Daily Investment Interpretations

February 18, 2009

2009-2-18:     The markets closed essentially unchanged today. The NASDAQ was off 2.69 points (-0.18%) to close at 1,468,. the Dow rose 3 points (0.04%) to 7,556, and the S&P 500 contracted 0.75 points (-0.1%) to end at 788. Oil finished at $34.60 a barrel, and gold added $10.700 to 978.20. The VIX dropped 0.2 to end at 48.46.
    Industrial production and housing starts were below what had been estimated for them. The Federal Reserve has altered its 2009 forecast from that of October, 2008, when it saw the economy growing by as much as 1.1%. Fed's outlook darkens The Fed now anticipates a shrinkage of the economy by 0.5% to 1.3% this year, with a recovery beginning in the second half of 2009. Growth in 2010 will fall somewhere between 2.5% and 3.2%.
    Stock market futures tonight are slightly positive.
    I've added the 50-day moving averages to the NASDAQ, Dow, and S&P 500 charts below, since this gives some feeling for these indices' longer-term trends.
    Otherwise, there isn't much new to report.

2009-2-18 (Morning):   The Dow has fallen below its November lows, but has now rebounded, presumably on optimism over the administration's mortgage foreclosure program  Mark Hulbert has written, Wall Street likely to fail retest of Nov. 20 bear-market low. See also Three Big Fears Have Market on Edge.
    Paul Krugman has written several squibs today. The first is: Permanent Link to Comrade Greenspan: Seize the economy’s commanding heights! Alan Greenspan, the poster child for laissez faire capitalism, is suggesting that maybe, in this once-in-a-century situation, it's time to temporarily nationalize the banks.
    Dr. Krugman's next brief is Permanent Link to The eschatology of lost decades. He first observes the good news that although Japan didn't recover very quickly from its slump, at least it didn't go into another Great Depression. But the bad news is that 3% of its 9$ rate of growth in GDP was attributable to net exports. Also, part of the rest of their GDP gains would have built upon their trade gains. The problem for us going forward is that the whole world can't have a net trade surplus.