The Economy Guy » Retail

Financial Regulation

cuible — Fri, 11 Dec 2009 23:22:38 +0000

Stocks went up a little today on the retail sales news. Bond interest rates increased at the same time – continuing their sideways trough move.

The Dollar strengthened another cent against the Euro. This had the effect of reducing the price of gold, and reducing the price of oil/gasoline.

Gold is now approaching my first buy position of $1100/ounce. However, I am hoping it continues its fall much further and faster.

Oil has fallen below $70/barrel in spite of the growth engine happening in China, and is looking like it could help support the grow of the US economy as gasoline might just fall in price.

In the news today……

Retail Sales – rose 1.3% in November, and up from the 1.1% in October. This is great news for the economy, as these sales will push through the entire economy and help wholesale sales, and manufacturing. Some day it might even cause more jobs to be created.

Auto Sales – did you know that the number of cars sold in China is GREATER than the number of cars sold in the US? That says a lot about the economy of China, as their economy is way smaller than our economy. The standard of living is increasing by leaps and bounds in China. It must be like living in the US in the 50’s and 60’s. I wonder when there will be a Chinese rock and roll.

Tonight’s Dinner Conversation…..

The House passed legislation to regulate the financial industry. The Senate will consider this subject some time next year. I don’t know the details; do you? I doubt that many people really know the details. In fact, I doubt the legislators (scumbags) even read the regulations.

The one thing I do know is that whatever is in this bill, it isn’t for my good, or your good. Why do I believe that? Because Congress works with special interests to draft these new laws, and someone (we’ll find out later) will be benefiting from these new laws. There appears to always be a payoff to someone. Also, I strongly suspect that some freedoms will be lost – certainly by the financial industry, but also by yourselves – somewhere hidden in the details. Look for it.

I can give you one example that came from my banker who went to DC to lobby against this legislation. The US Treasury weenies were acting like this legislation was already law, and were demanding certain actions from the banks. Oh, by the way, it means all banks – big and small. Don’t think this is aimed at just the Wall St giants who are too big to fail. No, it also will hit your corner bank. Back to the example, When you want a HELOC loan, your local bank will not only be presenting its normal HELOC loan package, it will also be presenting the US Government HELOC loan package. It is presumed that eventually, the local bank’s package will be eased out by the government – and you will only be able to consider a Federal Government package.

What do you think about that?

Here are the last numbers for today:
Dow Jones 30 Industrial – 10,472 (up 66 points)
10 Year Treasury Bond – 3.54% (up 0.06%)
Euro – $1.4622
Gold – $1116 (down $16)
Oil – $69.73 (down $0.81)
Gasoline – $1.84 (up $0.01)

Retail Sales, Wholesale Prices, Goldman CFO

admin — Tue, 14 Apr 2009 22:55:59 +0000

Stocks fell today on the poor economic news, and poor earnings continuing to come out – ending down 138 points. President Obama tried to talk the market up, but couldn’t overcome reality with his optimistic words.

Bonds gained again – their normal cycle in a down stock market.

The Dollar, oil/gasoline and gold all went sideways today.

In the news today…..

Retail Sales – fell 1.1% in March. This was much greater than expected (or more accurately hoped for). The surprise of falling retail sales hit stocks hard as a much smaller fall was expected to say that the “bottom” had been hit, and the economy was at a plateau. The fall was caused by less auto sales.

Wholesale Inventories – fell in March. This is good news as less wholesale inventories will mean greater manufacturing in the future when the economy does come back – but it isn’t now.

Wholesale Prices – fell 1.2% in March. This was mostly caused by falling energy prices (like a 13.1% reduction in gasoline prices), and we can’t expect energy prices to fall forever. Remember that we have been tracking oil and gasoline prices and they have been firmly in a “sideways” track – meaning the price isn’t going up or going down. The wholesale price decline wasn’t caused by general wholesale price reductions on everything we use in retail sales – so it won’t be coming through to the commercial level as price decreases.

Conclusion – Don’t listen to the people who are predicting the future, and are “wishing” the economy out of its slump. Listen to the statistics that measure the actual economy and then make up your own mind what is really going on.

Tonight’s Dinner Conversation…..

The CFO of Goldman Sachs, Viniar, said today that he is cautious about the future of the US banking sector. Here is what he said. Remember he is talking on an investor call when Goldman Sachs has announced very high profits for the 1st Quarter.

In a conference call with investors, Viniar said there are still “headwinds” in the broader sector tied to declining asset values.

What he means is that housing prices have not stopped falling, and housing prices indirectly (but very closely linked) affect those toxic mortgage securities that the big banks are holding. Falling housing prices mean falling toxic mortgage securities.

This is coming directly from someone who should know this relationship very well, and confirms what I’ve been telling you over the past year.

So, the question for you is: “Would you invest in the finance stocks of the US?” and why? A related question is “Will the stock market make new highs, or continue downward?”

Here are the last numbers for today:
Dow Jones 30 Industrial – 7920 (down 138 points)
10 Year Treasury Bond – 2.79% (down 0.06%)
Euro – $1.3258
Gold – $892 (down $4)
Oil – $49.41 (down $0.64)
Gasoline – $1.46 (down $0.01)

No Light Yet

admin — Wed, 14 Jan 2009 22:45:04 +0000

Stocks tumbled 248 points today as the retail sales numbers hit home. The picture is very glum for the economy and stock projections are reflecting them. We might have a rebound sometime soon, but I anticipate we will break below 8000 soon also.

Bonds continued their increase in value (decrease in interest rates). The dollar went sideways today.

Gold fell, and is approaching being a “good buy”, rather than my current “buy” signal.

Oil fell and gasoline went up again. This is such a visible manipulation of the markets that I’m disgusted by it.

In the news today…..

Retail Sales fell 2.7% in December. Without autos the fall was 3.1% – a HUGE fall. This is the first time the annual Retail Sales figure was negative (minus 0.1%). This is six months in a row that retail sales have fallen. There is no light at the end of this tunnel yet to be seen.

The FED Beige Book report said that economic activity was down since December in ALL areas of the country. This is a second extremely negative forecast for the economy, and therefore stock prices.

The 30 Year mortgage rate is now 4.89% – WOW!!!!!!!!! It fell below 5%. The 15 year mortgage rate is 4.63%.

On the more humorous side, Cognac sales have fallen 6.2%, and this is the first fall in sales for 6 years. Too bad for the French.

Here are Today’s numbers:
Dow Jones 30 Industrial – 8200 (down 248 points)
10 Year Treasury Bond – 2.21% (down 0.08%)
Euro – $1.3168
Gold – $809 (down $12)
Oil – $37.43 (down $0.50)
Gasoline – $1.17 (up $0.02) – what’s wrong with this picture??? Manipulation at its most visible.