Stocks Open Lower Ahead of Geitner Speech
The market is opening lower ahead of the much anticipated speech by Treasury Sec Geitner about the bank rescue plan. The market has been moving higher over the last few days, so this looks like a bit of the old 'buy the rumor, sell the news' action.
Many are skeptical that the new plan will have any revolutionary details. Most think that he will talk about public and private funds coming in to support "bad assets" on banks balance sheets (estimates near $500 billion), expand existing lending facilities, and announce additional steps to stem deteriorating mortgage conditions.
It is this last proposal that has been the subject of the most debate. There seems to be no clear way to offer new, lower interest mortgages without someone on the line to take a loss on the value of the home still being worth less than it was purchased for.
Oil is trading higher this morning, near $41, after the WSJ reported that OPEC is considering postponing new production projects.
Asian markets were mixed overnight. The dollar is slightly lower this morning, while gold is higher. The 10-year yield is 10 bps lower to 2.92%. And the VIX is higher to 45.4.
Trading comment: Yesterday I took profits in some energy and materials etfs, and also wound up putting on a small hedge in the Nasdaq. The Nazz is handily outperforming the S&P so far this year, and that relative performance gap could narrow.
Speaking of the SPX, it once again bumped its head at its overhead 50-day average. We still need to see a close above that level before the SPX is ready to breakout of this recent trading range.