March 8, 2008

Market Comments for March 8, 2008

1) The non farm payroll for February came in at a truly disastrous minus  -63,000. Most analysts had been expecting gain of 30,000. Earlier months were revised down dramatically. It is the worst payroll performance in 5 years. NASDAQ and most other stock indexes hit a new low for the year. An omen of worse to come.

2) The second richest man in the world now is Carlos Slim Helu, according to Forbes Magazine. He has the telecom monopoly for Mexico and is worth $60 billion. To make that amount of money shows you how far the third world has come and how far the US has fallen. Bill Gates lost his number one position to Warren Buffet due to the Yahoo deal.

3) The Fed announced a $100 billion term auction facility (TAF) designed to bring LIBOR interest rates in line with US market rates. This is good. Looks like the Fed will have to cut the discount rate at least another 100 bp to 1.75% in this cycle. The Fed will soon be paying you to buy stocks as this will constitute a  negative real 1% interest rate.

4) Citibank announced that it is reducing its US mortgage lending by $45 billion this year. This is a case of closing the gate after the horses have bolted. The stock hit $21, down from $60 last June.

5) Thornburg Mortgage, the largest provide of jumbo mortgages in the country, has defaulted to several lenders. The stock has dropped 87% this week and the company has said that it may have to cease operations.

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