PPI, Housing and Gold
Sorry to have missed yesterday’s market, but international travel does have its hiccups. However, I’m now connected.
Stocks fell for the last 2 days. The main reason is the fear of more financial meltdowns, and that fear is a real one – not just one that the market makes up to move itself. Bonds reacted correctly too by increasing interest rates slightly from the fear of future inflation.
Oil and gasoline have started up, as the hurricane sweeps across Florida. Dollar strengthening has stopped as the technical conditions make it bounce off a previously established barrier.
GOLD – I’m hoping that we didn’t miss that great price to buy gold when it was below $800/ounce last week. It has jumped up the last 2 days. My gut feeling is that gold will settle back once more as oil comes down again – but, if oil doesn’t come down again, then gold will just go straight up.
In the news today……
The Producer Price Index (PPI) which represent prices of goods “into” the factory door – jumped a massive 1.2% in July. This was way more than any one of the leading economics predicted; so it really scared the market with the implication of inflation feeding through into the CPI number.
New Housing Starts fell 11%. This was interpreted by the markets as really bad news as it portends an increase to the recessionary pressures in the economy. And, that is true. However, the market missed the great news that for the housing meltdown to finish, we must stop building houses, AND we must get a reduced number of existing housing from coming onto the market.
The ex-IMF Bank Chief predicted that another LARGE BANK will be going under soon. And, not so coincidentally, there were some severe rumors going around the market today that Lehman Bros is really have a hard time. Watch this spot. The one thing that I can be proud of is that economyguy readers knew these rumors long before they hit the general press.
Here are Monday’s numbers:
Dow Jones 30 Industrial – 11,479 (down 181 points)
10 Year Treasury Bond – 3.82% (down 0.02%)
Euro – $1.4695
Gold – $806 (up $14)
Oil – $112.87 (down $0.90)
Gasoline – $2.82 (down $0.05)
Here are Today’s numbers:
Dow Jones 30 Industrial – 11,349 (down 131 points)
10 Year Treasury Bond – 3.84% (up 0.03%) – this was caused by the fear of inflation.
Euro – $1.4785
Gold – $817 (up $11)
Oil – $114.83 (up $1.66)
Gasoline – $2.86 (up $0.05)