This is going to be an important week for the stock market. The biggest news will be the unveiling of the Obama administration’s bank rescue plan later today. In fact, Asian markets have already rallied strongly in anticipation. Clearly, the markets prefer certainty over uncertainty.
We don’t know the details yet of the plan but early indications are that it will be a private/public hybrid that will try to get troubled assets off the balance sheets of many banks. Tomorrow, the president will hold an evening televised news conference.
When Treasury Secretary Tim Geithner first spoke about the rescue plan six weeks ago, it lacked so many details that the market sold off strongly that day. Over the next 17 days, the Dow dropped nearly 1,700 points. Unfortunately, the Obama administration has not done a very good job of soothing investors’ nerves. Let’s hope the markets aren’t left in dark this time.