Morning Update: Market Gains, but Signs of Cooling
U.S. markets led a global rally, surging for the second straight day yesterday as the Dow Jones Industrial Average gained roughly 5 percent (Chicago Tribune). The gains came following President-elect Barack Obama’s announcement of several important members of his economic advisory team, including New York Federal Reserve chief Timothy Geithner for Treasury Secretary, former Treasury Secretary Lawrence Summers as the head of Obama’s National Economic Council, and Berkeley economist Christina Romer to chair the Council of Economic Advisers. Obama also indicated he will seek to push through a large economic stimulus plan (WSJ) in an effort to boost long-term spending and economic recovery.
Stocks across Asia surged following the U.S. gains, but indices in Europe were mixed in morning trading (IHT).
Despite the cheery day for many traders, new economic indicators offer few signs of short-term relief, particularly in developed economies. New estimates from the Organization for Economic Cooperation and Development reckon the United States and Eurozone are both likely to suffer four straight quarters (FT) of declining economic output that will not end until the middle of 2009. Meanwhile, the World Bank estimated that China’s growth will continue to slow (AP), dipping next year to roughly 7.5 percent, its lowest level of growth since 1990.
For more on the credit crisis and its international implications, including new analysis of Barack Obama’s team of economic advisers, please see the website of CFR’s Center for Geoeconomic Studies.
November 25th, 2008 at 2:11 pm
With the Treasury Secretary on his spending spree he surely isn’t trying to get a good return on the tax payers’ investment. The bailout was to buy up bad mortgage debt but it never did. What is the purpose of the fund? Paulson’s has warrants on many banks and they average 1 – 3 percent when enacted. Yet the cash investment is about 20 percent of the market cap. Maybe the next Treasury Secretary will be less erratic.
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