Weekly Market
Review
03/17/08
How big does a corporation have to be to
be too big to fail? The Federal Reserve pulled out all stops last week in
an attempt to save the 5th largest US securities firm from
financial ruin. By early Friday morning, the Fed had agreed to loan
undisclosed billions to a collapsing investment firm, something they have
not done since the 1960s. The complicated transaction, involving a
commercial bank serving as a monetary go-between, was designed to prevent
further panic on Wall Street (source: Financial Times).
The Fed’s historic action on Friday came
just 3 days after the central bank had agreed to swap up to $200 billion of
troubled mortgage-back securities from banks and investment houses in
exchange for the safety of Treasury securities. The infusion of
higher-credit rated paper into the financial pipeline could allow lenders to
get back into the business of lending, providing a supply of funds that had
dried up (source: Barron’s).
As if the Fed hasn’t been in the news
enough already, the spotlight will be turned back on them with their
scheduled meeting on Tuesday. If they lower their key benchmark interest
rate as expected, the US dollar, already at an all-time low vs. the euro,
could suffer further declines. If they decide to leave interest rates
unchanged for the first time since August or if the rate cut is smaller than
expected, the struggling US stock market could fall further (source: Federal
Reserve).
Notable Numbers for the Week:
1.
EXPORTS
- The upside to a weak US dollar is that theoretically
the cost of US exports is cheaper for a foreign buyer. The $148 billion
of exports the US recorded in January 2008 is an all-time monthly
record. That total is +80% more than the monthly export total
recorded 5 years earlier (source: Commerce Department).
2.
ONE IN A HUNDRED
- 1.2 million US households have a net worth of at least $5 million
not counting the family’s primary residence. There are approximately 110
million households in America (source: Census Bureau, Investment News).
3.
BIG DEBT
- The total value of home mortgage debt (including home equity loans)
held by Americans has increased +53% in the last 4 years. The amount owed
nationwide is $10.5 trillion (source: Federal Reserve).
4.
THE OTHER ELECTIONS
- In addition to a presidential election to be held on 11/04/08,
voters in 33 states will also be selecting 35 US senators.
Republicans currently hold 23 of the 35 seats up for reelection and
Democrats hold the other 12. The current split in the Senate favors
the Democrats 51-49 due to 2 independents that traditionally side with them
(source: Senate).
|
Securities offered through
Registered Representatives of NFP Securities, Inc., |
|
a Broker/Dealer and Member
FINRA/SIPC |
|
Investment Advisory Services offered through Investment Advisory
Representatives |
|
of NFP Securities, Inc. a
Federally Registered Investment Advisor |
|
NFP Securities, Inc. is
not affiliated with Barnes and Sherry. |
|
|
|
This site is published
for residents of the United States only. Registered representatives |
|
and investment advisor
representatives of NFP Securities, Inc. may only conduct business |
|
with residents of the
states and jurisdictions in which they are properly registered. |
|
Therefore, a response
to a request for information may be delayed. Not all of the |
|
products and services
referenced on this site are available in every state and through |
|
every representative or
advisor listed for additional information, please contact the NFP |
|
Securities, Inc.
Compliance Department at 512-697-6429. |