A New President
Stocks fell dramatically on this “Inauguration Day” to below 8000.
Bonds lost ground, but gained half of it back the last couple of hours of trading. The long duration Treasury Bonds are fighting the low interest rates due to fears of inflation and the supply of new issues coming on the market. The only thing keeping interest rates down is the “promise” of the FED buying long term bonds – but so far they haven’t.
The Dollar rallied on bad news for European country ratings (S&P ratings). Spain has been downgraded. France is spending like a drunken sailor – but so are we.
Gold rallied again, and is out of the “buy” range, and is now a “hold.”
Oil rallied in the last few minutes of trade, and gasoline fell a couple of cents. We’ll see what this really means tomorrow.
In the news today….
Was it Obama’s speech or just a backlash from Wall Street that caused today’s fall? The market fell dramatically today as we inaugurated our new President. Obama emphasized how bad the economy is worldwide, and this certainly should have scared people. Obama also emphasized that Wall Street needs to be regulated much more than it currently is regulated (and I agree with this sentiment.) Whatever the cause, the market fell today.
Layoffs – there have been 85,000 layoffs this month so far. Unemployment will continue to be the negative driving measure of this economy in the near term.
Pay Cuts – As so many people are getting laid off, the rest of the employees are taking pay cuts in many industries. This was a trend in the Great Depression, and it will continue to be a trend in this economy. This isn’t so bad as the prices of items is decreasing at the same time (except gasoline, of course.) If wages and prices decrease at the same rate, there will not be a great hardship to the general population.
Obama’s Stimulus Package – President Obama is proposing a massive stimulus package, and I’ll ignore the negative consequences in this write up. Here are the highlights. Hopefully some of the EconomyGuy readers can take advantage of this massive flow of money into the economy:
- Road/Bridge building program. Lots of jobs for engineers, and project managers.
- Health Care System – Obama is proposing eliminating all paper patient records and replacing them with computerized records. The benefit of this change is great for the patient. (The downside is that this information becomes more available to other organizations, like insurance companies, and can be used against people.) Lots of jobs for IT software people, training professionals and salespeople. In addition, there is an ever present need for Nurses throughout the US. Every doctor’s office is expected to spend between $30K and $50K to implement and train for these mandatory changes.
- Financial Markets – Obama will be instituting significant changes in the regulatory system of all financial companies. (Long overdue, and totally mismanaged by Congress). Lots of jobs for Accountants.
- Energy – Obama will stimulate the economy by encouraging (through lots of money) the alternative energy field. There should be lots of growth of medium sized companies and quite a few start up companies taking advantage of this flow of cash. Lots of jobs for engineers and salespeople.
Let’s pray that President Obama is guided well to move our economy out of the downward trend that it currently finds itself. I wish him well as our new President.
International Affairs….
Prince Alwaleed bin Talal’s Kingdom Holding Company of Saudi Arabia lost $8B the last 3 months of 2008. While I don’t wish anyone ill, it’s nice to see that foreigners don’t really prosper out of our economic woes. He tried to make a fortune by buying Citibank shares at what he thought was a bargain. However, the price has continued to fall.
Here are Today’s numbers:
Dow Jones 30 Industrial – 7949 (down 332 points)
10 Year Treasury Bond – 2.35% (up 0.04%)
Euro – $1.2909
Gold – $855 (up $15)
Oil – $38.74 (up $2.23)
Gasoline – $1.14 (down $0.02)
