The markets were a roller coaster ride today. But unlike a roller coaster, the last round was not a drop but up. Dow went from 12,863 to 13,010 in the final fourty minutes.
It's hard to understand the market rationale for going up. It seems as if the market is expecting an emergency rate cut tomorrow. We have already seen that the rate cuts have not helped. Look at where we are since the last rate cut.
It looks like there are people out there in denial. I must be missing something because from here, the news looks pretty ugly.
CFC was down as much as 20 percent but ended the day at 10.23 only 3.22 percent down. Unless there is a bailout, I don't see how a rate cut would help CFC. They also had a news release saying it has plenty of liquidity but they did not specify who it was. I guess FHLBs are a pretty reliable lender.
Freddie Mac was down 28 percent and Fannie Mae was down almost 25 percent. Weren't the GSE supposed to help ease the liquidity by lending more? With them having capital requirement problems, you can forget about raising their limits ($417) because they can't lend until they find more capital.
So what do you think was the cause of the sudden reversal in the market in the last hour?
2 comments:
Signs of a very unstable market, ready for a substantial decline, I think. Another rate cut, and we can use the dollar for tissue paper.
Unfortunate but true. The fed has been saying no to further rate cuts. So if there is, then they will have 0 credibility.
Sandy
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