Another Bear Stearns?
Stocks moved sideways today, but worry crossed the market as rumors about Lehman Bros. spread like a wildfire.
Bonds increased in interest rates as Bernanke jawboned about inflation. In fact, in a speech about 1970 inflation, he mentioned the word inflation 29 times. You can bet this was purposeful, while not being direct about today’s problems.
The dollar and gold basically moved sideways today.
Oil was the big story. It kept going DOWN, now at $122. However, in my opinion, gasoline was the headline story as it fell $0.16 today, and I’ve never seen that type of movement before. Those speculators must have sold their long contracts. Let’s hope the new prices hold for awhile so we see cheaper gas at the pump. It needs to stay at these levels for at least 2 weeks.
In the news today….
Gasoline demand was down 6% over the previous month. YAHOO!!!! You see price really does affect demand in a free society.
Productivity of workers was up 2.6% in the first quarter 2008. Unit labor costs rose 2.2% in the same period, and this is moderating. This was good news on the inflation front. If productivity can be improved, factories don’t have the same pressure to increase their prices, and workers don’t have the same pressure to have higher wages.
Dinner Conversation Tonight…..
The question for tonight is “Is Lehman Bros. in trouble – ala the kind of trouble Bear Stearns was in?”
Here are some things to think about while you’re discussing this interesting topic. Let’s look at the way Bear Stearns bit the dust, and turn that into a checklist:
- Is the Lehman stock price plummeting? Check
- Is the amount of Lehman stock option activity up significantly? Check
- Are the Lehman executives saying there is “no problem” regarding the Lehman liquidity? Check
- Is Lehman using the Fed Discount Window to get liquidity? Check
Those are the characteristics of Bear Stearns just before the famous Sunday JP Morgan buyout. And Lehman is doing the same thing. Could be interesting.
Here are today’s numbers:
Dow Jones 30 Industrial - 12,390 (down 12 points)
10 Year Treasury Bond - 3.94% (up 0.04%)
Euro - 1.5439
Gold - $884 (down $2)
Oil - $122.30 (down $2.01)
Gasoline - $3.20 (down $0.16)
