Happy Easter
Happy Easter Weekend. Unless something spectacular happens tomorrow, I won’t be writing an EconomyGuy on Friday.
Stocks climbed consistently today, ending up 262 points.
Bonds held onto their recent gains, and even extended them with the 10 Year Treasury interest rate declining to 3.33%. This continues to be a sign of fear in the credit market, and the bond market continues to be a “safe haven” investment.
The Dollar gained significantly against the Euro, but not against other currencies. Next week we’ll see how sustainable the Dollar gains really are.
Oil and Gold have pulled back (along with most commodities) a lot this week. Oil has declined 10%, and Gold has declined 8%. These declines are caused by speculators taking some of their profit off the table, and going to cash. This is a smart move for the speculators. This pullback might continue next week, but those of you who are thinking about investing some cash into gold should be ready to invest in the near future. In my opinion, the gold pullback offers an opportunity to invest in this precious metal.
In the news today…..
Mortgage rates for 30 year fixed interest mortgages are 5.87%, and 15 year fixed interest mortgages are 5.27%. This is a very large decrease in mortgage interest rates, and these rates are attempting to follow the decrease in the 10 Year Treasury rate. For those of you considering refinancing or purchasing a new home, I would recommend closely monitoring the daily interest rate over the next week with your mortgage broker. These rates are beginning to look good again.
In the US economic news, the jobless rate increased by 22,000 last week to 378,000. This is a big number, and is one of the important indicators of the recession taking a grip on the economy. The number of new payroll jobs decreased 22,000 in January and decreased 63,000 in February. The acceleration in this number is disturbing to anyone looking for a job, and also confirms the recession indication.
Dinner Conversation for Tonight
CIT is a 100 year old commercial lending company that loans money for the purchase of aircraft to lending money on unpaid client bills. $9.2B of its portfolio of loans are sub-prime loans, and $11.5B of its portfolio are student loans. CIT has seen a recent significant decline in its stock price.
Today, it was announced that CIT was drawing $7.3B from its bank lines of credit; its banks being 4 of the biggest US banks.
The questions for you to discuss tonight are:
- Is CIT in a stable financial situation today?
- Were the 4 banks smart in lending $7.3B to CIT?
- Would you purchase CIT stock? Why or why not?
- What more would you like to know about CIT before you became an investor in it?
Here are today’s Numbers:
Dow Jones 30 Industrial – 12,361 (Up 262 points)
10 Year Treasury Bond – 3.33% (Down 0.03%)
Euro – $1.5430
Gold – $920 (Down $25)
Oil – $101.84 (Down $0.70)
Gasoline – $2.61 (Up $0.04)