Hot Potato

Last week’s announcement from the Fed following their regularly
scheduled meeting helped the market gain traction in its most recent
rally. Like pedestrians stepping out from under cover following rain,
investors seemed to make tentative steps towards equities again – but
the storm clouds still linger on above them. The surging rate in
unemployment continues to be relevant and this week’s New Home
Sales, GDP, and Personal Income reports are likely to spur a fresh
round of volatility.

PPI data from last week was nearly in line with expectations and the
CPI numbers dealt a new hand of inflation concerns, something that
is an unavoidable topic of conversation for many analysts since the
Fed announcement sparked such strong sentiment towards US Dollar
weakness. While inflation concerns abound, the main focus this week
will be the investor reaction towards the so called “toxic assets” and
the plan to help unclog the credit freeze by assisting banks in
shedding the proverbial albatross.

The thing is, these bad loans and securities are not easy to toss
around. Many potential investors or private equity firms have skirted
these ill-fated objects. The trick apparently lies in this public-private
program which may tap into taxpayer dollars to help banks erase the
blemishes on the books. The market will be watching for a serious
level of commitment and any kind of vague plans may give way to

Past Performance is Not Indicative of Future Results.

a strong pullback, especially considering the atmosphere of anger
and frustration that seems to be developing regarding how much of
a leg up – bonuses or otherwise – certain companies seem to be
receiving. If a clear picture can be formed of how the plan will benefit
the public side and how strong the interest may be from private
investment willing to pick up the pieces, the positive feeling from
last week may continue through this week. The idea is to make sure
that the ones who end up holding the assets don’t feel like they are
getting burned.

Past Performance is Not Indicative of Future Results.

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performance is not indicative of future results. Copyright 2009 LaSalle Futures Group