Here are some of the things that happened while I was gone for most of the day:
The United States GDP report came out today and it was better than expected, though still a contraction – unchanged from the first quarter. Along with it are a set of data pointing to a slide in consumer spending, residential investment and exports, though all better than Q1. Government spending rose more, however, than previous period. Another sign of improvement was seen in the jobs front as the US initial jobless claims fell last week. Though positive news for the economy, it is countered by some grim report from the FDIC with its fund shrinking yet again from $13.3bn in Q1. Bair also added that bad loans are increasing and “problem” banks similarly rose.
An hour before the market closes, all major averages have rebounded after a little drop after the open, continuing their rally from yesterday. The Dow is now up by a little over half a percent, while the broader index S&P rose almost 4/10 of a percent. The Nasdaq is essentially flat. That only highlights that the markets are not yet done rallying – and that they are defying beliefs that had been consistently held on to as true – until recently. Now some questions are being raised. Also you might also want to consider what Doug Kass is saying – after such a huge run-up from the March bottom, he believes we’ve already reached the top of this rally for the year.
Some other news making the waves are the following: Goldman said to be subpoenaed after a story from the Wall Street Journal broke out Monday about their “trading huddle”, which provides trading tips to selected clients, which oppose ratings that come out of their written reports. Then you have Allen Stanford finally completing his Madoff-ish adventure by pleading guilty to the $7bn Ponzi scheme charged against him. Also coming in today relates to what is perhaps the topic that is easily one of the biggest during this whole recession: bonuses and you have both the French and the Brits working hand in hand in championing the idea of applying taxation to the banks’ profits.
That’s it for now. At least I think those are some of the important ones for the day. I’ll leave you with this bonus link to something yet again related to pay, from Clusterstock, which analyzes both the costs and benefits of paying so much for finance people. Inspired by an op-ed from the FT.
And I’m out.