Temp Rule on Short Selling
The Securities and Exchange Comission has announced a temporary rule on short selling of investment bank stocks as well as the stock of Fannie Mae and Freddie Mac. The rule will require brokers to actually pre-borrow the shares before shorting a stock. Currently many short sellers could short a single stock based on the same shares; the new rule will require a broker to cover shorts, share for share by removing shares from the market once a stock has been shorted. The SEC will consider extending this rule to the broader market. To me this is kind of a “duh,” or, self evident principle that should have led to reform years ago.
Payrolls Shrink Again!
Payrolls shrank again in June for the sixth consecutive month, this time, by about another 62000 jobs. Couple that with the market now entering official “Bear” territory and looks like we’re in for some real dog days this summer. Is it all doom and gloom? That depends on who’s talking. In the short term it most certainly is though the Fed is expected to be more bullish about prospects going into the new year (not to mention a new presidency).
In a recent Duke University survey of CFO’s the highest priority worries were 1) consumer demand; 2) cost of labor; 3) cost of fuel; 4) interest rates; 5) cost of health care. Interestingly, European and Asian business leaders were much more optimistic.