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Market Commentary: The Use of Money

November 11, 2008 – 12:42 pm

  China has decided to use some of their huge cash hoard to spark their economy. That announcement affected markets around the world pushing them up. The total package they say they are going to spend is $586 Billion. That is a smart use of some of their cash. Much of the spending will be on sorely needed infrastructure. This will not only help China but there will be a huge spillover effect to other economies.  

Central banks around the world are continuing to lower interest rates. The world is one big economy and it certainly appears that there is a coordinated effort to lower world wide interest rates and to use government coffers to try and stop the slide in the world economy. 

Of course it is the U.S. that is the most important by far and we have to start to recover first. We led the world into this mess and we will have to lead it out. Watch mortgage rates, the LIBOR rate and the movement of money out of the banks and into the economy. Liquidity is the key.   

Good Trading
Steve Peasley 

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