Record DOWn Day
Stocks set a record DOWN today when Congress rejected the $700B bailout plan, going down 778 points. Bonds were a safe haven with reducing interest rates – and bonds are a clear winner too. Bonds are betting the FED will reduce the Fed Funds Rate next month.
The Dollar went sideways with the Euro losing value, but the Yen gaining value. One great difficulty for currency investors is “What currency is strong?” It’s not the Dollar, but with the USA not fixing the financial mess – all the other currencies look very vulnerable too.
Gold went up slightly – a great sign in this chaos. Gold is a clear winner in a crisis.
Oil dropped over $10 today with gasoline dropping too. Donald Trump was interviewed on TV today, and he said oil would drop, and continue dropping and might hit $20 again – and the Middle Eastern countries couldn’t do anything about it. We’ll see.
In the news today……
The idiots in Congress couldn’t pass a $700B today, and you must ask why??? Simple in my mind. The citizens didn’t want it passed, and enough Congressmen and women listened. It was a close vote, but it failed. The negative outcome drove stocks straight down, and the rest of the world will follow as the sun circles the earth.
By the way, did anyone besides myself miss what was really in that bill that failed? I never saw any details discussed or published – only generalizations. If the government is going to spend $700B of our money, I really would appreciate some TRANSPARENCY – and that’s why Congress earns its low rating again.
When Donald Trump was interviewed on TV today, he made one very astute comment in my opinion. He said “Why is Congress giving money go buy toxic paper, and NOT asking for some good paper too?” Put yourself in any similar negotiation, and you would ask the same thing. I consider Donald Trump’s comment as very illuminating on the lack of thinking in Congress.
The meltdown continues with the banking sector:
• Wachovia is now part of Citigroup – and Citigroup now states that “we are too big to allow to fail.” - comforting words??
• Pieces of Lehman are being purchased.
• 26% of Morgan Stanley is now owned by Japanese company – Mitsubishi.
• FORTIS bank sold 49% of itself to the Dutch, Belgian and Luxembourg governments
• Germany bailed out the No.2 real estate mortgage company – it had a $51B line of credit – this is a big one.
• Iceland bailed out one of its banks
• The UK took over the Bradford & Bingley bank.
The FED pumped $630B into the financial systems of the world today – by expending the limits on some key lending methods. Now, that’s some bucks.
Here are Today’s numbers:
Dow Jones 30 Industrial – 10,365 (down 778 points)
10 Year Treasury Bond - 3.63% (down 0.20%)
Euro - $1.4442
Gold - $894 (up $6)
Oil - $96.37 (down $10.52)
Gasoline - $2.40 (down $0.27)
“The FED pumped $630B into the financial systems of the world today - by expending the limits on some key lending methods.”
Is that a way to get around Congress’ defeat of the $700B bill? Seems like a very similar number…
Reading and watching daily everyone says ride it out. At what point doyou pull your money out of the market??? What is a safe place to put it???
Hi Liz,
No the $630B is not a way of getting around Congress’ inaction. It is just a way to keep the wheels of commerce oiled. These loans are short term loans, and the Congressional loans are long term loans - maybe forever?? That’s the main difference. If Paulson had his way, they wouldn’t be loans at all, but a straight out purchase of toxic waste. I wonder if he have a deep hole somewhere to bury it in?
Tom
Hi Eric,
If anyone could answer your question, they would be a gazillionaire. The stock market is in a major bear trend right now - independent of the disaster of this bailout going on.
If you are considering taking you money out of stocks, you could wait for a bounce after the bailout is done.
Where you put it is another big problem. I’ve recommended gold, but you should only be placing a part of your wealth in gold, not the whole thing.
Consider having your funds in international stocks. The dollar is going to tank in the long run. In the short run, people are buying dollars right now, but that will change over the next 6 months of so.
Tom