Dollar Fall
Stocks went up today because they wanted to go up. Bonds moved sideways.
The Dollar moved sideways, but remains at a critical low point. Gold fell slightly today, but remains in its current sideways trend.
Oil and gasoline were down slightly, but basically were sideways.
In the news today…..
Wells Fargo Bank – was downgraded by an analyst yesterday, and that’s what caused the market to decline so fast at the end of the market. What’s wrong with Wells Fargo? They are making money out of their toxic mortgage portfolio that they inherited as part of the Wachovia takeover. This won’t last forever, and the bank isn’t in good shape. If you are a Wells Fargo account holder, know that I am putting Wells Fargo on the “bad bank” list along with Citigroup and Bank of America.
Dollar Fall – is causing concerns around the world. Exporting nations are finding it hard to export to the US with a declining Dollar. The other side of that same coin is that US companies are finding it very easy to export. The Dollar has fallen to greater than $1.50 per Euro. The high is $1.60 about 14 months ago. What can be done to stop the Dollar Fall? Well, so far the government is doing exactly what it has always done – jawboned. It says we have a “Strong Dollar Policy” and naturally everyone laughs at what’s really going on. If the governments get too nervous, they could intervene in the markets by buying Dollars. That would take a concerted effort by all major Central Banks, but especially China. China is the linchpin in any support of the Dollar. If the Dollar continues falling, China will lose a bundle of money, and nobody likes losing money. We want China to strengthen their currency’s exchange rate, or let it float freely like most other currencies.
Quantitative Easing – the FED said they are winding down their $300B purchase of US Treasuries. They were buying Treasuries to keep their prices high, and interest rates low. What now? We should expect to see interest rates start to creep up at the longer end (10 to 30 year Treasuries). If you own longer term Treasuries, you can expect to start losing money on the value. I’ll keep you posted on the much more important interest rate change – raising the FED Funds Rate – when it happens. Right now, it looks like the FED won’t move on the FED Funds Rate until mid-2010 at the earliest.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10081 (up 132 points)
10 Year Treasury Bond – 3.42% (up 0.01%)
Euro – $1.5027
Gold – $1060 (down $4)
Oil – $81.27 (down $0.10)
Gasoline – $2.04 (down $0.01)
