The Economy Guy

Issue: 10/18/07 Thursday

By Global Economy Guru, Tom Harvey…

The market kind of went sideways today again. The big movers today were the bond market, oil and the Euro. The 10 year bond reduced in interest rate to 4.50%; Oil set a new high of $89.47; and the Euro ended at $1.4298.

Eisuke Sakakibara, formerly Japan’s top currency dog, is tossing aside his Mr Yen moniker for the time being to weigh in on the potential future of the buck. According to Bloomberg, he “warned of a dollar firesale if economic growth forecasts for America dropped below 1 per cent. The IMF cut the US forecast to 1.9 per cent on Wednesday – down from a July estimate of 2.8 per cent.” Mr Dollar Bear said “Some form of intervention would be necessary to stop it, and that would require coordinated effort from all three major economies.”

This is a very serious prediction. Watch for his indicator of a 1% economic growth in the US. If it happens, it will get very interesting in the currency market, and the big players are going to make a killing. BTW, one of the biggest players in the currency market is Soros.

The market went down initially, but came back strong at the end of the day. It went down initially because of the increase in unemployment filings.

The number of newly laid off workers filing claims for unemployment benefits shot up by the largest amount since early February, a far bigger increase than had been expected. The Labor Department reported Thursday that applications for jobless benefits hit 337,000 last week, an increase of 28,000 from the previous week. That was the biggest one-week surge since jobless claims jumped 42,000 the week of Feb. 10. The increase was four times larger than the gain of 6,000 that economists had been expecting and could be a sign that the labor market is starting to weaken under the impact of a severe downturn in housing and the credit crisis that jolted financial markets in August.

Here are Thursday’s closing details:

DJ30 – 13,889 (Down 4 points)

10 year US Treasury Bond – 4.50% (Down 0.04%)

Euro 1.4298 – does this look like a new high??

Gold closed at $769 per ounce. (Up $6) Gold keeps plowing ahead.

Oil Closed at $89.47 (Up 2.07) a new record

Gasoline is $2.19 (Up 0.04)