Weak data regarding new home sales and manufacturing is not enough to thwart a rally in the stock market. A rally based on hope the Fed will offer additional stimulus to get the economy rolling again. Recall, this week the U.S. central bank is hosting central bankers from around the globe at a conference in Jackson Hole, WY. The markets are anticipating Fed Chairman Bernanke will offer QE3 at his closing speech on Friday.
Speaking of the Fed, Bloomberg finally obtained documents through the Freedom of Information Act regarding the Federal Reserve’s activities in the midst of the 2008 financial meltdown. What these documents revealed was a much deeper crisis than was known. We all knew the dollar amounts doled out by the bailout fund, but what was not known was how much direct intervention was provided by the Federal Reserve to Morgan Stanley - $107.3 billion, Citigroup - $99.5 billion, Bank of America - $91.4 billion, as well as foreign banks including Royal Bank of Scotland Plc - $84.5 billion, UBS AG - $77.2 billion, and Hypo Real Estate Holding - $28.7 billion. In addition, Bloomberg reported that on the promise of confidentiality, Barclays Plc borrowed $66 billion and Deutsche Bank AG borrowed $66 billion. Clearly the financial system was in serious distress and one has to wonder if things are much different today.
The last item of note today is Treasury will be selling $35 billion in 2-year notes, so stay tuned.
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