Issue 4-23-09
Stocks, bonds, oil and gasoline all moved sideways today.
The Euro strengthened a little.
Gold – the recent run up in gold price has neither tested the lows of $850 to $860, nor broken out on the technical high side of $925. These are the price points that I am currently watching. When either of these occur, I will then reassess my “take no action” recommendation on buying gold.
In the news today…..
Unemployment Claims – rose to 640,000 last week. This shows that the downward unemployment trend that people were cheering is a false path. We must wait until the data speaks for itself. Unemployment Claims is a backward looking indicator, but only one week back – so it isn’t such a bad indicator of the future.
What are the analysts looking for in the unemployment claims number? They are looking for a peaking pattern because historically a peak preceded the end of the recession by six to ten weeks. However, be warned, we are in unchartered territory, and past behavior is not an indicator of future behavior.
Existing Home Sales – fell 3% in March. This is bad news for any type of recovery in the US economy, as I claim the best measure of a healthy US economy “in today’s environment” is home sales. A decrease in home sales only lengthens the time it takes to sell all existing homes that are for sale.
Jane Harmon wiretap by NSA – no matter whatever issues arise over this wiretap, it clearly demonstrates that a member of Congress was willing to do business with a foreign government for her own benefit. We elect officials to represent Americans, not foreign powers. Where there is one member, there are more. This is just one additional example of why is say “Throw all the scumbags out!!!”
Moving House – In 2007 39 million people moved house. In 2008 35 million people moved. This decrease of 4 million people is a repercussion of the recession. And, the downward level of moves is predicted to continue into 2009. The recession is causing less people to change housing because it is harder to get a new job, or to sell your current residence. This is actually good news for the housing market as fewer houses will come on the market as compared to a healthy economy.
Mortgage Rates – The 30 Year Fixed Mortgage Rate is 4.80%, and nudging down toward an all time low. Three weeks ago the rate was 4.78%. Lower mortgage rates help the housing market as it encourages buyers. However, this particular rate must come down below 4.5% toward 4.25% if the government plans to see a significant improvement in house buying caused by low mortgage rates.
TARP Transparency – New York Attorney General Cuomo has released testimony and evidence from his investigation of Bank of America that raises questions about the transparency of TARP management. Last year when Bank of America was buying Merrill, CEO Lewis was told by then Sec. Treasury Paulson and FED Chairman Bernanke to go through with the purchase “for the sake of the financial community” and to “keep quiet about the Merrill losses.” This clearly shows that the US Government was deeply involved in the private sector merger, and orchestrating it – and that’s no secret. However, this latest news certainly forces the question “What was the quid pro quo for Lewis’ agreement?” Subsequent money to Bank of America certainly was one of them. Were there any others? The deep suspicion of Americans regarding its government is only fueled by this type of non-transparent action.
Here are the last numbers for today:
Dow Jones 30 Industrial – 7957 (up 70 points)
10 Year Treasury Bond – 2.93% (down 0.03%)
Euro – $1.3157
Gold – $907 (up $14)
Oil – $48.85 (no change)
Gasoline – $1.39 (no change)
