The S&P 500 FINANCIALS INDEX is having an excellent day, although I would have expected an even better response:
| Value 120.25 | Change 10.51 | % Change 9.6% |
Market enthusiasm spread to all sectors. MLPs, & REITs showed good gains, junk bond funds had more moderate gains. The VIX, volatility index, dropped 3 to the 42s, low region of this year's trading range.
Oil is on a streak, climbing above 53.
| CLK09.NYM | ...Crude Oil May 09 | ...53.50 | ... 1.43 .......(2.8%) |
The long awaited Treasury plan to cure the worst financial crisis since the depression was finally announced. The plan seeks to harness government & private resources for the purchase of $½T in bad assets to get them off the balance sheets of banks. Such purchases could eventually grow to $1T. This involves another massive amount of money to solve the worst financial crisis since the great depression. The major problem is nobody is sure how well it will work. Prior plans, even though well intentioned, didn't help.
•Treasury Announces $1 Trillion Public-Private Plan to Buy Banks' Bad Debt
This story about a big bank getting the staff to return bonuses sounds good on first blush. But the follow thru can haunt stock markets.
•ING Asks Employees to Return 2008 Bonuses, Defers Payments Pending Review
General Motors (GM) is facing its month end deadline to see if it will survive. Among many concessions needed, they are working with bondholders to reduce debt (i.e. debt for equity swap). As with unions, more negotiations are needed for a final solution. Sort of related, Daimler AG is getting outside financing (selling stock) from an agency of the Abu Dhabi government. Maybe GM can attract a large investment, even with its problems.
- GM bondholders want response on restructuring plan- AP
- Daimler shares rise after Emirate takes top stake- AP
Markets have settled down in the last hour. Dow is drifting sideways around up 280. As a reminder, this is what $1T looks like:
$1,000,000,000,000
A lot of money is being tossed around & we don't know how it will play out. There will be plenty of testimony before Congress this week, it's not clear if banks will play ball with Congress.
No comments:
Post a Comment