The Economy Guy

Stocks soared today on great earnings from Intel.  The herd took that as a sign of our economic recovery – it’s not.

Bonds lost lots of value, increasing interest rates up 0.25% in two days.  Here come the higher interest rates again.  Think inflation worries.

The Dollar lost a lot of value today, after moving sideways for the past few days.

Gold gained a lot today in line with inflation worries.

Oil and gasoline gained by a big jump, again think inflation worries together with an economic recovery.

In the news today…..

CPI – the Consumer Price Index rose 0.7% in June.  This was mostly caused by the biggest gasoline price rise in 5 years.  It’s coming down slowly this month, so that should slow inflation as measured by CPI.  The core inflation gain (CPI less food and energy) was up 0.2% in June.  The year over year CPI gain is MINUS 1.4% – one of the largest falls in inflation ever.

Industrial Production – fell 0.4% in June.  This measure of economic activity is skewed by what’s going on in the auto industry, so it should be ignored a little at this time.  The key take away is that industrial production is still going down.

Credit Card Defaults – fell slightly in June.  An encouraging sign for the credit card companies.  One explanation is that people are using their tax refunds to pay off debt.

Free Cellphones – are being given out in Colorado (the 17th state to do this) to poor folks.  Did you know that one of those taxes at the bottom of your phone bill – the Universal Service Fund – pays for this service.  Wireless Welfare – a new thing coming your way.

Tonight’s Dinner Conversation….

The FED just came out and said that unemployment will exceed 10% this year, and the country will have a minus 1% to minus 1.5% GDP growth (that’s negative growth.)

I was concerned that my prediction of unemployment being 10% by year end was going up in smoke because a federal agency is usually conservative.   Maybe it will be much worse.  I hope not.

However, I don’t feel real bad, as the FED’s prediction is 10.1% unemployment by the end of the year.  That means my prediction is still in the hunt for being a perfect prediction.  We’ll see.

In the meantime, the country is going to hell in a hand basket.


Here are the last numbers for today:
Dow Jones 30 Industrial – 8616 (up 257 points)
10 Year Treasury Bond – 3.60% (up 0.15%)
Euro – $1.4105
Gold – $939 (up $17)
Oil – $61.54 (up $2.02)
Gasoline $1.71 (up $0.06)