Only one week ago, market participants were wondering if Citigroup ( C) and General Motors ( GM) would be forced into bankruptcy. Now, bulls have carried a four-day winning streak -- one that saw the Dow Jones Industrial Average rally 10% -- into the weekend, and they're hoping that more good fortune will be in the cards during the coming week. How exactly did the market go from bankruptcy watch to rally mode? Credit good news from three financial institutions, namely Citigroup, Bank of America ( BAC), and JPMorgan Chase ( JPM).
Market participants will also watch for any hint of changes to the fair value accounting rules. They have long complained about the Financial Accounting Standards Board's statement 157, which was implemented in 2007 to change the definition of fair value -- the measure of the worth of an asset on a company's books -- the methods used to measure fair value, and the expanded disclosures about fair value measurements. The so-called mark-to-market rules have led to assets being priced well below their real valuation, making it impossible for banks to purge the toxic assets from their books, so any mention of change to those rules is well-received by the market. Both mark-to-market and the uptick rule have been in the spotlight lately. During the past week, Rep. Barney Frank (D., Mass.), among others, expressed support for a change to mark-to-market accounting rules as well as the uptick rule. "The uptick rule issue is done. People expect it to be put back into place," said Wells Capital's Paulsen. "However, mark-to-market is still very much up in the air, but it is the closest to being revised since the crisis began. You have a number of significant voices that more or less have said they support some sort of modification, including
Federal Reserve Chairman Ben Bernanke and billionaire investor Warren Buffett."
The TALF was designed to support the issuance of asset-backed securities collateralized by student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration. The program could see the New York Fed bank lend up to $1 trillion. On Friday, the New York Fed said it would extend the window for the first subscriptions for funding from the TALF by two days to March 19 to allow more time for borrowers to complete the documentation associated with the initiation of the program.
Any surprises from the Fed may come out well before the interest rate decision as Bernanke is set to appear Sunday night on CBS' 60 Minutes program. Bernanke is set to discuss the financial crisis, the recession and how the Fed is handling it all in his interview.