A Fun Ratio
Stocks continued their decline today, dropping 101 points. This was mostly caused by concern that Lehman Bros needs to raise billions; but Lehman refuted the charge printed in the Wall St. Journal.
Bonds continued their interest rate decline, ending at 3.90% – a nice gain in price. This too was driven by the Lehman Bros. story as bonds are considered a “safe haven.”
The dollar had a dramatic gain today as Bernanke tried to talk the dollar higher using inflation as the scare tactic. I do not think Bernanke will be successful, as words alone do not move markets permanents. I would expect a dollar fall tomorrow.
Oil and gold fell slightly today, helping take the heat out of the speculative market.
In the news today……
Bernanke said the 2nd half of this year will have “somewhat better economic conditions.” He also signalled there will not be a Fed Funds rate cuts, nor will there be a rate increase, at the next Fed meeting.
Here is a fun ratio for you to think about regarding the housing market. Take the ratio of house prices to household income. This ratio peaked at 4.2 at the peak of the housing market boom. Today it is 3.4. One pundit said that housing purchases would be appropriate around 3.0.
Manufactured goods orders increased 1.1% in April. This followed an increase of 1.5% in March. This shows a generally improving situation in the industrial sector. However, remember that the industrial sector is a small minority of the GDP makeup. However, any good news is welcome news.
Here are today’s numbers:
Dow Jones 30 Industrial – 12,403 (down 101 points)
10 Year Treasury Bond – 3.90% (down 0.07%)
Euro – 1.5446
Gold – $893 (down $4)
Oil – $126.70 (down $1.06)
Gasoline – $3.39 (up $0.04)
