Best Practices

Stocks moved sideways again today. The month of April is generally very bullish before tax day, and very bearish after tax day. This year has been different. The market has been indifferent before tax day. What does this mean for the rest of the month?

Bonds were hit hard by the Producer Price Index increase that jumped hugely on energy and food increases. If the CPI jumps like this number, then look out – bonds will jump in interest rate at the long end (10 years and beyond.)

The Dollar continues its sideways moves.

Oil and gasoline hit ALL TIME HIGHS today. This upward energy price increase will have far flung influences on our world economy, and it’s not going to be pretty.

In the news today…..

Southern California median house prices fell 24% over the past year. They went from $505,000 to $385,000. This is a horrendous drop, and it is no wonder that people are bailing out of their houses as they are “upside down” (higher mortgage than house value). The real question is “How long will this continue?” No one can really predict the end in house value decreases, but the ongoing home foreclosures are a big hint about the future.

Foreclosures were up 57% in March (year on year), and there were 235,000 foreclosures in the US versus 149,000 a year ago.

The government is recommending that Hedge Funds use “best practices”, and that there is a big role in hedge funds by the investors. My interpretation of this sage advice is “Buyer Beware.” Basically Paulson was saying that investors should be intimately acquainted with what their hedge fund is really doing in valuing assets. I totally agree with Paulson, and I am cynical about the advice of using best practices. Telling a broken system to change doesn’t accomplish the change.

Here are the numbers:
Dow Jones 30 Industrial – 12,362 (Up 60 points)
10 Year Treasury Bond – 3.57% (Up 0.07%)
Euro – $1.5784
Gold – $932 (Up $3)
Oil – $113.79 (Up $2.03) – a NEW HIGH was set today at $113.90
Gasoline – $2.88 (Up $0.06) - Gasoline keeps moving up, up, up, up….

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This entry was posted on Tuesday, April 15th, 2008 at 5:02 pm and is filed under Real Estate. 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.