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Thursday, August 27, 2009

Morning Market Report

It was a peculiar day in the market yesterday. Both durable goods and housing starts came out in the morning. Both numbers were better than expected. Meanwhile, Treasury had a fairly significant auction. After all this, the market indices were barely changed. In fact, both NASDAQ and the S&P index was up less than one point. Go figure.

This morning, revised GDP came out along with weekly jobless claims. Both were better than expected and first time jobless claims were down for the first time . All three are currently up less than a quarter of a percent. The only mover with all this news is the U.S. Treasury bond. The rate on the ten year bond has gaine about five basis points since yesterday morning. It's currently trading just under 3.5%. The yield spread between the two and ten year has increased slightly and is now at 2.43%. Oil is relatively unchanged at $71.16 a barrel.

Markets in the Far East were mostly down this morning. The Hang Seng in China was down 1.04%, the NIKKEI in Japan was down 1.56%, and the Straits Time Index in Singapore was the only index up .53%. Meanwhile, it was almost the reverse. The FTSE in London was up .25%, the Spanish index was up .23% and the DAX in Germany was the only index down .16%.

The Dollar is mixed against the major currencies. It is up .08% against the Euro, it's up .32% against the British Pound, and it's down by .42% against the Japanese Yen.

Finally, the endless stream of bank bailouts and restructuring may have taken a toll. It seems as though the FDIC, the insurance company for the banks, may itself be running out of money.

The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year.

That has happened only once before — during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.

Of course, in the 1980's the Treasury itself had money. Now, it sounds like robbing Peter to pay Paul only both Peter and Paul have no money.

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