Tomorrow Fed Chairman Ben Bernanke will give a speech at a Kansas City Fed conference. The Market is expecting him to touch on the current debate over mortgage lenders Fannie Mae (FNM)and Freddie Mac (FRE). Investors are unsure if Treasury Secretary Paulson and U.S. Treasury Department will backstop the firms, and exactly how. I believe any "Bailout" will wipe out the existing shareholders equity.
Crude gained more than $5 to hit $121 Thursday, on a weaker dollar,supply concerns and the uncertainly of the Geo Politics between the US and the Soviet Union. The CRB Commodity Index also made a strong advance, climbing 3.7% for the session. Commodities. The dollar shed 1.1% against a basket of major foreign currencies. While the U.S. economy continues to slog along, data is not at recession-like levels. Initial jobless claims for the week ending Aug. 16 fell 13,000 to 432,000, which is below the 440,000 claims economists forecast. The 4-week moving average for jobless claims remains elevated, advancing to 445,750 from 438,500.
Oil, Commodity, Natural Gas, Coal and Solar Stocks ripped back from their recent downfall. Financial shares held steady, allowing the broad market to advance. The nasdaq fell 8.7 points, The Dow and S&P were up less than a quarter percent each. The Market is wating on the Bernanke testimony to clear the fog over the fate of FRE and FNM. And comment once again in the US economy.
Speculation abound from Market Observers and many Financial Press have declaring these GSE basically insovlent, and have bascially said the Government is clueless and cannot really solve these problems.
Those are the Charges, Now Big Bad Ben Bernanke will have his chance to counter these allegations and shed some light on how and what the Federal Reserve sees over the near and far Horizon.
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