Big Events this Week

September 17, 2007

1) The obvious is the Fed rate decision tomorrow at 2:15pm EST
Expect serious volatility across all financial markets. Fed fund futures are now pricing in a greater chance of a 50bp cut than a 25bp cut. More specifically, the futures are pricing in a 54 percent chance of a 50bp cut against a 46 percent chance of a 25bp cut. On the other hand, compared to when we originally published this report on September 12th, the percentage of economists polled by Bloomberg expecting a 25bp cut has jumped to 78 percent from 69 percent, while only 18 percent expect a 50bp cut, down from 21 percent last week.

2) Lehman Brothers will be reporting earnings tomorrow, No time has been supplied
Earnings data will give us more detail on how bad the subprime impact has had on Lehman’s earnings. Don’t forget, they have announced close to 2000 layoffs. There is widespread fear that banks are not only sitting on bad loans and wrong-way trades, but they might also detail stalling takeover activity and a dearth in corporate debt financing. The data may not be that bad however because there is no set way to account for losses.

3) Goldman Sachs and Bear Stearns reports on Thursday before the market open
Goldman Sachs will benefit from a $2.15 bilions sale of Horizon Wind to EDP- Energias de Portugal SA in the third quarter. Bear on the other hand had 2 of its hedge funds collapsed into bankruptcy this summer.

4) Friday is the Quarterly Expiration of Stock and Index Options and Futures
This always creates a rise in volatility in the financial markets.

Posted in Bear Stearns, Bernanke, Forex News, Goldman Sachs, Lehman