President Obama isn't ready for a stock market rally. The new administration is working on cleaning up the mess in the financial system and focusing on stimulating the depressed economy. However, before the good news can be seen, there is plenty of ugliness around. Every day companies are reporting very negative earnings and this will continue for a few more weeks.
The good news is that more companies have been accessing the credit markets to raise fresh capital but not everybody has that luxury. It is a long difficult process but as the economy gets closer to a bottom, (which could be a year from now or more) the credit markets will gradually start to function more normally. We also need Wall Street to function more normally. Therefore, a plan to recapitalize the banks may only be successful politically if the Wall Street firms drastically change their bonus system. This is the new hot topic and much debate will be had.
All of the above led to concerns in the stock market which dropped about another 3% yesterday and may continue its downfall again today. GDP will be reported and promises to be ugly. We can be assured of one thing, volatility will continue.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment