Friday, December 26, 2008
I am watching the following headlines that are likely to affect my trading today:
Retailers' Holiday Sales Drop 5.5 to 8%
Great Series of Articles on Finance in Russia on FT
Battered Commodities to Perk Up in Late 2009
Russian Trading Halted After 12% Drop
CA Courts Affected By Budget Crisis
Moscow Agrees to Oligarch Bailout
Japan's Factory Output Plunges 8.1% to 55 Year Low
Holiday Sales Tumble as Consumers Cut Spending
Russia's Central Bank Devalue Ruble Again
GMAC Now Bank Holding Company
Wednesday, December 24, 2008
U.S. Falls Deeper Into Recession
US Home Prices Fall Near Depression Pace
Russia's Central Bank Devalues Ruble for Third Time In Week, Seventh This Month
Japan's Manufacturer Confidence Slumps Most on Record
Jobless Claims Jump to 26-year High
Americans Curb Spending As Income Declines
U.S. Stocks Gain As Durable Goods Orders, Spending Top Forecasts (by the way - doesn't this headline appear to contradict the previous one?)
Russia to Raise Nuclear Missile Output Fourfold
Monday, December 22, 2008
Click here for the entire story.
General Motors Corp. and Ford Motor Co., the two largest U.S. automakers, had their debt cut further below investment status by Standard & Poor’s and Moody’s Investors Service.
GM’s unsecured debt was trimmed one level to C, or 11 grades below investment quality, by S&P. Moody’s lowered its rating on $26 billion in Ford debt by two grades to Caa3, or nine below investment quality.
The dollar fell for a second day against the euro before U.S. reports today that economists estimate will show sales of new and existing homes approached the lowest level in at least nine years in November... The ruble slid to the lowest level against the dollar in almost three years as Russia devalued the currency and tumbling oil prices battered its economy.
“Re-default rates increased each month and showed no signs of leveling off after six months,” Dugan said in a statement. “This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable.”
I am watching the grains closely, but I am also watching stocks and the Dollar. The price of grains over the past few months has been linked to both to some extent. If the Dollar drops, that will be supportive of grain prices. The same holds true to a lesser extent with stocks. If stocks rise appreciably, that is also supportive of grain prices. If, on the other hand, the Dollar rises and stocks drop, it will tend to suppress grain prices.
They print them! Yes, out of thin air! Or computer 1's and 0's!
How strange that the Fed would try to stimulate the economy by printing more and more money, and using that money to buy more and more treasuries to suppress interest rates. Mean while, Congress is trying to stimulate the economy by going deeper and deeper in debt, selling more and more treasuries. It seems like a very vicious circle.
This same method of stimulation, known as quantitative easing, was used by Japan over the past 20 years. Unfortunately, it didn't work. But unlike Japan, the United States doesn't have vast reservoirs of foreign reserves to spend. The United States is building up only one thing: debt!
This "damn-the-torpedoes" strategy of not worrying about the deficit during times of economic strain will one day sink the American economy. This year, the federal government will spend $450 billion on just the interest on the national debt. Again, that's interest on last year's total federal debt. That interest payment ranks fourth in total government outlays, behind Medicare-Medicaid, Social Security and defense. In 30 years, the government's current tax revenue will cover only half of what it owes. We're soon going to be looking for change, all right. Pocket change!
Sunday, December 21, 2008
"Standard & Poor's said late Thursday that it has changed the market capitalization guidelines for its U.S. indexes, cutting what a company needs to be worth before it can enter one of its categories. For large-cap stocks, reflected by the S&P 500, the value was cut to $3 billion from $4 billion."
Click here for the entire story.