Rumorville
Stocks moved multiple hundred points up and down today, awaiting the FED announcement on a rate cut. Once that announcement was made, stocks fell like a stone, ending down just 74 points – basically a sideways move day (with volatility).
Bonds continued their upward trend in interest rates.
The Dollar lost more ground, and Gold gained some more – but still remains a great buy.
Oil took off, and gasoline gained a few cents too. Maybe the speculators are coming back in the oil futures market.
In the news today…..
The FED reduced the Fed Funds Rate (and the Discount Rate) 0.50% today. That means the Fed Funds Rate is now 1.00%, and doesn’t leave a lot of room for the FED to reduce that key interest rate much more (only 1%) if it wants to combat a severe recession. The Bond market is already betting on an additional 0.5% by the December FED meeting.
Durable Goods Orders gained 0.8% in September. This was a surprise to the predictors (and I bet these guys are pollsters too when they aren’t economists). The cause of the rise was an increase in aircraft sales (think Boeing), and an increase in auto sales (think low interest rate incentives that aren’t sustainable.) So, the best thing you can do is ignore this statistic for now. I think it takes at least 3 consecutive months of growth or contraction to see a real trend in Durable Goods Orders.
Soros stated today that the Hedge Fund industry will be 1/3 of its current size after the worldwide economic meltdown is complete.
The Rumor for Today….
Okay, I’ll be a rumor monger today. I heard from a usually reliable source (someone who trades in millions of dollars worth of commodities each day) that “someone” is threatening to sell $1Trillion into the stock market just before the election – in order to persuade some “fence sitters” how to vote. If this could be accomplished, it would probably drive stocks to their lowest levels in the current bear market.
The question for today is “Who is threatening this sale?”
Here are Today’s numbers:
Dow Jones 30 Industrial – 8991 (down 74 points)
10 Year Treasury Bond – 3.87% (up 0.05%)
Euro – $1.2952
Gold – $754 (up $14)
Oil – $67.50 (up $4.77)
Gasoline – $1.53 (up $0.08)