This has been one heck of a week, with mortgage interest rates falling back below 5% again, rates that many of us feel we may never see again once our nation has to pay the tab for the Stimulus Bill and deficits. Uncertainty though helped mortgage bonds, as investors pulled some money out of stocks and pushed it into credit markets.
Uncertainty rules though:
- The Treasury Secretary and the Federal Reserve Chair are both losing some clout in Washington DC right now, with some suggesting that President Obama isn't listening to them as much and may be looking to implement major changes. Though I try not to get too political on this site, leaving heavy duty politics to Northwest Indiana Politics, much of the uncertainty is in response to Stimulus not really working and fears that deficit spending is going to drown us all in debt we can't afford.
- More government regulation of automakers and energy and banking, is causing the stock market to react very poorly. More government in general is a negative to stocks, raising the cost of doing business and increasing costs to consumers.
And speaking of the Stock market, prices continue to plunge following President Obama’s sketchy new proposals for the banking system. His announcement yesterday had few details, but are quickly coming under heavy criticism across political boundaries and around the world. NYC Mayor Michael Bloomberg has been very vocal, saying that these measures will cost many American jobs, and make American banks far less competitive in the global market.
Looking at the technical picture for Stocks, the Dow and the S&P have both fallen beneath their 50-day Moving Averages. This is very significant, as neither index has closed beneath their 50-day Moving Average since July of 2009. If Stocks are unable to regain their footing and move above this important Moving Average, we may see a continued slide lower in Stocks, which could benefit Bonds. And with no economic reports due for release today, much of the trading in Bonds will be driven by Stocks and technical action in both markets.Also giving Stock investors some jitters today – the US Senate unexpectedly decided they will delay today’s confirmation vote for Federal Reserve Chairman Ben Bernanke’s second term. The Senate has said they need to further review the Fed’s role in the bailouts of the financial industry during the economic meltdown…which has the ring of wanting to be “politically correct”, in light of Obama’s most recent proposals on the financial and banking industries. If not confirmed, Bernanke may have to give his seat to Vice Chairman Donald Kohn – and there are only nine days left in Bernanke’s current term, so a vote will need to take place quickly. This delay is adding a great deal of unwelcome uncertainty to the already jittery Stock market, and many traders are voicing concerns that the p