Midday Market Update: Geithner Speaks While Markets and ETFs Wait

March 24th at 10:00am by Tom Lydon

ETFsTreasury Secretary Timothy Geithner is speaking in front of Congress today while markets and exchange traded funds (ETFs) hover in negative territory.

Geithner has told Congress he’d like broad new powers to regulate non-bank financial companies such as AIG (AIG), whose collapse could jeopardize the economy. The powers would include the ability to seize control of the institutions, take over bad loans and other illiquid assets and sell the good ones to competitors.

On a separate note, many AIG executives who received bonuses have stepped up to the plate and decided to give them back to taxpayers. In fact, 15 of the 20 bonus recipients have agreed to pay back the bonuses in full, accounting for a huge percent of the roughly $80 million trying to be recouped, state Grant McCool and Lilla Zuill for Reuters.

The price for a barrel of black gold has risen more than 30% this month, but benchmark crude for May delivery fell about 89 cents in early morning trading to hover around $52.91/barrel. NYMEX oil traders are confident that crude will stay at or around $53 if the economy recovers.  Take a look at United States Oil Fund (USO), which is up 30.6% over the last month and is down 1.40% in intraday trading.

As the global economic crisis has inherent vulnerabilities in the international monetary system, China is growing increasingly concerned about holding huge U.S. dollar reserves and is pushing to create a new international currency reserve to replace the dollar.

Another concern the Chinese have is that their huge dollar-denominated foreign reserves, which are valued at more than $1 trillion made up of U.S. Treasuries and other dollar-denominated bonds, will lose significant value in upcoming years, states David Barboza of The New York Times. The move is unlikely to be successful, though; Russia tried something similar and failed.

Some pullback of the markets is expected. After all, it has gained nearly 20% in the last 10 trading sessions.  The Dow Jones Industrial Average was down about 0.7% in late morning trading.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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