Be Ready To Act

This is the way a market reacts to a recession. The Dow Jones went down 307 points today, and amazing fall. Interest rates fell, oil fell, gasoline fell, gold fell.

In the news today…..

The Service Sector contracted SIGNIFICANTLY in January. The ISM Index for the Service Sector was 54.5 in December, and 44.6 in January. Anything under 50 is a contraction. NO ONE thought this would be contracting in January. EVERYONE expected a slight expansion (an index value over 50). This is what shook the market today. This is one of those significant measures of the economy, and it scared ALL markets.

Remember that as the US goes, so the world goes. So, oil futures prices declined as the world is now expected to go into recession (or better put, depression.) Even gold backed off its highs, but I believe this will be only temporarily.

The Richmond US Federal Reserve Bank President stated today, that our “struggling economy may need more rate cuts.” And he “sees a recession that is shallow with a short recovery.” These are the MOST NEGATIVE words coming out of any FED official regarding our economy. Take heed.

Where can all this lead….

I want to advise all readers to keep one eye on the inflation numbers in the future. The FED is pumping money into the US and world systems like there is no limit on the printing press. Their short term goal is to keep the banking system from cracking. Their secondary short term goal is to provide liquidity to the US economy, so the economy doesn’t stop from its own weight. Both of these goals appear to be happening. HOWEVER, all these dollars can come back as inflation. In the worst scenario, we could have a hyperinflationary depression. Sounds bad doesn’t it? IT IS. So, let’s watch those inflation numbers, and be ready to act to protect ourselves if they start turning up.

Here are today’s Numbers:
Dow Jones 30 Industrial – 12,265 (Down 370 points)
10 Year Treasury Bond – 3.58% (down 0.06%)
Euro – $1.4643
Gold – $890 (Down $19) – could be a gold buying opportunity if it drops another 50 dollars.
Oil – $88.41 (Down $1.61)
Gasoline – $2.26 (Down $0.05) – when it gets below $2.20, you will start seeing cheaper gas.

Spread The Word:

This entry was posted on Tuesday, February 5th, 2008 at 5:14 pm and is filed under Recession. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Be Ready To Act”

Lucky on February 5th, 2008 at 6:41 pm

>>So, let’s watch those inflation numbers, and be ready to act to protect ourselves if they start turning up.<<

Tom, be ‘ready to act to protect ourselves’ how???
Tom on February 6th, 2008 at 10:02 am

Lucky,
This is a very big topic, as it’s important to radically change our thinking about “things”, and how we spend our money and how we invest our money. Inflation is opposite from a recession, and how you invest is also “opposite” in many ways. It is impossible to give good advise right now because the real economy isn’t known yet. The details of the economy “at that time” will fine tune any advice i’ll give. If and when any inflation starts up, i’ll have a special report or a teleseminar on this important topic. Thanks for asking the question.

However, in general in an inflation, the cost and value of everything increases. So, getting out of a cash position is required. It’s way too early to do that now.
StoordStully on January 3rd, 2009 at 9:55 am

htoayvccxfbzxknewell, hi admin adn people nice forum indeed. how’s life? hope it’s introduce branch