Here's a lesson to future central bankers: If you want to calm financial markets, get interviewed on a popular television show. If Oprah won't have you, try something else.
Ben Bernanke, chairman of the U.S. Federal Reserve, took this approach on the weekend, stepping out of the usual Senate hearings and sitting in front of the cameras at 60 Minutes – the first time a sitting Fed chairman has participated in an interview in at least 20 years.
There wasn't anything terribly new in his message – he remains upbeat that the U.S. should pull out of its recession later this year, but a recovery depends on stabilizing the financial system – but the fact that he said it on a popular news show seemed to resonate with investors on Monday morning.
U.S. stock index futures were higher with about an hour before markets open, suggesting that stocks will rise at the start of trading. Futures for the Dow Jones industrial average were up 78 points, to 7257. Futures for the broader S&P 500 were up 8 points, to 763.
In Europe, the U.K.'s FTSE 100 was up 2.1 per cent and Germany's DAX index was up 1.6 per cent in afternoon trading. In Asia, Japan's Nikkei 225 rose 1.8 per cent in overnight trading.
Okay, there was more to this budding rally – a potential fifth straight day of gains for U.S. stocks if it holds – than Mr. Bernanke's message. Barclays PLC joined Citigroup Inc. and Bank of America Corp. by saying that its businesses are performing well this year. Bloomberg News also said that the British-based bank has held talks about a potential sale of its iShares exchange-traded fund business. The shares surged 20 per cent.
As well, if investors had feared last week that Europe and the United States were going in separate directions in dealing with the economy – the U.S. supports massive stimulus spending; Europe not so much – then the meeting of the G20 finance chiefs served to paper over these differences.
On the weekend, the finance chiefs vowed to work together to clean up the toxic assets that are currently sitting on the balance sheets of major financial firms, affecting their financial health and exerting a drag on lending.
In Canada, investors at last have some clarity on who will serve as chief executive of Rogers Communications Inc., months after the passing of Ted Rogers. Say hello to Nadir Mohamed, long seen as the front-runner to take the reins of the cable firm.
