Markets Dance the Texas Two-Step

March 12th, 2009

Two Steps Forward, One Step Back

Global financial markets continue to dance to the risk-averse music this morning, ceding a small portion of the last two days’ equity gains in early trading today, with a number of negative stories already having hit the news wires. The Wall Street Journal is reporting that the US life insurance industry may be the next sector to come under government scrutiny as it begins to deal with the fallout from its chase of ever-higher investment yields over the past number of years. Freddie Mac, the now nationalized US mortgage insurer, also reported a $23.9B USD fourth quarter loss last night after the close and has asked for an additional $30.8B USD in funding to support its ongoing operations. The firm concluded 2008 with a total of $50.1B USD in losses. Read Full Article »

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Obama Returns to Optimistic Tone

February 25th, 2009

President Sells “Yes We Can” Image on Economy

“We will rebuild, we will recover, and the United States of America will emerge stronger than before,” declared President Obama before a joint session of Congress last night in a State of the Union-style address.  Delivering a message that “the weight of this crisis will not determine the destiny of this nation,” Obama took a decisive turn with his messaging last night and returned to the more upbeat and optimistic tone that defined his stump speeches during the campaign.  After taking great care to explain the economic crisis and its far-reaching implications in the weeks following his inauguration, Obama took a much more balanced approach last night.  Though some would argue that his message was simply more upbeat and in the tone of his natural speaking style, it is also probably safe to argue that the change in message was a deliberate attempt to try to revive consumer confidence amid the turmoil.  After all, if American consumers simply keep hearing how bad things are with little hope of seeing a near-term improvement, they are less likely to spend those stimulus cheques that are about to grace their mailboxes.  And a populace that saves stimulus cheques instead of spending them is one that is not likely to climb out of a recession any time soon. Read Full Article »

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Europe Officially in Recession

February 13th, 2009

European GDP Data Prints Record Fall

Euro zone Q4 GDP fell at a record pace in the final months of 2008, printing a 1.5% decline against expectations of a 1.3% retracement and a 0.2% retraction in the previous quarter. With two successive quarters of negative GDP performance, Europe is now officially in recession, while the scale and depth of the decline is relatively unprecedented in such a short period of time. Germany’s Q4 results fell 2.1% against expectations of a 1.8% decline and 0.5% in the previous period, with similar, though not quite as dire, results coming from both France and Italy. French employment also declined 0.6% against the market’s consensus call of 0.5%, compared to the previous period’s reading of –0.3%. Read Full Article »

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