Morning Update: Buffett Backs Mortgage Plan
The markets are getting a small bounce in early trading, as Bernanke testifies again today to the Joint Economic Committee. Bernanke said the financial market crisis is affecting the broader economy, especially the availability of credit. He still expects GDP to expand in the second half, but Q4 is looking like it could be pretty weak.
He is urging Congress to act quickly to pass the plan. Bernanke is also trying to stress that this plan should be viewed as an investment, and not an expenditure. There should be a significant return of the $700 billion borrowed (I think the govt. will actually make money on this plan)
Warren Buffett entered the fray last night, when he made a $5 billion investment in Goldman Sachs (GS), buying a preferred stock position that will yeild 10%. Goldman will also raise another $5 billion through a common stock offering priced at $123.
Buffett said in 5-10 years we will look back and see that there were some extraordinary buying opportunities. Buffett added that Congress needs to pass Treasury's plan, and that he would not have invested in Goldman if he thought the govt. plan would not go through.
Asian markets were mostly higher overnight. The dollar is slighltly higher this morning, and oil is also higher, near $108. The 10-year yield is lower at 3.77%. And the VIX is still high at 36.24.