Thursday, March 20, 2008

What A Week, Dow Finishes + 3%!

The Dow Jones Industrial Average, after the collapse and bailout of Bear Stearns, a 3/4 cut in the fed funds rate, and a 1 point cut in the discount rate, and numerous 300-500 point swings, has finished the week with a 3% gain. Phew! Now, if we can make it through a Good Friday extended 3 day weekend without another bank failure, maybe we can begin to make some real progress next week. Despite Bear's collapse and the 7000 jobs it will likely cost, and the 2000 additional jobs cut by Citicorp this week, some good things did happen. Mortgage rates, as reported earlier, at least conventional ones, have made a solid move down. There was also the US regulators lowering the capital reserve requirements for Freddie and Fannie that have put an additional $200 Billion in mortgage financing on the table. Also, the feds moves to open the discount window to brokerages and stoke the market with unprecedented liquidity. I think it was Joe Kiernan that put it best this week, 'Ben Bernanke went into the week with a grade of C or C+ and somehow came out with an A'. Let's see if he can hold that grade, I sense that we haven't hade finals quite yet.

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