State Of The Union
All the markets moved sideways today. Stocks are flirting with technical support areas to determine if this market will bounce up again, or die a painful death by losing a significant amount of its recent gains. On the news front, everyone is waiting to see if Congress and the President will be changing course, or not.
In the news today…..
Existing Home Sales – fell 17% in December. This is a disaster. The drop was the greatest drop in over 40 years. Surprisingly, the drop was caused by first time home buyers who were getting the $8000 tax credit – even though this program expires in April, not now. The median sales price was $178,300 – up 1.5% over the prior year. But, since first time buyers weren’t buying, and they normally buy lower priced homes; the median price would be skewed higher. So, was there really an increase in home prices? I don’t think so. The one and only measure of a solution to the home glut is a reduction in home inventory to “normal” levels. We are far from that even right now.
Goldman Sachs – warns the FED that it is too early to start raising interest rates. They say it would be a disaster for the markets. If you are one of those people who think that Goldman controls the FED, then you can see what will happen at future FED meetings. No interest rate hikes soon.
Ben Bernanke – is more likely to be reconfirmed as the FED Chairman. The White House and Tim Geithner lobbied all weekend for Ben, and this increases his odds of being confirmed. Best quote: “He’s the best we’ve got.” I personally doubt that statement. I still feel that Geithner has a great chance of losing his job.
Wild Card???? – Osama bin Laden made a broadcast that could be the trigger to start more attacks against the west. If this comes to pass, I wonder who will die? Do these poor souls have any faith in our President to protect us? If any Americans die, then you can bet the right wing will launch an all out assault on the President for not keeping Americans safe. Listen for the phrase “If the President had allowed water-boarding, we would have known about this attack before it happened, and we could have prevented the loss of life.” If the attack Is big enough, you can bet that all markets will react to the news. Generally, there is a rush to the Dollar, and you can see gold strength as a bastion of safety.
Tonight’s Dinner Conversation…..
State of the Union Speech – there are rumors coming out of the White House that President Obama will be suggesting another package of spending to help Americans. Should be interesting to analyze, as this will cost money, and will add to the deficit. How much – is the key question.
It is hard to argue against increasing child tax credits for the poor, and helping with student loans. However, these measure don’t attack the main issues in the economy. The questions to ask are “What caused the poor to need more child tax credits?” “Why do students need help with their student loans?” Then look at the proposals, and you will definitely see that the solutions being proposed by the President don’t attack the causes.
The main problems in the US from the population’s perspective is unemployment – in other words, jobs. The President is smart enough to know to give lip service to the jobs problem, but will he be able to propose anything that actually would create jobs?
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,197 (up 24)
10 Year Treasury Bond – 3.63% (up 0.03%)
Euro – $1.4152
Gold – $1095 (up $6)
Oil – $75.12 (up $0.58)
Gasoline – $2.00 (up $0.04)