Stock Rally in the Offing?
The bond markets take the Columbus Day holiday today, but the stock markets do not.
Will this be the day the markets push off the bottom of the pool and try to get above water?
There are good signs. As The Post's Zach Goldfarb reported earlier, the Asian markets have rallied and the Wall Street futures (a good prediction of how stocks will trade when the markets open at 9:30 a.m.) are trading higher.
Morgan Stanley has closed its deal with Mitsubishi UFJ Financial Group in which the Japanese firm gets a 20 percent stake in Morgan for $9 billion. News of the deal is pushing Morgan Stanley futures up. Morgan shares lost 60 percent of their value last week on worries that the Japanese would pull out.
Treasury continues to work on its comprehensive rescue plan that may be modeled on the European plan, CNBC reports, in which the government would guarantee loans between banks.
As you recall from coverage over the past couple of weeks, a key problem at the heart of the ongoing financial crisis is trust: There isn't any. The credit markets are seized up because banks aren't loaning to each other because they aren't sure they'll get their money back. If Treasury backed these loans -- a move that carries its own problems (i.e., Are people really sure they want the Treasury to get into that business?) -- banks would likely start lending to each other again.
Also on CBNC this morning, Frederic Mishkin, Columbia University professor and Fed Reserve veteran, opined that if the credit markets are taken care of, the stock market "will take care of itself" and this crisis "could turn around very quickly."
Finally, after last week's Worst Week Ever on Wall Street, we're looking for signs -- any signs -- of a Return to Normalcy. One we saw earlier this morning: a headline on CNN reading: "Kids Need More Vitamin D."
Opening bell moments away. As always, hang on.
-- Frank Ahrens
October 13, 2008; 9:24 AM ET
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Posted by: Night Mayor | October 13, 1908 11:04 AM | Report abuse
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