Market Talk

Victory is ours...for today.

US stocks rally, as buy signals abound from overseas markets to the crude pits. Banks get the eased accounting rules they’ve wanted and a Dow Theory buy signal sets off industrials and transports shares.

DJIA rises 216 (2.8%) to 7978, S&P 500 jumps 23 (2.9%) to 834, Nasdaq Comp gains 51 (3.3%) to 1602. The latter is now positive for the year. DJ Transports surge 7.9%. Late selloff trims gains.

Today had the feel of a Big Day, from the G20 gabfest to the ECB meeting to the FASB concession on Mark-to-Market.  Whether it was actually a big day or the market just wanted it to be that way remains to be seen.

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In the War of Wealth, everybody loses.

The Financial Accounting Standards Board agreed to ease their mark-to-market accounting regulations, and while the market appears to like it, other observers are more skeptical.

Perhaps hostile is the better word.

Banks have been howling that the accounting rules have unfairly pushed down the valuations of their assets since the onset of the downturn. But supporters think mark-to-market gives investors a fair assessment of what assets are worth and changes would allow banks to overvalue their assets.

The Dow Jones Industrial Average gained more than 300 points in earlier trading as the financial sector praised the plan, but bloggers have met the rule changes with trepidation, noting the unintended consequences of the reforms and a lack of trust surrounding the banks.

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It’s hard to know what to make of the housing market. On the one hand, everything looks awful. On the other, not everything looks awful.

Of course, in a nation as big as the United States, coming up with one description of the housing market has always been something of a generalization. When things were looking great in California, they were giving land away in Kansas. As Nevada and Florida were crashing, other markets were doing fine.

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Speculators and the Fed certainly played key roles in the lightening spike in crude oil prices during 2007-2008, but price appreciation was “an inevitable consequence of booming demand and stagnant production,” James Hamilton writes at Econbrowser.

In a research paper, Hamilton, a University of California economics professor, looks at some of causes and consequences of the crude spike.

Crude oil surged to near $150 a barrel last year, but collapsed toward the end of the year as the global economy went into a tailspin. Crude has since rebounded a bit, currently trading above the psychologically significant $50-a-barrel mark and reaching as high as $52.36 in earlier trading today.

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This stuff used to be so hard; thanks FASB!

Newswires’ Matthias Rieker writes:

Bank stock investors might be getting in ahead of bank earnings reports in hopes for a big boost from the proposed changes mark-to-market accounting, which are expected to be voted on this morning by FASB.

So far, bankers have said little about the potential impact, but are careful not to imply any change might lift earnings as much as 20%, as some observers have suggested.

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The more that comes out about the Treasury Department’s Potemkin Village of a market platform for impaired assets, the so-called Public Private Investment Program (yes, as we all annoyingly know by now, it’s pronounced “PEE-pip” by the smart kids in Washington), the worse it sounds.

Because it’s starting to sound like a rigged game.

The latest revelation comes courtesy of the Treasury Department’s application form to be a fund manager in the PEE-pip, as the Wall Street Journal recounted yesterday. Only firms that already have at least $10 billion of toxic securities under management are eligible. That leaves us out, and just about everybody else, too.

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US stocks poised to bound higher at the open, influenced by rallies in overseas equities markets, and investors’ stronger proclivity to peer beyond the current grim economic headlines and scour economic data for signs things aren’t still getting worse.

Prospects for relaxation in mark-to-market rules are tantalizing risk takers as well. France and Germany talking tough at G20 gathering, taking a firm stance on reshaping global financial regulation.

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