“Stocks are clearly having trouble extending their gains,” reports today’s Wall Street Journal. And that a number of key market health indicators are flashing red right now. When were these indicators flashing green? We don’t recall.
From the depths of the credit crisis last November, the price of Goldman Sachs’ stock (NYSE: GS) has soared 178%. The price of gold, meanwhile, has advanced a mere 25%. Is Goldman, therefore, the new gold? An investment acolyte could easily draw that conclusion.
The high water mark for gold occurred at 12:00 noon in Hong Kong on Monday. From there, gold shed about $7 by the time London had been trading for an hour. Gold gained almost all of that back in the rest of London trading…and up until precisely 9:00 a.m. in New York. Then a seller showed up…with another sharp sell-off the moment that London closed. From there, gold did nothing…except briefly tick down to its low of the day…$938.40. For a Monday, volume was very light…and [according to the usual N.Y. commentator] “saw estimated volume of only 84,287 lots which, if it is not radically revised, suggests Monday was the quietest Comex day in quite some time.” The US$ was up…
Fed’s Beige Book disappoints…Dollar rebounds on the day…Currencies come back on the night…RBNZ leaves rates unchanged…And Now… Today’s Pfennig!
Bonds down. Gold up $17. Someone seems to think there is a whiff of inflation in the air. Sniff…sniff….
As recently as February, General Electric Co. (NYSE: GE) had hopes of maintaining its dividend payout. “We’ve got the cash flow to pay the dividend,” GE Chief Executive Officer Jeffery Immelt said in a Feb. 5 interview with The Wall Street Journal.
The toxic tentacles of recession seem to extend into every imaginable – and unimaginable – pocket of the economy. As these tentacles release their toxins, the resulting distress affects both individuals and industries alike, often in ways we might not have imagined in advance. But so too do recessions impart the occasional surprising benefit. Our advice: Enjoy the benefits when and where you can because this recession is likely to get much worse before it gets better.
Even though the government stress tests have ended and the banks in question have set about raising the required capital, credit rating agency Standard & Poor’s believes the nation’s banking crisis has “merely entered a new phase” and might not end before 2013.
What do the Fed’s recently concluded “stress tests” have to do with commercial real estate? Everything. The stress test results convey the illusion that America’s largest banks possess adequate capital. But that’s not true. And since America’s largest banks possess inadequate capital, they will be reducing their exposure to commercial real estate loans. REIT-holders beware!
In an odd bit of capitalist irony, the U.S. banking crisis could end up as the catalyst that finally jump-starts the long-moribund market for initial public stock offerings (IPOs). In fact, it already appears to be happening.
