Sunday, December 14, 2008
market summary and outlook as of 12/14/2008
Market is waiting for the progress on Auto bailout. Credit Market --investors are still risk averse. T-bill yield dropped almost to zero. --no dramatic change in other major credit markets relative to last week. Level remained elevated --More investors favored IG coporate bonds, the strategy I mentioned last weekend. Mortgage market --Risk preimiums remain close to the level of last week. 30y yields hovers around 5.4%. Stock market --relatively stable in the past week. But the fate of $15 bil bridge loan can swing the market next week. Economy --weekly Jobless claims reached 26 year high, 573k seasonablly adjusted. --trade deficit widened for the first time as the volume increase in imported oil more than offset the decline in oil price and plunging car purchases. --More companies took a hit, like newspaper firm Tribune filed for bankruptcies and Hedge funds Citadel scaled operation in Asia. Outlook --Government won't let auto industry go bankrupt now to worsen the recession. The collapse of the auto bailout by Congress on Thursday forced Government to try alternatives. --The fate of bailout depends on the stance of UAW. If UAW still refuses to cut their salary in line with other positions provided by foreigh auto makers, they may deserve a bankruptcy.