Today's Key Market News - Market Finds Religion?
(Stocks in this article: NYSE: PTR, NYSE: ALU, NYSE: GS, NYSE: MEH, Nasdaq: CELG, Nasdaq: SPTN, Nasdaq: MOVI, Nasdaq: MSFT)
Stocks are up a bit more than just modestly this morning, with the Dow leading the way, rising near 1%. The day is an off one for devout Jews and Muslims, who are marking the holidays of Rosh Hashanah (Jewish New Year) and Ramadan. As a result, the streets of downtown Manhattan are a little quieter than usual with a significant portion of the workforce taking time off. While this Greek/American is actually returning to the desk today, we wish our Jewish and Muslim friends the best, and we hope that days like these bring us together rather than divide us.
Meanwhile, Wall Street Greek believes that the market is pricing in the likelihood of a Fed rate cut, but we anticipate that sometime between Friday and the FOMC meeting, doubts and uncertainty will create renewed volatility in stocks. These concerns will likely arise from the market's lack of confidence in the Fed, which we view deserved. Investors are uncertain whether the Fed sees reason enough in the data to initiate a greater than quarter point rate cut. We expect that a quarter point cut would not be a significant positive factor for stocks or the economy, but we are increasingly concerned that this could be the direction the Fed goes. We note, however, that the accompanying Fed Policy Statement could help to reassure investors.
We place a higher degree of possibility in a 50 point cut, enough to show economic participants that the Fed is backing up its words with evidence that it will take aggressive enough action if necessary. We very much doubt the Fed is prepared to initiate a greater than 50 point cut, and we also view a "no action" decision as unlikely. We have taken solace in Fred Mishkin's research on the impact of housing, and his strategic goal to dramatically reduce rates in that event. At the same time, we think he may already be too late.
This article, marking our return to the desk, will be a light one. We are doing some catching up, and plan to publish a Today's Greek Coffee later this evening. In today's key market-moving news articles below, you will find information on the Bank of England's action to ease lending restrictions further. Also, China is in focus, as Warren Buffet reduced his stake in PetroChina (NYSE: PTR), and the big red nation announced foreign investment remained robust in August. We have included much discussion on the dollar, and its weakness and pending weakness that could follow a reduction in interest rates. Next week's upcoming "Greek's Week Ahead" article will address the dollar, and the cure we see for it, so don't miss it!
Goldman Sachs' (NYSE: GS) Global Alpha Fund reported a 22.5% depreciation in value in August, but thus far, hedge funds have not added much fuel to the economic fire. However, we would not advise confusing timing with economic probability. Remember though, hedge funds and alternative investment vehicles cover a broad range of investment styles. Some are in fact geared to profit from situations like the current investment environment. Also, liquidity for these sophisticated investors is typically not fluid enough to allow them to exit in panic. Many times, investors are limited to forewarn portfolio managers well in advance before pulling capital. This may provide some funds an advantage over mutual funds in capital flow management. In other words, it gives hedge fund investors an opportunity to sleep on it before pulling capital in panic. Still, a great enough cause for capital withdrawal would not preserve hedge funds any more than it would any other vehicle. People relate "risk" too often with hedge funds, though sometimes rightly so due to the often high degree of leverage employed. However, hedge funds, for the most part, if managed properly and depending on their goals, are engineered to minimize risk while providing absolute return.
Thank you for the many heartfelt thoughts readers shared with me concerning September 11th. They were warming, kind and inspirational.
Stocks are up a bit more than just modestly this morning, with the Dow leading the way, rising near 1%. The day is an off one for devout Jews and Muslims, who are marking the holidays of Rosh Hashanah (Jewish New Year) and Ramadan. As a result, the streets of downtown Manhattan are a little quieter than usual with a significant portion of the workforce taking time off. While this Greek/American is actually returning to the desk today, we wish our Jewish and Muslim friends the best, and we hope that days like these bring us together rather than divide us.
Meanwhile, Wall Street Greek believes that the market is pricing in the likelihood of a Fed rate cut, but we anticipate that sometime between Friday and the FOMC meeting, doubts and uncertainty will create renewed volatility in stocks. These concerns will likely arise from the market's lack of confidence in the Fed, which we view deserved. Investors are uncertain whether the Fed sees reason enough in the data to initiate a greater than quarter point rate cut. We expect that a quarter point cut would not be a significant positive factor for stocks or the economy, but we are increasingly concerned that this could be the direction the Fed goes. We note, however, that the accompanying Fed Policy Statement could help to reassure investors.
We place a higher degree of possibility in a 50 point cut, enough to show economic participants that the Fed is backing up its words with evidence that it will take aggressive enough action if necessary. We very much doubt the Fed is prepared to initiate a greater than 50 point cut, and we also view a "no action" decision as unlikely. We have taken solace in Fred Mishkin's research on the impact of housing, and his strategic goal to dramatically reduce rates in that event. At the same time, we think he may already be too late.
This article, marking our return to the desk, will be a light one. We are doing some catching up, and plan to publish a Today's Greek Coffee later this evening. In today's key market-moving news articles below, you will find information on the Bank of England's action to ease lending restrictions further. Also, China is in focus, as Warren Buffet reduced his stake in PetroChina (NYSE: PTR), and the big red nation announced foreign investment remained robust in August. We have included much discussion on the dollar, and its weakness and pending weakness that could follow a reduction in interest rates. Next week's upcoming "Greek's Week Ahead" article will address the dollar, and the cure we see for it, so don't miss it!
Goldman Sachs' (NYSE: GS) Global Alpha Fund reported a 22.5% depreciation in value in August, but thus far, hedge funds have not added much fuel to the economic fire. However, we would not advise confusing timing with economic probability. Remember though, hedge funds and alternative investment vehicles cover a broad range of investment styles. Some are in fact geared to profit from situations like the current investment environment. Also, liquidity for these sophisticated investors is typically not fluid enough to allow them to exit in panic. Many times, investors are limited to forewarn portfolio managers well in advance before pulling capital. This may provide some funds an advantage over mutual funds in capital flow management. In other words, it gives hedge fund investors an opportunity to sleep on it before pulling capital in panic. Still, a great enough cause for capital withdrawal would not preserve hedge funds any more than it would any other vehicle. People relate "risk" too often with hedge funds, though sometimes rightly so due to the often high degree of leverage employed. However, hedge funds, for the most part, if managed properly and depending on their goals, are engineered to minimize risk while providing absolute return.
Thank you for the many heartfelt thoughts readers shared with me concerning September 11th. They were warming, kind and inspirational.
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posted by The Greek | 10:00 AM
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