Today the Dow lost 427 points and closed below 8,000. Perhaps that is exactly where it should be. 
Back on 10/28, the Dow closed at 9,065.12 after rising 889 points during an extremely volatile session.  Traders were jumping for joy while I played the pessimist telling everyone to beware of the 900 point pop.  Prior to the pop, I also said I thought we were nearing the bottom.

Much to my surprise, the Dow popped back up and many thought the worst was behind us, but not me!  The index had no business being above 9,000 so soon, especially in the midst of such economic uncertainty.
The …read more

The FOMC did just what investors predicted by cutting the target rate another 50 basis points. 

The FOMC’s statement included the expectation for inflation to moderate in coming months, noting that the government’s recent actions have improved credit conditions, but “intensification of financial market turmoil” is likely to exert additional spending restraint as downside risks to growth remain.  No word on what those risks are.
The FOMC went on to say that business spending and industrial output have weakened and slower foreign economies will hurt prospects for U.S. exports.
Although the rate cut was what most people wanted (and received via a unanimous vote), is this really good news?
The Fed’s …read more

The Treasury’s Troubled Asset Relief Program was approved a few weeks back, but the spending is just getting under way.  Now that the government is starting to invest when will the banks begin to lend?
There are many motivations behind (or should I say underneath) TARP, but unfreezing the credit markets is at the top of the priority list.  PNC was the first regional bank to receive direct investment from the government when the Treasury agreed to purchase $7.7 billion worth of PNC’s preferred stock.  Then, PNC announced plans to spend $5.5 billion on the acquisition of National City Corp.
National City was definitely in trouble.  The …read more

I watched the Dow rise from 200+ points below to 30+ points above yesterday’s close in less than an hour.  News of the synchronized central rate cut was supposed to set markets ablaze!  What happened? 
Well, I can’t quite comment on the effectiveness of this coordinated effort.  Half of one day watching the stock market isn’t enough and I don’t believe the stock market can be used as a decent gauge for success anyway.
Rates affect the stock market because lower bond rates usually make stocks look more attractive.  That’s why rate cuts are usually met with stock market rallies.  But, I don’t think rates should dictate the stock market.  …read more

I threw it out there earlier this week, but it has been confirmed: Washington Mutual is looking for a buyer. 
Maybe WaMu has publicly denied rumors that it was searching for a buyer, while privately sporting a “FOR SALE” sign in an attempt to raise confidence or safe face…I’m reaching here!
IDK, but WaMu’s stock has shed over 90 percent of its value in the past year and regulators were asking other banks about a possible purchase well before WaMu fessed up.
Shares of WaMu opened 28 cents higher, representing a 14 percent gain from yesterday’s close.

According to the New York Post it may be Washington Mutual.
This does not mean a government bailout, but Federal regulators have been in touch with several banks including JPMorgan and HSBC about the possibility of buying Washington Mutual.
WaMu officials insist the bank is not looking for a buyer and that stock price is not an accurate measure of performance.
The recent JPMorgan rumors have caused violent fluctuations in WaMu’s stock.  Perhaps WaMu should have accepted JPMorgan’s offer earlier this year at $8/share?

AIG, the giant insurer, is now seeking $40 billion of emergency funds from a variety of sources, including the Fed.  The stock sank over 30 percent last week and as much as another 52 percent this morning.
I am not aware of the Fed offering money to insurance companies but perhaps the Fed’s choice to open the discount window to investment banks has given AIG some false hope of government assistance.
AIG is in a tough spot, being a bond insurer in an age where creditworthiness is falling and defaults are rising. 
Between AIG, Lehman Brothers and Merrill Lynch confidence in U.S. financial markets …read more

The Fed’s report on domestic business conditions asserted that the economy is growing slowly.
In a nutshell, the report suggested that the tightening of consumer purse strings along with an ailing housing market, waning effects of the economic stimulus package rebates and high food and energy prices have forced the economy into a sluggish rut.
The Fed will meet on September 16 and make a decision regarding interest rates.  This one should be a no-brainer, right?