There are hopeful signs that a bottom is forming in the battered stock market. The market surged upward yesterday when the vice chairman of the Federal Reserve hinted that the Fed would be more open to additional rate cuts than had been previously communicated.
Perhaps most positive the market traded "even" today in spite of two big up days in a row. Tonight Chairman Bernake, speaking at the Charlotte Chamber of Commerce, more broadly confirmed that additional rate cuts are likely.
Other signs of a bottom is that several banks have received significant capital infusions. Other well regarded "big investors" are starting to take advantage of beaten down shares in companies like E-Trade. UBS made a decision to more their SIV's onto their balance sheet.
Financials have strengthened. Oil is backing away from $100, for now. Big tech growth stocks have quickly bounced back and are trading close to their previous levels.
There is still a long way to go, but signs are promising. Tomorrow's debate will be between those that are inspired by the prospect of rate cuts and those that fear that the need for more substantial cuts means we are headed for recession.
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