Risk and Return

Yesterday was one fo the best days ever for the stock markets:

What does it mean? I think it ultimately depends on factors unrelated to the move itself. Econompic provides us with some context:

Obviously large one day moves in and of themselves tell us little about what is to come. So, let us at least look [...]

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Durable goods cam in better than expected, though it may only be due to a temporary bump:
Miller Tabak’s Peter Boockvar notes that “the Govt stimulus package has a depreciation tax credit that expires by year end — so companies have to now use it or lose it. That could have had an impact on order [...]

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You may remember the website we discussed back in January. Dale Franks just discovered their program, because they now are on Television. He asks the obvious question:
So, should the mortgage companies get off scott-free from facing the results of their poor business decisions when it comes to the loans—loans they shouldn’t have made in the [...]

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From the New York Times:
Earlier this year, Mr. Bush derided a modest plan to provide $4 billion to states and localities to buy foreclosed properties, saying that buying up empty homes helps only “the lenders or the speculators.” Actually, it protects entire neighborhoods and local economies from the effects of foreclosures by preventing a greater [...]

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We should start out with some humor:
A robber in a ski mask blamed the bank for what he was about to do, The Associated Press reported Feb. 22.
“You took my house, now I’m going to take your money!” the assailant hollered. Talk about a reverse mortgage!
The FBI plans to review the bank’s foreclosure records for [...]

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So claims Alex Tabarrok. Alex and his blogmate Tyler are two of my favorite bloggers, but on this matter I think Alex is wrong. Unlike for some, his argument doesn’t invite scorn, because humility should teach us that sometimes things are different, and we cannot always fully understand why, at least not until after the [...]

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The GDP numbers came out yesterday. For a breakdown, including the inflation component, go here. For the announcement from the BEA go here. The Fed also cut rates by 50bps. Here is the Journal’s story.

Reactions:
Barry Rithotlz- Q4 GDP: El Stinko!
• Consumption slowed to 2% from 2.8% in Q3; I suspect that only partly reflects real [...]

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youwalkaway.com

I really have little to add to my declaration of extreme discomfort.
H/T: Barry Ritholtz
Much more on this here.
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Ben Bernanke gives Congress and the President the green light to take steps to stimulate the economy along with a warning:

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There has been a considerable difference between the two indexes of housing prices. Calculated Risk notes a new paper analyzing why and notes these implications:
This suggests that one of main differences between OFHEO and Case-Shiller was that Case-Shiller included many non-agency homes financed with subprime loans. These homes saw more appreciation during the boom, and [...]

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From a post at the Minneapolis Star Tribune’s buzz.com describing the impact on neighborhoods in Minneapolis of the spiraling number of foreclosures. Each pin is a foreclosure. 725 total in North Side. (HT: Instapundit)
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Paper Economy has taken a close look at what it will take to get inflation adjusted housing prices in Massachusetts back to trend over a five year period. It should be noted that for this to happen sooner the decline would have to be deeper (due to inflation doing less of the work for us.)

The [...]

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