Friday, August 31, 2007
Dow Jones Up: Mission Accomplished!
Stocks appeared poised for a strong opening this morning ahead of a speech by Federal Reserve Chairman Ben Bernanke and the introduction by President Bush of policy proposals to lessen the pain for struggling mortgage borrowers.
—The Wall Street Journal
No, I am not making this up: stocks are set to rise in part on news that President Bush is going to announce a plan to help subdue the mortgage crisis.
As further explained in this morning’s online version of the Journal,
Mr. Bush…is expected to introduce a plan to reduce some of the pressure on squeezed homeowners by, among other things, changing the Federal Housing Administration mortgage insurance program to allow more people to refinance with FHA insurance if they fall behind on adjustable-rate mortgages, according to media reports. The president is scheduled to speak at shortly after 11 a.m. Eastern time.
While we here at NotMakingThisUp never venture short-term opinions on the direction of stocks or bonds—let alone the ups and downs of pre-opening futures trading—we can’t help but wonder at Mr. Market’s heightened expectations for what the nation’s CEO will do to solve the sub-prime crisis.
Hope that Mr. Bernanke and Mr. Bush's words will calm the waters helped to push shares of mortgage lenders higher early on. Countrywide Financial, the nation's largest home lender and a company that has been hard-hit by the credit and housing turmoil, jumped 6% in overseas trading.
If history is any guide, we suspect tomorrow’s newspapers will report something like the following:
When the President and his team received word of the 100-plus point rise in the pre-opening Dow Jones Industrial Average on their Blackberries on the way to the announcement, they immediately declared “Mission Accomplished,” turned around the motorcade and drove back to the White House.
I Am Not Making This Up
© 2007 NotMakingThisUp, LLC
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 9:03 AM