The Economy Guy

All six measures of the markets that I report on went sideways today – with a slight upward movement to the Dollar.

In the news today…..

Jobless Claims – was 550,000 last week.  The news is casting this as a good number – because it came in less than some folks guessed it would come in at.  Who cares about people’s guesses?  It’s the actual number that counts.  550,000 is a bad number, and it means unemployment will continue going up.  The official unemployment rate is 9.5%, but when you factor in the known additions, the government should be announcing it to be about 9.6% right now – only 7 months into the year.  Clearly the economic stimulus is not working – the only measure of success is jobs.

Retailer Earnings – are now coming in.  They are interesting, so I thought I would tell you a few things about them. Here is what I see:

1. Sales are slow
2. Inventories are very low – the goal of all those sales.
3. Some retailers, like GAP, are seeing much improved earnings on reduced sales.  Huh???
4. The better earnings are coming from introducing higher priced, higher margin items (like jeans) which are being sold.
5. However, that’s the exception as most stores are just selling slowly – even with continuous sales.
6. The rumor on the street is the “Cash for Clunkers” will cut into future retail sales as the new car owners must make car payments.
   

Underwater Mortgages – are set to double from currently 26% of all mortgages to over 50% by 2011 according to a prediction being made by Deutsche Bank.  This report is getting a lot of political flack since it flies in the face of the “good news” coming out about home sales, etc.  However, this is a serious study, and is worthy of economyguy readers.  What this means is that home prices are projected to continue falling if this prediction comes true.  And, more importantly, this will have a major drag on the US economy.

Here are the last numbers for today:
Dow Jones 30 Industrial – 9256 (down 25 points)
10 Year Treasury Bond – 3.75% (down 0.02%)
Euro – $1.4356
Gold – $963 (down $3)
Oil – $71.94 (down $0.03)
Gasoline $2.06 (up $0.01)