Over the Weekend…
Mar 25, 2010
Posted by Jody Eisenman | Filed under Uncategorized
Several events should have affected the financial markets.
- The first managing director of the IMF, John Lipsky, stated that all G-7 countries with the exception of Canada and Germany will have debt to GDP ratios that may exceed 100% by 2014. This has not happened since 1950, which came as a result of spending following the conclusion of World War 2. In addition, the US budget deficit will probably surpass $1.4 trillion for this fiscal year.
- Federal Reserve Chairman Ben Bernanke called government bailouts of large financial firms “unconscionable” and must end. While I agree with this, it seems paradoxical for him to state this after presiding over the largest financial bailout in history.
- The situation in Greece got somewhat murkier.
- The landmark health care bill passed the House of Representatives.
Based on these events, the futures were down sharply on Monday morning. Despite this, by the close of the day, the Dow Jones rose 44 points to an 18 month high.
The scope of this move in stock prices has been incredible. The market seems to shrug off almost every bit of bad news to constantly move higher and higher. As I stated last week, I still believe that we are severely overbought on a short term basis. In addition, the S and P 500 is right up against a technical top. However, based on the moves in the last year, it’s tough to bet against this market. It will be interesting to see how the market reacts over the rest of the week.
