This week, the stock market rally further.
According to the news, it is due to:
- Banks (Citi, Bank of America etc) proclaimed that their Jan & Feb 09 results are strong;
Federal Reserve announced on Mar 18 that it will buy up to $300B treasury bill from the market and buy addition mortgage-back-security from financial institutions.
- Better than expect economic data (see below)
- The 2nd announcement trigger the bond interest rate and the US dollar to fall. It will also trigger an inflation in future when the economy start to recovery.
- Internationally, it is not a fair and just method in order to stimulus the economy. Why? At first, US government issue bonds to foreign countries, then it press the button to print more $$ out to buy back the bonds that they issued out. Foreign countries like China which held more than $700B US Bond will suffer a loss due to US dollar drop and reduction in future return when interest rate fall.
Economic Data:
- US Feb building permits up to 547k (better than expect, 547k), prior 531k
- US Feb housing starts up to 583k (better, 450), prior 477k. Good sight, but compare to an average of 1M house start, 583k still looks too low and it may take at least 1 year to recover the # back to average;
- US initial jobless claims on 03/14 down to 646k (better, 655k), prior 658k. Even though the total jobless claim rise further to historical high, I think it is reasonable given the unemployment rate rise to 8.1% and both figures will continue to rise in 09;
- US Feb Core PPI up 0.2% (better, 0.1%), prior 0.4%
- US Feb Core CPI up 0.2% (better, 0.1%), prior 0.1%
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