The Economy Guy

Stocks like the earning report from Alcoa and jumped 61 points today.  Bonds moved sideways.

The Dollar lost another cent against the Euro as the Dollar approaches its all time low.

Gold gained another $13 today, and made a NEW HIGH again today.  Nice for the gold holders.

Oil and gasoline went sideways in its trend boundaries.

In the news today……

500,000 loans modified – according to the Obama administration.  This meets the goal set for the summer.  The new goal is to help 3 to 4 million mortgage holders in the next 3 years.  The program is changed to make it easier to document the application process.  Most lenders are unwilling to reduce the principle amount of the loan.  Generally there is disappointment with this program as it isn’t working fast enough.

UK and Europe – kept key interest rates the same.  The Bank of England and the European Central Bank both kept their key interest rates unchanged.  Australia raised its rate 0.25% earlier this week – the first G20 central bank to act.

Retail Sales – have come in, and aren’t great.  The consumer is still well trained to save and not spend.  There was increased spending, but only at the low end, discount stores like TJ Maxx, etc.  The high end stores are getting killed with sales reductions of 10% to 20%.  Luxury stores aren’t doing well here, but are booming in China – so who cares.  Consumers know that they will only buy when things are on sale – like 60% off.  So, stores are responding, and they all have the sale signs out all year round.  When these stores (Macy’s, Dillards, etc) need to get rid of their merchandise, they sell it at cents on the Dollar to TJ Maxx and Ross where everyone is going to get the brands they love.  I personally believe this is a major shift in buying within the US, and will remain for many decades.

FHA – is now running in the red so badly that it is estimated that it will need a $54B taxpayer bailout sometime in the next two years.  So, who’s writing these crapy loans that FHA is taking.  FHA takes loans with very small down payments, and are suspect from that aspect to begin with.  If a buyer doesn’t have any “skin in the game” they can walk and not care what happens to the money.  And, that’s what’s happening.

Tonight’s Dinner Conversation……

Your safety – that’ what I want to talk about.   The GAO came out today and said that about 200 people were hired to do the door-to-door Census work, and they are criminals.  They should have been weeded out, but the vetting process broke down, and they slipped through.  So, beware is my message.

The question for you tonight is “What will you tell the Census taker who comes to your door?”  Will you give the personal information that goes beyond the number of people in the house?  Will you let that person come into the house, or talk at the door?

Here are the last numbers for today:
Dow Jones 30 Industrial – 9787 (up 61 points)
10 Year Treasury Bond – 3.26% (up 0.08%)
Euro – $1.4779
Gold – $1056 (up $13)
Oil – $71.33 (up $1.76)
Gasoline – $1.78 (up $0.06)