BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[All eyes on the cost of money]]>http://www.bloggingstocks.com/2007/08/13/all-eyes-on-the-cost-of-money/http://www.bloggingstocks.com/2007/08/13/all-eyes-on-the-cost-of-money/http://www.bloggingstocks.com/2007/08/13/all-eyes-on-the-cost-of-money/#commentsFiled under: ,

Investors will be focused on the cost of borrowing short-term money as the week begins. Liquidity fears jumped last week when LIBOR rates began to spike in Europe, a sign that money was hard to find. Also, in certain trading days, the euro was quite weak, signaling that investors were moving out of euro's and into other currencies.

Supposedly, some European money-market funds might contain more toxic paper -- subprime and other leveraged loan instruments -- than international investors would have liked, leading investors to start moving assets out of these short-term instruments and back into their local currencies.

As a reminder, as the week begins and concerns about global liquidity persists, U.S. corporations, excluding those that have not been absorbed by private equity, are cash rich and not very leveraged. Most publicly traded companies are prodigious generators of free cash flow.

Further, despite the subprime mess and constant screams that Americans do not save, households have over $5 trillion of cash and equivalent assets. Therefore, both Corporate America and U.S. households are flush with cash.

Look for a drop in LIBOR and U.S. short-term lending rates this week as U.S. and European bankers' efforts to add liquidity to the market take hold. This will be the first step in a series of steps to add liquidity to the U.S. and European economies for the remainder of 2007, which will prove bullish for stocks.

All eyes on the cost of money originally appeared on BloggingStocks on Mon, 13 Aug 2007 16:45:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>borrowingeuroEuropelendingLIBORliquidityshort-termMon, 13 Aug 2007 16:45:00 EST