Market Summary March 31st – April 4th
With markets the way they have been this week, its no longer a surprise to see them move 3 – 4% in a week. What is a surprise is to see the markets close in the positive. Foreshadowing for the rest of Q2? Or will it all end in tears… Things certainly haven’t followed the script this week.
Ben Bernanke finally admitted that a U.S. recession is probable along with the IMF decreasing projected global growth. Treasury secretary Hank Paulson also made a proposal for a new financial regulatory plan in their attempt to prevent the investment banks from ever single-handedly crippling the American economy again. Economic data was rather mixed. The unemployment rate may have been bumped up to 5.1% with nonfarm payrolls plunging by 80,000 but ISM non-manufacturing and manufacturing have both increased.
But what really triggered the market rise this week were the financials. It seems major investors believe the best is over. Lehman and UBS announced plans to raise $4 billion and $15 billion respectively through stock offerings and Citigroup sold $4.5 billion in debt. China’s sovereign wealth fund has also started a $4 billion private-equity fund focused on financials. Hopefully it’ll work out better than last year when they invested in Blackstone and Morgan Stanley.
Market Outlook April 7th – April 11th
We’ll get a glimpse into the reasons behind the Fed’s decisions with FOMC minutes coming out on April 8th. Pending home sales will also indicate how Main Street is faring with the housing market continuing to plummet. GE will report earnings next week and it’ll be interesting to see how the AAA-rated company’s diversification has fared in current economic conditions.
