The Sun is Shining on Wall Street

This morning, the sun is shining on New York City and on Wall Street.

President-elect Barack Obama was one of the few people that could have restored confidence in the financial markets through the appointment of a Cabinet members that the market trusts and a clearer plan of action for tackling the economic crisis. On Friday, his appointments for Treasury Secretary and the Secretary of State were leaked, sending stocks soaring and according to the Washington Post, Obama and leading Democrats are planning a 2 year fiscal stimulus package that could amount to 5% of GDP. He also named former Treasury Secretary Larry Summers to head the National Economic Council. Summers is Geithner’s mentor and was one of the leading candidates for Obama’s Treasury Secretary post.

With 2 well respected powerhouses on his Economic Team, Obama has a good chance of turning the economy around in late 2009, early 2010. The new Administration is beginning to grease the wheels and the market is liking it.

Q3 GDP Could Fall as Much as 1%

However in order for the gains in the equity and currency markets to be sustained, hope needs to supersede reality because as of Tuesday, the US economy should be in a technical recession. Third quarter GDP numbers are due for release and after contracting by 0.3 % in the second quarter, first quarter GDP growth could fall as much as 1% (consensus is -0.5%). The US economy would not be a stranger to such a deep contraction as growth fell by 1.4% in the third quarter of 2001, 3% in the fourth quarter of 1990 and a whopping 6.4% in the first quarter of 1982.

Existing Home Sales Drop 3.1%

It is no secret that the housing market is in trouble and the latest existing home sales numbers confirm that. Resales dropped 3.1% to 4.98 million rate, which is the lowest since June 2008. The big story however is the drop in house prices, which was the largest on record. The combination of a slowing economy and tight credit markets has prevented real estate from recovering and with the recent layoff announcements, I expect demand to slow even further.

Another Big Bank Will Not Fail

Citigroup was another major uncertainty that made the markets nervous. The US government has announced that Citi will be receiving $20B in cash from the Treasury and $306B of asset guarantees. In return, the US government will receive preferred shares in the bank. This step indicates that the Bush Administration believes that the financial system could not afford another big bank failure which is probably right.

For those of you that are interested, here is a quote from Obama’s radio address on Saturday outlining his Economic Recovery Plan:
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In the Financial Papers: Today’s Top Forex News 06.24.08

kathysmallHere is the “In the Financial Papers Radio Broadcast” (Length: 6:01 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
Bernanke Plays `Dangerous Game’ Signaling Higher Rates as Growth Stagnates
Dow Chemical Will Raise Prices as Much as 25% in July on Record Fuel Costs
Financial Firms May Make Deeper Cuts, Eliminate 175,000 Jobs
Funds Forced to REveal Bets on UK Banks
China Agree 96% Rise in Iron Ore Prices
Major Indexes Near Bear Stearns Levels
Cheaper Gas in Tijuana
Key Eurozone Index Contracts (PMI) – Stagflation Fears Rise
ECB Careful Not to Repeat Same Mistake
British Gas makes hostile bid for Origin Energy Ltd. Australia. BG Group Plc made a A$13.8 billion
ECB Orphanides: market expectations of for July ECB meeting are appropriate. While a rate hike in July is appropriate, “I do not want to go beyond July,” Orphanides said.

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In the Financial Papers: Today’s Top Forex News 03.20.08

kathysmallHere is the “In the Financial Papers Radio Broadcast” (Length: 07:14 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
Citigroup Plans Layoffs
Commodity Prices Continue to Slip
Philadelphia Fed Index Beat Expectations
UK Retail Sales Stronger Than Expected
Airliners and Automakers in trouble
Are Oil and Gold Prices Turning For Good?
Bank of England Investigates Rumors

In the Financial Papers: Today’s Top Forex News 01.15.08

Here is the “In the Financial Papers Radio Broadcast” (Length: 07:48 minutes), all the news relating to the foreign exchange market. The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
– Dollar Continues to Slide as US Retail Sales and PPI Growth Turn Negative
– Merrill Lynch Receives $6B Capital Infusion
– Citigroup Reports Record Loss, Gets $14.5B Infusion
– German ZEW survey hits new low
– Gold’s Rally Above $900 Represents Falling Demand for US dollars
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In the Financial Papers: Today’s Top Forex News 11.26.07

Here is the “In the Financial Papers Radio Broadcast” (Length: 09:21 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
– What Will Tip the US Economy Into Recession?
– Bernanke and Kohn Set to Talk this Week
– Citigroup Plans Another Round of What Could be Massive Layoffs
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