The Economy Guy

Issue: 11/14/07 Wednesday  

Let’s get back to the reality of what’ going on in the markets.  Yesterday was one of the biggest up days in stock market history.  Today, the stock market kept going up, right until the last few minutes of trading, and ended up losing 76 points.  That downdraft you felt today was the market melting.

Bond and currencies went sideways.  Bonds still have a 0.25% assumption built into the current price that the Fed will decrease the Fed Funds rate by 0.25% in December.

Oil, gasoline and gold started their march upwards again today, even while the stock market was continuing its upward march this morning.

All in all, today was a non event.

The bad news that had been front & center has shifted to incredibly, stunningly good news…in the form of words, assurances that the worst may be over as far as financial firm fall-out is concerned.   So. There’s this bridge in Brooklyn…The spillover, infection, next shoes, whatever, are very slowly being revealed & as the layers are peeled away, there’ll be one big, stinky onion.  The pressure on financial shops has been hugely lessened as accounting change (Level 3/157), set to be put into effect Thurs that was to require shops to quit marking-to-make-believe on slippery instruments, has been delayed for 1 YR.  Somebody, somewhere, in some high place, was willing to bend over on the rule (Look ma! No bailouts!).

Here are Wednesday’s closing details:

DJ30 – 13,231 (Down 76 points)
10 year US Treasury Bond – 4.27%  (Up 0.01%)
Euro $1.4653
Gold closed at $815 per ounce. (Up $16)
Oil Closed at $94.09 (Up $2.92)
Gasoline is $2.37  (Up $.05)