Market Rebounds Again
Stocks soared for the second day in a row – ending up for two days with a massive gain. Today, the market ended up 397 points. This was based on the sentiment of the government bailing out Citigroup.
Bonds fell dramatically today in sympathy of stocks, but also on the Citigroup bailout – as this shows the true picture of inflationary bailout that will come to pass in the future. In addition, the next Secretary of the Treasury – Geithner – is known as the “Secretary of Bailout” as his nickname.
The Dollar fell in sympathy with stocks going up. As did Oil and gasoline.
Gold went counter, and gained again to end over $800/ounce at $820/ounce. OFFICIAL NOTICE – gold is now a buy – NOT a buy with both hands – as the price has passed $800/ounce. The price could fall below $800 sometime in the future, but this breakout in price from $700/ounce looks like a real sign of strength to me. I hope the readership took their opportunity to buy gold in the past month.
In the news today…..
2 California Thrifts went bankrupt – Downey Savings and Loan (who did a lot of Option ARMs) and PFF Bank and Trust (who did a lot of construction loans). In Georgia, the Georgia Community Bank also went bankrupt. That’s 22 banks so far this year, and the FDIC must be having a lot of fun.
President-Elect Obama announced his jobs plan for next year. He plans on creating 2,500,000 jobs in 3 or 4 years by reconstructing our highways, school modernization, and energy investments. I personally like this idea as the taxpayer gets something for the money we would be spending on these projects.
Citigroup is being bailed out by the US Treasury – a $20B bailout, and this is after the $25B we plugged into Citigroup earlier. We (the taxpayers) will be guaranteeing losses on the $306B pile of toxic waste that Citigroup is holding. Kiss that money good-bye. The taxpayer is at risk for $250B and stands to gain on its $20B stock purchase. Sounds just like a deal that I wouldn’t make anywhere, anytime. But, on the other hand, I guess I just did.
To keep our scorecard up to date, the Federal Government has pledged $7.5Trillion (that’s Trillion) so far to save our economy.
Home sales are slowing – now 5 million homes per year (annualized). The median price of homes sold in the US is $183,000, down 11.3% from last year – the largest EVER fall in prices since 1968. Of the homes being purchased, 45% of them are “distressed sales.” We now have a 10.2 month backlog of homes for sale in the US – WAY TOO HIGH – but, at least it’s something that is a solid measure of when we are out of the woods – NOT YET.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8443 (up 397 points)
10 Year Treasury Bond – 3.34% (up 0.17%)
Euro – $1.2910
Gold – $820 (up $28)
Oil – $54.50 (up $4.57)
Gasoline – $1.14 (up $0.08)