Issue 01/25/08
The market started up 100 points and fairly steadily declined all day to end down 171 points.
All markets were trying to settle out the shaking that had happened on Monday when the rogue trader in Societe Generale unwound his lousy trades. So, all in all, this was a fairly good week for the markets.
In the news…
Not much news today. The main discussion around the water fountain was the rogue trader who lost such a huge amount of money. Professional futures traders think the story is fairly bogus that this guy could have done it alone, and they think he was using some fictitious instruments too. We’ll have to wait for the whole story to come out.
On a similar thought, have you ever heard of a financial concern every saying they had an “unauthorized profit?” I haven’t. They seem to consistently tell us about “unauthorized losses.” Given that traders don’t always lose, there must have been a profit somewhere, sometime.
The supplemental story is that the Fed reacted on Tuesday morning to this rogue traders selling by lowing the Fed Funds rate by 0.75%. In so doing, they lost a large amount of credibility in the professional marketplace. How could a lone rogue trader cause the Fed to panic like that? Why didn’t the Fed know what was going on? Why didn’t the Fed pick up the phone and ask? Remember, the official story from the Fed said that they were unaware of anything amiss in
An Unfair Stimulus Package?
If I offended anyone yesterday with my story about the fairness of the government stimulus package, I apologize. I certainly did step across the line of not being a political proponent. My purpose in writing these articles is to get everyone to think for themselves. Provoking you to think is part of my intent, and the stimulus package was just too great an opportunity to show the connection between politicians and economics. If you are interested in finding out why the US Congress and the President is so anxious to use a fiscal stimulus to solve a perceived potential economic recession, tune into our teleseminar on January 30th to hear how it all started during “The Great Depression.” It will be a great opportunity to ask those questions you have always wanted to ask.
Here are today’s Numbers:
Dow Jones 30 Industrial - 12,207 (Down 171 points)
10 Year Treasury Bond - 3.58% (Down 0.06%)
Euro - $1.4676
Gold - $911 (up $5) - and hit $921 during the day.
Oil - $90.71 (up $1.30)
Gasoline - $2.32 (up $0.04) - could have been worse, because gasoline inventories came in much higher than expected.
