Betting On Inflation
Stocks soared today on Lowe’s good performance, and housing sentiment. (Neither is a good reason to soar, but they are the reasons that the stock market follows.)
Bonds fell (increased interest rates) today significantly.
Gold and the Dollar went sideways today.
Oil and gasoline drove higher, and are threatening higher energy prices across the board to all Americans. Here is a sign of inflation.
In the news today….
Housing Sentiment – rose for the second straight month. This measures new home builders sentiment regarding the housing market. They concluded that the housing market is at the bottom, and are very cheery. Sentiment is way too subjective to measure anything meaningful regarding the bottom of the housing market.
Insurance Companies – are now refusing TARP money. 3 of the insurance companies mentioned by the Treasury have come out publicly and stated they don’t want, and don’t need the TARP money. (Allstate, Prudential and one other) That means the other insurance companies desperately need the money. Nice. When the insurance companies take the TARP, check to see if your insurance company is on the list.
Warren Buffet – has purchased more Wells Fargo Bank shares and US Bank shares. More intriguingly, he has doubled his derivative bet that the S&P500 will be higher than it is today in 10 years. What is Warren really betting on? He is betting that inflation will come along in the next year or two, and will drive everything up, including stocks, so he will just make more money accordingly. The lesson here is Warren is betting on inflation hitting.
Here are the last numbers for today:
Dow Jones 30 Industrial – 8504 (up 235 points)
10 Year Treasury Bond – 3.21% (up 0.09%)
Euro – $1.3554
Gold – $922 (down $10)
Oil – $59.09 (up $2.59)
Gasoline $1.76 (up $0.08)