Market Close-FedSpeak

Posted: September 4, 2008 at 4:16 pm by Chuck

The Fed’s Yellen and Fisher had a few words to say today. Yellen admits that rate policy is difficult to make in tight credit conditions. Fisher made sure to disavow any Fannie/Freddie responsibility, putting it squarely on the Treasury.

FED’S YELLEN: FED POLICY NOT VERY ACCOMODATIVE, SLUGGISH GROWTH SEEN IN 2H08, INFLATION RISKS HAVE FALLEN, BUT STILL AT FOREFRONT
- Notes does not see a wage price spiral, expects inflation to fall to just above 2% in 2009
- Pricing pressures have not disappeared, but tight credit conditions are making rate policy more difficult, US enduring a ’severe’ credit crunch
- Sees housing prices falling further, overseas economics are suffering from slow US economy<EUR/USD USD/JPY USD/CHF USD/JPY>

FED’S FISHER: UNCLEAR WHAT IMPACT STRONG USD AND CHEAPER OIL WILL HAVE; FNM AND FRE ARE FOR THE TREASURY AND CONGRESS TO HANDLE - Q&A

The Dow finished down 344 points, Nasdaq down 74, and the S&P got hit by a 38 point drop. A lot of red out there. Oil stayed within $107-$109, but the market kept falling, totally perplexing some people. It’s better than having oil at $145, but $107 is not a good thing. And, that’s pretty much the whole story these days. People want the market to rally, just because everything in the world hasn’t completely fallen apart. The market should rally because there is great economic news and real global growth, not just because Lehman (LEH) might be able to avoid an outright implosion. Talk about having lost perspective.

Technical levels were broken all over the place today. Chuck will have the charts tonight! Don’t forget that non-farm payroll numbers are out in the morning. They will be market-moving.