The Economy Guy

Stocks took a hit today as traders took their profits from the recent run up.  Bond market jitters also influenced stocks today, and as this is a truly unusual event, I wanted to bring it to your attention

Bonds fell dramatically in value (big increase in interest rates) as a poor 30 Year Treasury auction and inflation scare took over.  This current run up in interest rates is starting to look bad from my perspective, and will be noted by all other markets very soon (as it was a small amount by stocks today).

Everything else went sideways.  Gasoline is at the price point where gasoline price increases can be anticipated at the pump within 2 weeks if the price does not start falling soon.

In the news today……

Stress Test Results – The results are in, and banks need $76.4B more money in the next 6 months to keep themselves healthy.  The worst bank is Bank of America needing about $33B.  The rest of the banks need around $5B each or less.  No one failed the test of course, and they are being given 6 months to raise the money somehow.  Watch for tricks.

Jobless Claims – came in at 601,000 this week, and is a significant drop.  This is the lowest level in 14 weeks.  However, it is still above the 400,000 level – so this means that unemployment will continue to increase, but at a slower pace.  The reason I report on this weekly measure is that is is one of the better statistics to watch for a recovery.  A single week is meaningless, but several weeks in a row – 4 to be safe – is a pretty good sign of what the job market is doing out there.  Workers are finding it hard to get a new job, so the total unemployed number continues to climb.

Obama to cut $17B from budget – what a bunch of hooey.  The majority of the cuts are in defense, and you can argue those cuts based on any potential military danger to our nation and our interests. Some of the “cuts” are for obsolete air traffic control equipment that has been replaced and is no longer needed – I contend this would have fallen away by itself.  Don’t believe the headlines, but delve into the detail.  This is politics at its best (or worst??).

1Q Productivity and Wage Increase – were both up  0.8% (annualized) and 3.3% (annualized).  Remember this is a government produced statistic, so should be read with a wary eye.  Have you met anyone who got a wage increase lately?  Maybe.  

Retails Sales – increased in April based on retail store reports (like WalMart is doing great).  The news would have you believe this is a sign of a recovery.   Hooey.  The factors that came into play were warm weather (cooler clothes purchased), an early Easter, and less tax withholding in people’s paychecks.

Tonight’s Dinner Conversation…..

Massachusetts welfare is getting better.  The State is now giving out donated automobiles to help people get to work.  And, the state is picking up all the costs except gasoline.  The state is paying for repairs, state tax, inspection fees, insurance and even AAA membership.  The average annual cost is $6000.00.

This appears to be a very generous and heart felt gesture to help people who need it, and are willing to work.

Here are some more emotive results.  People who lose their job can keep their car.  People who were just laid off want to get a free car right away – people are lining up.

Remember that all the costs are coming from taxpayers.

What is your position on this form of welfare?  There are no right or wrong answers, just feelings on this issue.
 

Here are the last numbers for today:
Dow Jones 30 Industrial – 8409 (down 102 points)
10 Year Treasury Bond – 3.30% (up 0.14%)
Euro – $1.3388
Gold – $916 (up $5)
Oil – $56.00 (up $0.37)
Gasoline $1.67 (up $0.04)