Deflation Continues
Stocks fell, and then rose, ending up 69 points. The action was caused by the very poor financial results reported by Citi and Bank of America.
Bonds gave back some of their recent gains, and ended with their interest rates up 0.1%.
The Dollar lost some ground, and gold gained back most of its recent losses in one day – a nice move.
Oil ended up slightly, and gasoline was unchanged.
In the news today……
Consumer Prices were down 0.7% in December. This is a decent measure of the deflationary forces surging through the economy today.
Citigroup and Bank of America reported abysmal results today. Bank of America needs another “bailout” to stay solvent. BofA used to be one of the most stable banks around as they managed their own housing portfolio, but their purchases of Countrywide and Merrill Lynch have kicked it in the pants. Looks like a poor management decision by BofA. The approval of the latest “bailout” for BofA makes the US Government the majority owner of Bank of America. Another nationalized bank….
Citigroup, on the other hand, is just so bad that it only gets worse. Citi is selling off whatever assets can bring a decent price (like the sale of Smith Barney to Morgan Stanley). They are going to restructure themselves into two elements – one will be a bank, and the other one will hold all the junk investments that Citi has on its books. Not a pretty picture for Citi. It could go under even after the great “bailout” of the past.
PS – and the citizens of America take it in the shorts if BofA or Citi go under.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8281 (up 69 points)
10 Year Treasury Bond – 2.30% (up 0.10%)
Euro – $1.3251
Gold – $840 (up $33)
Oil – $35.89 (up $1.11)
Gasoline – $1.17 (down $0.01)
