The Economy Guy

ATTENTION EconomyGuy readers.  I will be flying to Europe tomorrow, so the daily newsletters will be disrupted from time to time as I attempt to connect to the internet in that far away land.  I will try to get out as many as possible, and will catch up if something big breaks.

All markets went sideways, with oil and gasoline falling back from their recent highs.

In the news today……

Bernanke – will keep his job as head FED.  Obama announced today that he is re-appointing Bernanke to run the FED.  This provides stability to Wall St because they know what to expect from Helicopter Ben.

Consumer Sentiment – rose in August.  The index value is now 54, and was 47.  These are fairly meaningless numbers, except in relation to 90 meaning a “normal” market, and 100 meaning a “growing” market.  So, 54 is still dismal.  It means consumers are not spending like a drunken sailor, but they “feel” better about their world than they did a month ago.  The stock market grabbed this news and read into it that everything is wonderful again – and went straight up.  The faster and higher something goes, the bigger the crash.

Home Prices rose – 3% in the 2Q 2009.  This is wonderful news, and comes from the S&P/Case Schiller index – probably the best measure of US home prices out there.  Does this mean the housing has turned the corner?  Maybe.  Time will tell.  I have warned that we are just entering a period of “resetting ARM rates” which should cause a new wave of foreclosures.  Many forecasters have guessed that home prices will fall another 10% to 15% over the next 2 years.  Time will tell.  I am personally surprised at the 3% rebound.  Naturally, all housing market are local, not national, so 3% is fairly meaningless to your particular market – but it is the measure for the US.

Here are the last numbers for today:
Dow Jones 30 Industrial – 9539 (up 30 points)
10 Year Treasury Bond – 3.45% (down 0.04%)
Euro – $1.4295
Gold – $945 (up $2)
Oil – $72.05 (down $2.32)
Gasoline $2.01 (down $0.04)