The Economy Guy

Stocks went sideways today with a downward bias.  Bonds continued to increase in value (lower interest rates) and this is great news for all interest rates, but particularly mortgage rates sometime in the next couple of weeks.

The Dollar went sideways, as did Oil and Gasoline.

Gold was the big mover today, and ended up $22 today, breaking out of its trading range on the upside – this is spectacular news for gold buffs.

In the news today……

Productivity – rose 6.6% annualized during the 2nd Q 2009.  This is a massive increase caused by companies slashing spending during the current recession.  One of the major cost savings has been “labor costs”.  Let’s look at productivity, and ask the obvious questions.  What is productivity?  It’s the change in cost to produce things.  An increase in productivity means that the companies can produce 6.6% more goods for the same money.  Who gets the money?  The company – and in the past, companies used it to pay employees more money while increasing their earnings.  Now, companies are keeping the whole thing to bolster their earnings.  Things have changed.

Job Losses – are still increasing, but at a slower rate according to ADP – who puts out jobless rates earlier than the government, and does it for the private sector.  The government will state this is good news.  I say BS.  The economy is still losing jobs, and as long as we are losing jobs, our economy is just getting worse.  It’s as simple as that.

BP finds oil – in the Gulf of Mexico and in US waters.  It’s estimated to be 3 billion barrels.  BP is the biggest driller in that area, and this is great news.  It’s a very deep (7 miles down) oil find, and it must be studied further, but it means the US will have more oil, longer that anyone thought before.  It will drive the greens nuts because they would like to see the wheels come off of cars before seeing more oil pumped.  It will drive the global warming crowd nuts because they would rather see the earth go into another ice age than have oil pumped – oh, by the way, did you know that “animals” cause more CO2 than our trucks and cars?  That tells me that the  global warming crowd should become vegan before they ever protest our transportation again.

Here are the last numbers for today:
Dow Jones 30 Industrial – 9281 (down 30 points)
10 Year Treasury Bond – 3.30% (down 0.08%)
Euro – $1.4271
Gold – $979 (up $22)
Oil – $68.05 (no change)
Gasoline – $1.81 (up $0.03)