Panic Selling
Stock gyrated today from low to very low to low to moderately low, closing down 312 points. How low can you go? The reason? – the world is still scared about a worldwide recession. Bonds got clobbered today, rising in interest rates.
Gold and the Dollar had a modest rise.
Oil and gasoline continued their tumbling ways – in spite of a cut in oil production by OPEC. My calculation says that my city should be charging about $1.75/gallon, but it’s really $2.75/gallon. Have you ever asked why no one in government doesn’t look into this mass manipulation of prices, and gouging of the entire US public?
In the news today…..
Existing Home Sales in September rose 5.5% over August – and most of the sales came in the West. Does this mean the housing crisis is over? Nope!!! – the easy answer. Here’s why:
- Housing prices kept falling – 9% year over year.
- The new house inventory is 9.9 months – too large to declare any turnaround.
- The future is a recession – and this is bad news for any housing sales.
- There continue to be record foreclosures – and used houses compete with new houses. The entire housing market must turn around, not just new homes.
The FED is thinking about bailing out insurance companies now. The first two companies that they have talked to are MBIA and AMBAC. If you remember, I talked about those two companies months ago. They are the ones who insure cities/counties/companies so AAA ratings can be put on bonds. This just looks more and more like a bailout.
The Bond market is betting (through purchases of Treasuries) that the FED will be dropping the Fed Funds Rate by 0.50% next week when it meets – unless it drops it this weekend (on Sunday?) instead.
Food for Thought…..
How is your horoscope? Historically, the 28/29 of October are the worst days for “panic selling” in the stock market. Should we be worried? This proved true in 1857, 1907, 1929, 1987, and 1997. Could 2008 be another year to add to this infamous list? We certainly have all the earmarks so far.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8379 (down 312 points)
10 Year Treasury Bond – 3.70% (up 0.17%) – a major increase in interest rates
Euro – $1.2618
Gold – $730 (up $16)
Oil – $64.15 (down $3.69)
Gasoline – $1.48 (down $0.10)
