My Comment: From my previous posts on this blog, it’s clear I’m critical of the stimulus program. This article and many others articles on the subject point out the obvious, the expectations for job creation due to stimulus aren’t being met. This is a nice article from the AP.
By BRETT J. BLACKLEDGE and MATT APUZZO – 2 hours ago
WASHINGTON — An early progress report on President Barack Obama’s economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports. Continue reading
Anyone who has read my blog for some time, knows that I am bullish on oil over the next 12-24 months. I recommended purchasing oil in the 50s and low 60s . I still like it over that period, but think it ran up a bit too fast. Rex Tillerson, CEO of Exxon said on 6/16/09 The recent rise in oil prices is mainly caused by the weak dollar and not supported by market fundamentals. “When you look at just fundamentals, there’s not a lot to support this kind of price movement we have seen…in the last six weeks…Concerns about a weakening dollar and coming inflation have led some investors to bet on an economic recovery and try to get ahead of a rally.”
Source: Rex Tillerson, Exxon CEO statements made at a gas conference the Dutch city of Groningen.
My Comment: As market observers we have to wonder how much of the jobless losses is factored into the economic data that is coming out. I saw a statistic that for every 6-10 jobs lost adds up to one more foreclosure. Also, the recently announced car dealership closings will have a serious negative impact on the jobs numbers. It feels like the “crisis” may be over, but the economic pain may have a ways to go. We may be in for a long recovery, if measured by jobs, home prices or wages.
Nobel laureate economist Paul Krugman says financial markets have overestimated economic strength in their recent rallies. Continue reading
With a little more than 6 months left in the year, the Senate yesterday took a vote on permanently raising the FDIC limit to $250, 000. This piggybacks on a similar vote taken in the House doing the same. The measure will now be reconciled by committee and presented to President Obama for signature. Expectations are that this bill will be signed into law by the end of May. Investors have been looking for this clarity for some time and while we need to be cautious until this measure becomes law, it is close. There have been some questions raised related to a 2013 date – some are asking if this measure expires in 2013 and FDIC limits could go back to $100,000. The answer is “No”. The change is permanent. The 2013 date is referencing a 5 year date for the $250,000 limit to be reviewed for possible increase based on inflation. The 5 year period being referenced includes 2008 (original move to $250,000) through 2013.
We refused to touch credit default swaps. It would be like buying insurance on the Titanic from someone on the Titanic.
My Comment: I’m sick of hearing about bank stress tests. It’s a joke and the Government has mismanaged this from the beginning. First the Government couldn’t decide if they were going to publish the results. Now, they say they will publish the results and that no bank will fail the test. So is this a case of participation alone gets you a gold star? The public and investors are supposed to feel good about a transparent “stress test” that no bank fails.
In my opinion, the results should not be published. The Government will have the ability to pick and choose which banks win and lose from the stress test, by publishing which banks are healthy than the others. Another potential problem is how much data is the Government going to release; just the score or a detailed report. If the release is skinny on details, I suspect investors will view this as a bad sign, because the government is trying to hide just how bad the results are.
Bank bailout plan’s ‘stress tests’ already causing stress
My Comment: Investors concerns and euphoria follow the Dow Jones Industrial average. It’s interesting the savings rate is finally starting to nudge higher, but I assume that has more to do with people’s concerns about the economy and losing their jobs than a long term change in savings pattern. Once the markets and economy rebound, I think we will once again see the savings rate slide off a cliff. However, we can hope this economy could be the wakeup call that changes the savings and consumption pattern of a generation. We will have to wait and see.