Stress Tests Finally Print
First up, let’s talk about the stress tests. Personally I could just as easily forget about them, because as I’ve said over and over again, the government wasn’t going to “spook” the markets with “true results.” This whole “exercise” is a just another effort to make us all “feel good.”
OK, the rumor mill has finally been shut down, and the facts, as the government would let us know them to be, are out… Let’s take a gander at the results!
The Wall Street Journal reported it like this: 10 of the 19 largest U.S. Financial Institutions will be required to raise a combined $75 billion in new capital.
The Washington Post reported it like this: Nine of the 19 banks do not need any new capital at all.
It’s all in the way you word it… Both of them are correct… The WSJ tells it like I think most people would want to hear it, while the WP, is for the “Pollyannas” of the world!
When it’s all said and done… This feel good circus is now over, and we can get back to dealing with the financial meltdown, deficit spending, China, and other things that are easier for us to deal with, like the story that came across the screens yesterday regarding credit card charge offs, than a feel good circus! Yes, the credit card charge offs are up 44% versu last year… Now, isn’t that one of those things that makes you go, oooooooohhhhhh nooooooooo!
The currencies drifted most of the day yesterday waiting for the stress tests results, and then rallied at the end of the day with the euro (EUR) pushing past 1.34 once again. The euro has fallen back below that figure again this morning, but remains close to the 1.34 figure.
Yesterday, the European Central Bank (ECB) did what I said would be the prudent thing to do, if you “had” to do it, and cut rates only 25 BPS, instead of the 50 BPS the markets were expecting. The euro had to deal with the dolts that think larger rate cuts are what values a currency… But, as I said before, the ECB wants to be able to come back to the rate cut table, if needed, and cut rates again.
Unfortunately for the euro going forward, ECB President Trichet finally gave in to the “weak links” in the European Union, and announced that the ECB would begin buying bonds to support the credit markets. This move was fiercely opposed by Germany’s Central Bank, the Bundesbank and it’s President, Axel Weber. I’m with the Bundesbank on this one… To bad Trichet “gave in.” This move now throws the European Union on the roster of nations employing quantitative easing… And you know where I stand with that!
Well… Today is the Jobs Jamboree for April… Yesterday, the Initial Jobless Claims fell from 635K the previous week, to 601K… And, just like I said they would… The media was all over this move, pointing out that this is most likely an indication that the recession is coming to an end. Well… Today’s Jobs Jamboree is expected to show a fall in jobs lost too… I guess they haven’t polled Chrysler and GM workers… But anyway, the “experts” believe April’s figure will be right at 600,000, down from last month’s 663,000. That’s quite a ride down the slippery slope don’t you think? I’m going to say that 600,000 is too “pie in the sky” and that the actual number will be disappointing compared to 600K. But again, if it shows a figure below last month’s 663K, then we’ll hear about how all is right on the night, and happy days are here again…
That should boost risk assets… Should…