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Market Commentary Treasury Secretary
Timothy Geithner released a progress report and some further details on the
Financial Stability Plan. This is the same plan that disappointed the markets
in February, and the centerpiece, the Public/Private Investment Fund, is
essentially the original Troubled Asset Relief Program (TARP) from last fall.
This latest update generated more questions than it answered. If one believes
that legacy loans and securities (the “bad” or “toxic” debt) have an
intrinsic price (the value if held to maturity) that is higher than the
market price (what you could get if you had to sell it today), then the plan
has some chance of working. However, if the legacy debt really is bad (and
the intrinsic price is closer to the market price), then a lot more is likely
to be needed to fix the financial system. There still seems to be a basic
element of hope in the plan – specifically, that the economy will improve to
a point where the legacy debt is less threatening to the overall banking
system. The economic data were mixed, but
suggested some “green shoots.” Home sales advanced, probably reflecting
weather effects (better-than-usual in February, following worse-than-normal
in January). Personal income fell in February, with
further weakness showing in wages and salaries – and figures were revised
lower back to October. Personal spending rose modestly in February, with a
large upward revision to January. Adjusted for inflation, it appears (barring
a substantial revision to the data) that consumer spending growth will be
positive in the first quarter – not especially strong, but not terribly weak,
either – a contrast to the sharp declines in spending seen in both the third
and fourth quarters of last year. Consumer spending accounts for about
two-thirds of gross domestic product (GDP) – other components should be weak. Next week, fresh March figures arrive.
There are some potentially market-moving data releases, but the focus will be
on Friday‘s employment figures. The March Employment Report is expected to be
terrible, but a lot of that is already factored into the markets and the
figures are likely to be dismissed as “a lagging indicator.” Federal Reserve Vice-Chairman
Donald Kohn and Chairman Ben Bernanke will speak on Friday.
Indices
Consumer Money Rates
Currencies
Commodities
Bond Rates
Treasury Yield Curve – 3/27/2009
S&P Sector Performance Charts – 3/27/2009
Economic Calendar
Past
performance is not a guarantee of future results. There are special risks
involved with global investing related to market and currency fluctuations,
economic and political instability, and different financial accounting
standards. The above material has been obtained from sources considered
reliable, but we do not guarantee that it is accurate or complete. There is
no assurance that any trends mentioned will continue in the future. Municipal
bond interest is not subject to federal income tax but may be subject to AMT,
state or local taxes. Investing involves risk and investors may incur a
profit or a loss. Commodities
trading is generally considered speculative because of the significant
potential for investment loss. Markets for commodities are likely to be
volatile and there may be sharp price fluctuations even during periods when
prices overall are rising. Specific sector investing can be subject to
different and greater risks than more diversified investments. Tax Equiv Muni
yields (TEY) assume a 35% tax rate on triple-A
rated, tax-exempt insured revenue bonds. Material prepared
by Raymond James for use by its financial advisors. The information
contained herein has been obtained from sources considered reliable, but we
do not guarantee that the foregoing material is accurate or complete. Data
source: Bloomberg, as of close of business March 26th 2009. If you would prefer
not to receive this newsletter, please e-mail
our office. ©2009 Raymond James
Financial Services, Inc. member FINRA / SIPC. |
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