While many believe that the U.S. recession and exchange traded funds (ETFs) are still facing an uphill battle, U.S. stocks and exchange traded funds (ETFs) are lower on concerns that some of the brightest minds in Washington will fail to come up with a plan to further stimulate our economy and boost confidence.
The Federal Reserve is debating on whether to target the money supply through the purchasing of Treasuries or take Chairman Ben Bernanke’s approach of targeting and reviving specific credit markets. On the plus side, Bernanke underscores the need for the Fed to purchase assets and begin reviving the $400 billion contraction in its balance sheet and has stated that the nation has averted depression risks, states Steve Matthews of Bloomberg.
On a separate note, the consumer pricing index rose 0.4%, more than the expected 0.3%. This is good news for those of us who were fearful of deflation, and it helps put a stop to a continuous decline in values. The index was pushed up primarily because of higher gasoline and clothing prices and an increase in commodities prices, which is generally a good indicator of a broad based rise in prices. On the negative side, it also indicates that cost of living is increasing in a time of recession and makes it that much more difficult for consumers to purchase.
Take a look at the SPDR S&P Retail (XRT): which is up 8.60% for the week
To further add to the market’s drop in early morning trading was a 4% decrease in crude oil prices, which reflects poor demand at refineries, states Reuters. This demise of Tuesday’s gains, which was caused by better-than-expected housing numbers inflation, was a result of a cut in China’s economic growth forecast for 2009.
Take a look at the iPath S&P GSCI Crude Oil Tot Ret Idx ETN (OIL), which is down about 3% in intraday trading.
Lastly, in an attempt to defend AIG’s (AIG) actions and mitigate taxpayer reaction, Chairman Edward Liddy, openly admitted that some of his company’s compensation packages were distasteful. Critics are stating that company executives and employees should not have received huge bonuses, if any, that were paid by using taxpayer money. Congress states that they will ensure that taxpayers are not footing the bill, states Alison Vekshin of Bloomberg.
Kevin Grewal contributed to this article.
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.