The Economy Guy

Stocks moved sideways again today, ending up 41 points.  Nothing too exciting there — but wait.

Bonds fell in value (increased in interest rates) as the AMBAC (bond insurer) fiasco played out today.  AMBAC announced it will be raising $1.5B by selling its shares.  It looks like the banks reported a few days ago, won’t be lending AMBAC the money to cover its insurance claims.  This made the bond market nervous – and caused the bond interest rates to rise.

The Dollar continued its fall, but more slowly today.

The Big News was that GOLD made a run at $1000/ounce, but only got to a NEW HIGH of $995/ounce.  You can bet that gold will shatter the $1000 level very soon.

Oil was another big gainer.  It rose $5.00 today to settle at $104.52, a NEW HIGH.  Get ready to pay more for everything petroleum.

In the news today….

The FED stated that the economy has “slowed” since the start of the year.  2/3’s of the 12 FED regions reported that there has been a contraction in the economy while the other 1/3 said things were just pushing along with no growth.  The main drag on the economy is the retail sector – the biggest sector.  People are just anxious about their own personal future given the slowdown in jobs and home values.

The Service Sector was measured to be an index value of 49.3.  A number of 50 or less represents a contracting economy.  The Service Sector has contracted in both January and February – so this is another sign that the Service Sector of the economy is going into Recession.

Factor Orders were down 1.5% in January.  Another sign of the contracting economy.

OPEC does not intend to increase the supply of oil as it anticipates that the slowing economy of the US, and then the rest of the world, will reduce the demand.  As of today, OPEC sees a falling demand right now, and a steady supply.  So looking at the price of oil skyrocketing, what is going on?  Demand down and supply steady should be a recipe for a falling oil price – but it is rising.  Does the word “manipulation” come to mind?  Oil hit a new high today of over $104/barrel.

Tonight’s Dinner Conversation

Tonight’s Dinner Conversation is to answer the question “Why do I have Dinner Conversations in the EconomyGuy?”  I maintain that dinner discussions is an essential part of maintaining and growing the US economy.  Sound irrational?  Here is my logic. Bringing together your family unit (including your extended family units) at one time in one place is critical to maintaining and growing your family strength.  Adding the element of economy to these important discussions raises everyone’s awareness and ability to act in their own self interest.

So I encourage you to meet with your family and express your love and support.  Give them a hug.  Tell them how grateful you are for them.  Strengthen those bonds.

If you don’t have an immediate family around, be with your extended family – friends, neighbors, work mates, sports friends.  While you don’t need to hug them, it wouldn’t hurt.  Do tell them how important they are to you (and the US economy – that should tweek their interest).  Express and feel your gratitude for them.

Here are today’s Numbers:
Dow Jones 30 Industrial – 12,255 (Up 41 points)
10 Year Treasury Bond – 3.69% (Up $0.11)
Euro – $1.5263
Gold – $989 (Up $21) – an interday HIGH was set at $995.
Oil – $104.52 (Up $5.00) - a NEW HIGH
Gasoline – $2.53 (No Change)