Steady Trickle of Good News to Prop up the Mood of the Economy

Posted by Pat Kitano at 10/20/2008 10:11 PM
Categories: Economy


The world seems to have coordinated a strategy of a continuous flow of good news to maintain a positive investor mood.


After Warren Buffett's NYT "Buy American" editorial pumped up the final trading hour buying spree last Friday, Dow futures started the weekend looking negative. Then, over the weekend:
And on Monday:
All this good news will buffer tomorrow's unwinding of $400 billion worth of Lehman Credit Default Swaps tomorrow that forces holders of these CDS to pay up ~$360 billion. The massive hedge fund selling over the past few weeks was based in part to cover these losses, so we'll see what the net shock effect is tomorrow.

The world governments are now on a massive PR campaign to restore investor confidence. Frankly, that is good psychology.

 

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