Initial Jobless Claims - Better than expected Israel Rejects Temporary Truce as Gaza Fighting Intensifies Treasury Drafts Broad Guidelines for More Aid to Auto Industry
COMMENTS The fat lady is half in the bag, humming to herself. Hopefully she will stay awake until midnight in order to belt into full song. In the meantime, she wanted us to let everyone know how grateful she is to have learned so many new things in 2008 including quantitative easing, claw backs, vertical slices, TARP, suspended redemptions, breaking the buck, ponzi scheme, and ZIRP. She definitely learned a few other acronyms this year (TAF, TSLF, TALF, etc) but she gets easily confused given how much she has had to drink this year. Speaking of confused, what a year for financial markets. As so much has been written on the subject already, we will instead keep today’s message brief as there was plenty of fix-related action on which to focus (have a look at an intra-day GBP chart which got destroyed if you are in front of your computer). We will, however, make one nostalgic point — this year was the worst year for stocks since 1931. For those who are too young to remember, 1931 was the year that Al Capone was put in jail, Nevada legalized gambling, Willie Mays and Micky Mantle were born, and both the Empire State building and the George Washington bridge were opened. In any event, back to the present as we sit on the cusp of 2009. As we close the books for the final trading day of the year, many of the market moves played out as asset allocation models would suggest. The EUR and GBP were sold hard into the 11 am fix, equities rallied on good breadth, and bonds sold-off (most aggressively in the long end). Most of the activity was of the real-money/forced nature variety and therefore it probably isn’t worth reading too much into the moves. We also had better than expected claims although there is likely some noise in the data due to the Christmas holiday. Looking ahead to next year, we kick things off with ISM on Friday and the employment report next week. In the meantime, we are left wondering what President-elect Obama and his counterparts around the world have in store for us on the fiscal stimulus front. Best wishes for a happy and healthy 2009 from all of us at Goldman Sachs.
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