Look For Volatility to Continue
Is the U.S. economy beginning a recession, or are we merely experiencing a correction? Is a bear market on the way for 2008? How much longer will the subprime crisis linger? These questions and plenty more are being asked daily, and assuredly someone somewhere has the answer, but who? What is for sure, is that the volatility that has been the benchmark of this year, will likely continue.
On November 30, which is next Friday, the year-end markers are due for several of the country’s biggest banks–Bear Stearns, Lehman Bros, Goldman Sachs, and Merrill Lynch. The banks will be looking to clear their ledgers for the next year, and depending on what they have to liquidate to do so, could push the financial sector even lower. As it stands now, the sector has lost 27% off its high, according to this article on thestreet.com. The Dow is at it’s lowest point since April, and has given back almost 10%, since reaching the year’s high in October.
If it’s volatility that you’re looking for, then in addition to the markers coming due, there is a slew of reports coming out this week. The same article states:
. . .next week’s economic data pose some telling signals for markets on whether recession looms, and the Federal Reserve’s thinking. The Fed’s beige book, or intermeeting report on economic activity, comes out Wednesday, while Fed officials pepper the week with speeches, including one Thursday from Chairman Ben Bernanke. Tuesday brings November’s consumer confidence report, followed Wednesday by a read on business spending with durable goods orders for October. Most economists are expecting declines in both.
Lastly — as if Treasury Secretary Henry Paulson’s new view that the housing recession and upcoming loan rate resets need a united response from the mortgage servicing industry isn’t enough to spook investors — economists are predicting that both existing- and new-home sales, which are reported Wednesday and Thursday, respectively, will decline again.
Looks like the end of the year, will be anything but dull.
