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March 15, 2008 – 8:18 am | by BizIntel
Despite an initially positive reaction by the stock market to CPI data yesterday, the market headed into negative territory after a heavy dose of bad news from the Fed and Bear Stearns (NYSE: BSC).
Take One for the Team
The Federal Reserve announced it would work with JP Morgan Chase (NYSE: JPM) to float a cash-strapped Bear Stearns funds in order to keep the company in business. Their concern is that, given an already air-tight credit market, the entire economy would collapse if Bear were to suddenly go out of business. Why? Because nobody really knows how enmeshed Wall Street is when it comes to lending between firms. If one giant falls, several more may unexpectedly collapse as well. Even though it has been given a brief reprieve, most expect that the company will be sold to a larger bank or private-equity firm within a matter of weeks. After the news, BSC stock quickly lost about half of its value…ouch.
Enter the 2nd Bear
Or, I guess I should say the market has already entered the second bear market of the millennium (irrespective of how the Bear Stearns issue pans out) . Now the question is, will it be long or short? In my opinion, you have to hope for the best and expect the worst right now. Especially because I fear a larger problem with consumer credit (i.e., credit cards) could sneak up on the economy if we’re not careful.
March 14, 2008 – 6:59 am | by BizIntel
The US Bureau of Labor Statistics released February ‘08 Consumer Price Index (CPI) numbers this morning, showing that price levels remained relatively flat vs. January. Both the overall CPI and the CPI less food and energy showed a 0% increase vs. the prior month (in January, the CPI increased 0.4% and 0.3% respectively vs. December ‘07).
The Stock Market Reaction
The stock market is looking for a positive open on the heels of the announcement, as futures are up ahead of the bell. However, many question the decrease in energy prices that the report factors in (i.e., a 2% decrease in gasoline prices), so we may see stocks move lower by market close.
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Tags: CPI Numbers
March 7, 2008 – 8:00 am | by BizIntel
The US Bureau of Labor Statistics announced this morning that nonfarm payrolls fell by 63,000 in February, leaving unemployment at approximately 4.8%. This comes on the heels of a loss of 22,000 jobs in January, making it two straight months of job decreases.
As Steve Liesman noted on CNBC this morning, we’ve never had two straight months of decreases in a row outside of a recession.
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March 4, 2008 – 8:02 am | by BizIntel
Chairman Bernanke is set to speak in Florida on long term plan to mitigate mortgage foreclosures. More to follow.
February 29, 2008 – 7:23 am | by BizIntel
Income, Outlays
The US Bureau of Economic analysis released numbers on personal consumption expenditures (PCE) and income today before the stock market open. Even when adjusted for inflation, personal income rose 0.4% boosted by bonus payouts and gains on the exercising of stock options. However, personal expenditures remained relatively flat when adjusted for inflation (unadjusted figures rose 0.4%).
Bottom line: flat spending points to a slower economy.
Inflation Up
Inflation continues to remain a threat, with the PCE price index increasing 0.4% when food and energy are included, and 0.3% when excluding food and energy. I always look at the former - food and energy are volatile, but bottom line is that they are an expense that impacts consumers.
Bottom line: not good, inflation is never good for the market.
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