Market Briefing for 01/19/2009
The Bank of England revealed its second plan Monday morning, allowing treasury to buy back toxic assets. The new $73 billon plan is aimed at unfreezing the credit market, while purchasing stakes in banks to secure them from collapsing. While Prime Minister Gordon Brown is certain that the markets still requires further aid, meaning pumping more money into the system, some are now disagreeing about these methods, as the burden keeps on falling on taxpayers. In addition, skepticism is still sky high as previous plans have failed to secure the financial system.
.
Over the last couple of months, the U.K economy has gone from bad to worse as the subprime effect has fully leaked through the global system. Interest rates have dropped to 1.5% while economic growth has decreased by magnitude proportions. Industrial Production dropped last week by a whopping 6.9%, while inflation data didn’t show much of a positive result.
Even though central banks are doing their utmost to try to control the situation, commercial banks now seem to be prolonging the recovery, refraining from giving out funds. Due to the current economic situation, borrowers have been welcomed by closed doors, as banks are now reluctant to lend despite recent cash injections.
The U.S market will be closed today due to Martin Luther King Jr. Day; therefore traders shouldn’t be surprised to see little movement across the board. Major movement will come tomorrow as the world will view the main event; a new president will take oath.
Market Pivot Points
The Bank of England revealed its second plan Monday morning, allowing treasury to buy back toxic assets. The new $73 billon plan is aimed at unfreezing the credit market, while purchasing stakes in banks to secure them from collapsing. While Prime Minister Gordon Brown is certain that the markets still requires further aid, meaning pumping more money into the system, some are now disagreeing about these methods, as the burden keeps on falling on taxpayers. In addition, skepticism is still sky high as previous plans have failed to secure the financial system.
.
Over the last couple of months, the U.K economy has gone from bad to worse as the subprime effect has fully leaked through the global system. Interest rates have dropped to 1.5% while economic growth has decreased by magnitude proportions. Industrial Production dropped last week by a whopping 6.9%, while inflation data didn’t show much of a positive result.
Even though central banks are doing their utmost to try to control the situation, commercial banks now seem to be prolonging the recovery, refraining from giving out funds. Due to the current economic situation, borrowers have been welcomed by closed doors, as banks are now reluctant to lend despite recent cash injections.
The U.S market will be closed today due to Martin Luther King Jr. Day; therefore traders shouldn’t be surprised to see little movement across the board. Major movement will come tomorrow as the world will view the main event; a new president will take oath.
Market Pivot Points