American Home Debt
The stock market is getting more interesting. The Dow Jones 30 Industrials moved down 214 points, and now is just a little higher than 12,000. That Nasdaq and S&P500 are both at 52 week lows. This doesn’t look good for stocks. Certainly not the place to be investing unless you are a day trader – and love risk.
Bonds rallied today with the 10 Year Treasury interest rate dropping 0.07%.
The Euro hit a new high today, meaning the Dollar took it in the shorts again. The Euro is worth $1.5386 today, and probably more tomorrow. Currencies is one of those places to be investing in.
Gold slip back on profit taking. It will undoubtedly blast through the $1000 level in the very near future.
Oil continued its painful march into unchartered territory, ending at $105.47.
In the news today….
The New York FED Chief Geithner said today that “low interest rates may stay around for awhile”. This makes too much sense, not to discuss it here. The Feds are lowering interest rates to save the banks from their liquidity crisis. Lower interest rates mean that banks will pay lower checking and savings and CD interest rates, and will make money on their traditional loans (mortgages, car loans, etc.) The lower the interest rate, the more banks will earn. Banks must earn a lot to pull themselves out of the potential bankrupt position some find themselves in.
The FED will be lowering the Fed Funds rate again this month – at least 0.50%, but maybe another 0.75%. The Fed Funds rate is currently 3%, so it will soon be 2.5% or lower. Great for the banks. The longer the Fed keeps these rates low, the longer banks can make big profits. That’s the game plan.
Did you know that the government measures the amount of equity that all Americans have in their homes? They’ve been doing this since 1945. Well, today’s announcement is that FOR THE FIRST TIME EVER, the amount of equity in American homes is less than half. That means that the debt on American homes is now greater than the equity. I never knew this statistic before, and I’m not sure what I’ll do with it yet. This problem will only get worse as the value of homes decrease. We got in this situation over the past 5 years because so many people took money out of their homes by refinancing.
Here are today’s Numbers:
Dow Jones 30 Industrial – 12,040 (Down 214 points)
10 Year Treasury Bond – 3.62% (Down $0.07)
Euro – $1.5386 – A NEW HIGH
Gold – $974 (Down $14) – a little profit taking from yesterday – resting before it climbs to the top of the mountain.
Oil – $105.47 (Up $0.95) - a NEW HIGH
Gasoline – $2.65 (Up 0.01)