Yeah, I guess one could say that. As you can see though, there nothing to worry about. It has happened many times in the past.
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Posted on 04/27/2008 3:51:35 PM PDT by shrinkermd
BANK AND OTHER FINANCIAL STOCKS rallied strongly Thursday on further optimism that the corner has been turned in the credit crisis.
...Ironically, financials jumped following a Wall Street Journal story Thursday suggesting the Federal Reserve will lower its key interest rate target only another 25 basis points (a quarter percentage pointLower interest rates are the traditional tonic for financials. But the stock market seems to have inferred that, if the Fed trims the overnight federal funds rate only one more time, it would signal it signals its work is done...
After all, the Fed under Chairman Ben Bernanke not only has slashed its fed-funds rate target 300 basis points since last September, it has initiated an entire alphabet-soup array of new policy tools to alleviate the crunch: the TAF, for Term Auction Facility, of longer-term loans to banks; PDCF, for Primary Dealers Credit Facility, for loans to non-bank dealers that deal with the Fed, and TSLF, or Term Securities Loan Facility, through which the Fed swaps super-safe and liquid Treasuries for securities of lesser stature.
...Given all these initiatives, which arguably add up to the most aggressive actions by the Fed since the Great Depression, the jump in bank stocks would suggest the market is saying, "Mission Accomplished."
Yet the latest Fed data indicate banks are increasingly dependent upon the central bank, even as non-bank dealers have begun to wean themselves off borrowing from the central bank.
Banks in the latest week had to increase their borrowing from the Fed sharply and had to pay more for that privilege in the TAF -- even as non-bank broker-dealers were able to reduce their reliance on loans from the central bank.
(Excerpt) Read more at online.barrons.com ...
The stock market has already discounted the “recession”. Some analysis believe that the market is already anticipating the “recovery”.
The stock market is just ignoring the fundamentals. People have been living off their home equity for a lot of this century. Now that banks are pulling HELOCs and many HELOCS are defaulting as house prices go down, where is the consumer getting the money to keep spending, especially when food and fuel prices are taking a bigger chunk of every paycheck ?
It’s not like we’re all getting massive raises.
A very interesting read, with lots of links:
http://mrmortgage.typepad.com/blog/
bttt
Yeah, I guess one could say that. As you can see though, there nothing to worry about. It has happened many times in the past.
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Ya learn to eat a lot of beans and cornbread!
Gee, what do you think will happen if they DON’T lower it 1/4 point like everyone thinks they will? That after watching the effects of what has been done and as questions regarding the sub-prime effects are answered that there is no need for another cut right now....
I hear you need to eat rice with the beans to reduce the social constraints imposed by the beans...
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