaucracies. This guy is also 30 something, and I am hoping he is seasoned enough to handle this position. Maybe he's going to learn on the job.

Stock Market

I am watching the stock market soar, partially in hopes of this global intervention saving us, and partially in a large short squeeze (those that were betting on lower stock prices have to come in and cover their bets). I am also watching the financial index XLF underperform and GE trade in the red which is curious.

Talking Heads

Finally, I am listening to the talking heads on radio, and you have half say we are going down and half that we are going up.

What are we to take from all of this? In my humble opinion that the bottom line is that the policy makers around the world will do whatever it takes (in something of a hit and miss strategy) to stabilize the markets, that the economy will be weak for a little while, that there will be some additional pain and that it will be a bumpy ride.

Fasten your seatbelts.

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