Daily Investment Interpretations

January 13, 2009

2009-1-13:   Today was a lackluster day. .  The S&P 500 rose 1.53 points (0.18%) to 872. the Dow fell 25.21 points (-0.3%) to close at 8,449 and the NASDAQ gained 7.67 points (0.5%) to lend at 1,546. Oil climbed a little to $38.83 a barrel, and gold was unchanged at $821 an ounce. The VIX fell 2.57 to 43.27. The immediate cause for this was gloomy earnings forecasts... something that had already been anticipated, but that, in the heat of the moment, sparked a wave of selling.
    Andy Brooks, head of equity trading at T. Rowe Price, says that the consensus has shifted over the past few weeks from expectations for a recovery to begin in the latter half of 2009 to a recovery beginning in the first half of 2010, with a corresponding delay in stock market recovery. Michael Ashbaugh has released his Tuesday technical analysis of the stock market: Ashbaugh's three ways to track a trend. Mr. Ashbaugh concludes that things could go either way. If the S&P breaks below 850, it will probably go farther down. Conversely, if it goes up and remains higher, then this bear market rally will remain intact. Paul Farrell warns, "Don't be conned into thinking there will be a recovery in '09". Marketwatch' "prognosticators-of-the-month" are looking for a bottom in the middle, or toward the end of the year.
    Paul Krugman's article, Permanent Link to Bang for the buck (wonkish), observes (also crediting Mark Thoma and this) that this kind of money that the federal government borrows isn't wasted, but that the greater part of it comes back to the government in the form of income tax, and of savings that don't have to be paid out in the form of  what I might loosely call, "job welfare".  
    It might be worth noting that a year ago, we were being told that the housing problem was well in hand, and that we were on our way back up.
    Here's a video of Chairman Bernanke's speech today: Bernanke: banks need more funds.
    And there you have it.