Obama's plan is working? US stock recovering

Dannyboy83

http://news.bbc.co.uk/2/hi/business/7935533.stm
Citigroup announced a profit for first two months of 2009. The news pushed shares in Citigroup 37% higher,

Banking stocks led a surge on the US markets.



The Dow Jones index closed up 379.44 points, or 5.8%, to 6,926.49.

The Standard & Poor's (S&P) 500 rose 6.4%.


Markets in London, Frankfurt and Paris were all up about 5% at the close.



Also in New York, the technology-based Nasdaq index soared by 7%, closing the day at 1,358.28 points.



Bank of America up 28% and JP Morgan Chase up 22%.

Securities and Exchange Commission (SEC) could soon re-impose the uptick rule.




European gains
In Europe, Barclays climbed 10% while Deutsche Bank gained 16%.

It seems as though Barrack Obama has managed to restore a little bit of confidence.
Ben Halliburton, chief investment officer of Tradition Capital Management, warned that the rally was likely to be short-lived.

Even so, its too early for any of that spending to have taken effect so it does look like Obama is starting to spread some confidence.

Manic Moran

What, the steady free-fall from early February (about 8,300 on the DOW) to yesterday (6,300) had nothing to do with Obama, but today's 400 point jump is a result of his plan?

Does this mean then that the 940 point one-day jump in October was the Bush administration's recovery plan working, and the decline the rest of the time had nothing to do with it?

One day doesn't exactly make a trend. Although most people seemed to be saying that the floor of the market was about 5,500-6000, so the reversal was pretty much going to happen anyway: There were too many undervalued stocks to keep the bargain-hunters away. Look back about two months to the massive swings the stock market was taking on a daily basis. 500 down, 300 up, 200 up, 600 down, 400 up... Just people speculating on apparent bargains. No reason to believe today isn't more of the same.

NTM

Dannyboy83

Manic Moran wrote: »

One day doesn't exactly make a trend.

Yea but apparently CitiBank had a really good quarter in general.
Isn't that a sign that things are improving?

I realise there were a lot of one offs there, but some of them didn't seem to be.

Sand

It probably has more to do with Citi turning a profit in exceptionally difficult markets when most investors were treating Citi stock like it had the plague. Markets are surprised, suddenly wonder if this is the nadir of the markets, should they jump in now to catch the upswing? So they do. Suddenly they notice other people are....OH MY GOD THEY MUST KNOW SOMETHING I DONT!!! BUY BUY BUY QUICK QUICK QUICK...37% price swing in a single day. It can easily fall just as quickly if people start trying to claim that 37% profit and start selling...sparking a similar crazed bout of selling amongst others.

Obamas plan hasnt even got out of the traps yet, and the real impact [ and judgement on it] wont be felt for well over a year if not longer. The market commentaries I have seen have tended to be unrelentingly negative about Obamas plan - criticising it as vague, not enough and badly though out. Of course these same market commentators werent exactly prophetic about the current market conditions either.

Manic Moran

Dannyboy83 wrote: »

Yea but apparently CitiBank had a really good quarter in general.

Not sure that helps your accreditation to Obama's plan, however. For most of the first month of the "two good months," Bush was in charge. Obama's economic package was signed most way through the second month, so that probably didn't have much of an effect either. I realise this may be something of a hard idea to grasp, but is it possible that the actions taken in Oct and November of last year might actually have had a positive effect on the economy as well? It was big news at the time, after all.

From Yahoo finance, on the longer term (i.e. more than today's closing bell).

A gain on Wednesday would give the Dow its first two-day winning streak since early February. But Wall Street is used to false starts. The Dow had gained 200 points in a single day five times in 2009 before Tuesday. Each time, it lost ground in the next session, twice by triple digits.

And after they hit their lowest points last year, both the Dow and the Standard & Poor's 500 jumped about 20 percent. But those lows didn't last, and Wall Street is now trading well below those levels.

Overheal

Apparently wealth globaly has dropped over $25 trillion since Obama took office, according to Limbaugh here on the radio. Can we blame him for all of it? No. Only in the same way we can credit him with a one or two day bounce.

Manic Moran

Well, so much for the great recovery. Dow's down 50 right now. I guess Obama needs to go to Plan B?

NTM

Pocono Joe

I know Obama's Plan A is Blame Bush, is Plan B Blame Rush?

buynow

Pocono Joe wrote: »

I know Obama's Plan A is Blame Bush, is Plan B Blame Rush?

Whether or not it is plan B, It is having the desired effect.
Republicans and the right wing media are spending a lot of time and effort defending a radio host.

Overheal

miss the good old days when everyone blamed communism?

Manic Moran

Life was much simpler then...

NTM

Pocono Joe

Overheal wrote: »

miss the good old days when everyone blamed communism?

What goes around comes around. Although this time I'm afraid it will become a domestic issue.

Black Swan

Are we on the same page posters? If Citi turned a profit during the first two months of 2009, why were they given bailout monies late last year? Is this a case for creative accounting, or did they need or deserve the bailout monies in the first place? Does anyone see the craic? Give Bad B!ue a few billion, and she'll show a profit too!

Pocono Joe

Blue’s comment got me thinking about something else that’s been eating away at me for awhile. I’m not quite sure this fits here (or maybe I’m too lazy to start a new thread this morning), but I’ve been asking bankers and CPA’s a simple question for months now, and I can’t get a straight answer. Bankers give me a blank stare and CPA’s usually say they just don’t know.

In the US, many of the loans on homes over the past 10 years are purchased with less than a 20% down payment (I’ve been told upwards of 90%). Lenders therefore require the people taking out loans to pay PMI (private mortgage insurance) as part of the loan.

"If your down payment on a home is less than 20 percent of the appraised value or sale price, you must obtain private mortgage insurance, known as PMI, with your lender. This will enable you to obtain a mortgage with a lower down payment because your lender is now protected against any default on the loan."

It is the best of all options for banks. Supposedly, if you default on your loan, the bank is paid through PMI for the difference from what a bank gets in foreclosure and the balance of the loan. Yet you the individual with the loan, are still on the hook for the difference of the revenues in the sale of the property and the balance of the loan (if you don’t get the loan dismissed in a bankruptcy filing), even though it was you that paid the PMI premiums. Therefore the bank does a little double dipping in event of a mortgagee’s default.

Here is my question. How are the banks in financial trouble because of the defaults involved in the mortgage crisis? They are guaranteed full payment on monies lent.

Some of the CPA’s have stated that is why companies like AIG are in trouble. I can somewhat understand this, but AIG got a bailout. And if AIG is in trouble because of PMI payments, why are the banks in trouble? Something Is Rotten in the State of Banking!

If I am wrong in my thinking, neither bankers or CPA’s have indicated so. If someone can give me a real answer to this, it would be appreciated.

Dannyboy83

Manic Moran wrote: »

Well, so much for the great recovery. Dow's down 50 right now. I guess Obama needs to go to Plan B?

NTM

LOL, whats that mate?
A Sarah Palin inspired frontal lobotomy for the whole population?:pac:
If she became President, I would defect to North Korea:D


I think Obama's real plan B is to colonise Mars and forget about the rest of us here.;)

Trouser_Press

Manic Moran wrote: »

What, the steady free-fall from early February (about 8,300 on the DOW) to yesterday (6,300) had nothing to do with Obama, but today's 400 point jump is a result of his plan?

And the 400 point jump had nothing to do with Obama, but he was the cause of the "steady free-fall from early February"? Is that what you're saying?

Ah honey, the Republicans are outta power.....get over it.

Manic Moran

You appear to have missed out the second part of my post where I made the same comment about the large jump during the Bush adminstration.

Is that what you're saying?

I'm saying that

he was the cause of the "steady free-fall from early February"?

is just as sustainable as saying that the 400-point-jump being attributable to him.

i.e. In my opinion, neither is.

NTM

Hobbes

Manic Moran wrote: »

What, the steady free-fall from early February (about 8,300 on the DOW) to yesterday (6,300) had nothing to do with Obama, but today's 400 point jump is a result of his plan?

I agree with Manic Moran. Anything that Obama implements now isn't going to have any real impact for years.

The stock market bouncing is just the stock market.

Overheal

Look, his success or failure is never going to be measured properly by the dow, to be honest. When companies start turning profits and unemployment starts to drop a few points, that will be a much better indicator of things turning around.