Obama Stimulus Package To Boost Jobs

Daily Market Commentary for September 7, 2011

President Barack Obama will propose a $300B stimulus package to boost jobs.
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Gold was tumbling lower today - down as much as $80 an ounce ahead of the lunchtime hour on Wall Street. Platinum has officially taken the back seat to gold - at least as a lesser desired security blanket. The Dow Jones Industrial average was hosting a nice triple-digit gain into same time period, ending the session higher by 276 points. U.S. stocks on Wall Street rose for their first session in four. The NASDAQ ended the session with a gain of over 75 points and the S&P 500 closed the day higher by over 33 points.

Federal Reserve Chairman Ben Bernanke will get an opportunity tomorrow in Minnesota to lay out what the U.S. central bank can do to revive the economy. The world’s most powerful central banker, Federal Reserve Chairman Ben Bernanke, largely kept quiet on what the Federal Reserve is considering in the face of data showing, at best, a languishing economy. Two key allies for Bernanke, on the Federal Open Market Committee, Vice Chairman Janet Yellen and New York Fed President William Dudley, haven’t shown their cards of late either. Its expected that Bernanke may refrain from giving clear QE3 hints at the Minnesota speech which is due for release at 1:30pm ET. FED minutes of the August 9th meeting show three options under consideration: swapping shorter-maturity government securities for longer-dated ones, buying more bonds, and reducing the interest rate paid to private lenders for the reserves they park at the central bank. The swap idea appears to be gaining traction in part because it will not draw as many howls of protest politically that outright bond purchases would encounter. Additionally, because inflation hawks who fear the size of the Fed’s balance sheet would be less likely to oppose an operation that doesn’t change it.

More good news on the front - it was reported that Germany’s top court ruled it legal for the country to take part in regional rescue plans. In Berlin, Germany, the country’s Constitutional Court rejected lawsuits aimed at halting Germany’s participation in emergency loan packages, easing worries some about Europe’s ongoing debt troubles.

Fed Beige Book released at 2:00pm ET today showed the U.S. economy is expanding at a modest pace. The characterization, laid out in the Fed Beige Book of anecdotal evidence the central bank collects before each interest-rate decision, won't come as a huge shock after data showing zero non-farm jobs created in August and faint activity in the manufacturing and service sectors. The report which is based on information collected on or before August 26, shows that market volatility and economic uncertainty has led many to either downgrade their assessments or become more cautious. Views by 12 Fed districts ranged from 'modest or slight expansion' from five Fed banks to 'somewhat weaker' in the Philadelphia region.


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