Bush says the economy is sound in the long term!

Bush says that the economy is sound in the long term and that is something that we all know. The problem is that the markets do not seem to know that are still very much bearish than bullish.
Just a statment from the president is not going to set things straight and it may need some deft handling by the Fed before the economy is back to square one. This is going to be one tough kitty to handle but handle they must, for the whole world is watching to see what the Fed does next!

Wall Street floating on high expectations!

After the Friday losses, a badly shaken Wall Street is keeping its hopes up in anticipation of another slash in the rates by the Fed. It seems that these days the market seems to follow a philosophy of 'one day at a time'. The recent dismal showing by the housing market is still setting waves in the industry with more and more banks introducing more and more stringent rules regarding loans. Let us just say that the lending part by the banks is going to become less and less for the near future.
With such a poor showing and a fall by more than 26% in the sales of new homes, the markets reacted with a 'knee jerk' reaction. That is only to be expected.

But would the Fed slash rates this soon and if they do so, what would be the impact on an already weak Dollar? Wouldn't there be a free fall? As it is the Dollar has lost so much of its value against a host of major currencies and today it holds supreme only over those currencies whose rates are still stringently controlled by their central banks. My two bits is that the Fed would slash the rates but it may not come as early as the wall street thinks. It would probably happen around the end of the fiscal year, thereby giving the new Financial year a boost as well. But then again, it may happen soon, either way, it is time for a martini, dry, shaken but not stirred!

JP Morgan takes a dive by 35%

It seems that none of the banks are immune from the credit crisis, with more and more banks coming out and declaring their losses, well sort of. Today, we saw the JP Morgan declare a loss of 35% as a result of bad housing loans.

The mortgage issue seems to be like a ‘blob’ that just keeps on growing and growing, swallowing the healthy profits of many a bank and institutions alike. More and more people are defaulting on their mortgage payments and this is having a kind of a free for all effect on all the world economies alike. Most of the share markets are all exposed in one form or the other to whatever takes place at Wall Street and this week has clearly shown that.

The jitters in the market is going to go on for some time to come, as we can see from the indices all across Europe and Asia go into a tizzy as soon as the reports of the ‘Wall street shakedown’ reached them.

CEO Jamie Dimon attributed this dismal performance by JP Morgan to the worse than expected results in the home equity front. But at least they can take heart in the fact that their losses are not as bad as that of the Citigroup which is now currently looking at the Middle East for a healthy infusion of cash. 'Let us take heart that we do not have to beg as of yet, we still have the stuff’ must indeed be going through Jamie Dimon’s mind right now!

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