Today’s Stocks & Topics: General Motors Acceptance Corporation (GMAC), Borrowing Money From 401K, (AUTH) Authentec Inc., Fear, Credit Default, The Stock Market.
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The market collapsed yesterday by 700 points for the DOW. Across the board markets fell 7 to 10% in one day. That is the third worst fall in stock prices ever. You can thank our politicians. They led the market to believe that the $700 billion dollar investment in mortgage backed poorly performing loans was a done deal, that there was an agreement between the parties. That turned out to be a lie. The stock market hates surprises and this was a big one.
Likely there will be a deal of some kind, however the longer it takes, with the financial markets frozen in many ways, the more pain Main Street will feel. The pain has been confined to Wall Street for the most part with little effect on the average person. The job losses have hurt but have been confined to certain sectors. That will spread as money flow has slowed to a trickle throughout our system.
Make no mistake; the financial crisis will affect everything. So far it has not been that bad, but it could get much worse. The Fed and Treasury regardless of the failed $700 billion deal has infused that much or more in the world markets to stave off as much damage as they can. Their tools are limited but they are using them.
Everyone is holding their breath at this point.
Steve Peasley
Today’s Stocks & Topics: (GG) Goldcorp Inc., (GLD) Spdr Gold Trust, Bailout Plan, (EZPW) EZCORP Inc Cl A Non-Vtg, (PCAP) Patriot Capital Funding Inc., Pension Plans, 401K, (CIT) CIT Group Inc., The U.S. Congress.
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No one likes the deal the government has proposed, but as our politicians do nothing, the worse the pain will be for our overall economy. There is a time factor involved and that time is dictating the depth of the weakness of our economy. No free market minded individual likes any of this, but if you step back and take a look at the bigger picture it’s a question of how many jobs you are willing to lose, versus bailing out Wall Street. You can argue that this is an investment or a bail out; that is semantics.
We can argue about the unfairness of it all and who to blame but something needs to be done quickly. Let’s say nothing is done- America will not disappear but we will fall into a long and painful recession.
Meanwhile, the final GDP numbers for last quarter were revised this morning downward from a growth rate of 3.3% to a growth rate of 2.2%. The first number was 1.9% when first reported months ago. Now we look to the third quarter’s number which will be released in the next few weeks. A recession is two quarters in a row of shrinkage in GDP. We may get our first quarter of shrinkage this next report. It is going to be close thing. What about the final quarter? Will we fall into a recession? It’s likely up to our politicians at this point.
Meanwhile, the market is reacting well this morning under the circumstances. It’s still down but not nearly to the degree I think most were expecting.
Good Trading
Steve Peasley
Today’s Stocks & Topics: The Stock Market, (WM) Washington Mutual Inc., (DPL) DPL Inc., Mortgage, JP Morgan, (GE) General Electric Company, (PFE) Pfizer Inc.
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