“Stress” Tests
Stocks fell a little today, and are awaiting earnings reports to determine its future path.
Bonds also moved sideways, as did the Dollar.
Oil and gasoline fell slightly.
Gold fell a lot, being down $25 today. The new price has broken a trend line on the downside, and gold must test recent support levels at $850 to $860 before we know what the future might hold. So my advice is to wait for the test of these levels, and see if it bounced upward or continues downward. One of the two will happen.
In the news today……
Unemployment was reported at 8.5% last week. However, one of the equally important statistics is Underemployment. This represents people who are not looking for a new job any longer because they’ve given up and are doing something else (like going back to school) or have taken a part time job. Underemployment is currently running at 15.6%. Together this means that 24.1% of the people in the US are either unemployed or making a lot less at a part time job (or something else) than they want to make. Another way to look at this is that the Unemployment statistic of BOGUS!!!!!!!
The FED set up currency swap agreements with Japan, the UK, the ECB and the Swiss today so they can acquire those four currencies at any time. Why would the FED do this? It could be very innocent – like they want to reciprocate with those countries as they have already provided Dollars in the other direction. However, there is usually more than one explanation for a major FED action, and I just haven’t figured this one out yet. Is the FED anticipating a downturn in the Dollar that they can counter with those currencies? Are there “friends of the FED” who might need those currencies on a weekend?
The “Stress Test” being performed by the US Treasury is a SHAM. The Treasury has already stated that the Big Banks are too big to fail, so they are basically excused from the stress test, or the stress test will be structured in such a way that they pass. The results of the “stress test” are anticipated to be announced at the end of this month. All the Big Banks are “friends of Geithner”. I fear for the mid-level sized banks who hold some toxic securities and are not “friends of Geithner” as the Secretary can shut them down at a whim.
One small history lesson on “stress tests.” Fannie and Freddie had legislated (required by law) stress tests in their charter, and long ago before the Freddie and Fannie scandals came out, Freddie and Fannie ALWAYS passed their stress test. However, these industries turned out to be insolvent, and the taxpayer picked up the bill. Herein ends the history lesson.
Here are the last numbers for today:
Dow Jones 30 Industrial – 7976 (down 42 points)
10 Year Treasury Bond – 2.94% (up 0.03%)
Euro – $1.3413
Gold – $873 (down $25)
Oil – $51.05 (down $1.46)
Gasoline – $1.48 (down $0.02)