Okay, so the Dow Jones Industrial Average is down 200 points at 9:15 AM. Is it an understatement to say that it is not a good opening?
What’s the deal? Jobless claims were not so great. Then the Bloomberg Consumer Comfort index was released at -47.6, it’s clearly indicating that consumers are very pessimistic on the economy. Confidence among women fell to the lowest level since October 2009, while Americans making more than $100,000 a year were the most pessimistic since November 2009. Today’s comfort report showed sentiment among Democrats fell to the lowest level since February, while confidence among Republicans dropped to a nine-week low. Democrats were 8 points more pessimistic than Republicans, the biggest gap since March. So no one thinks the economy is headed in the right direction.
And looking around the globe it doesn’t get any better. Stocks tumbled as the Yen dropped the most Since 2008 on Japanese central bank sales. The MSCI All-Country World Index sank 1.8 percent and the Standard & Poor’s 500 Index fell 1.9 percent. The yen depreciated as much as about 4 percent against the dollar, the biggest decline since a 6.1 percent drop on Oct. 28, 2008.
Concern the economic recovery is faltering has driven investors out of stocks and into the relative safety of gold, Treasuries, the Swiss franc and yen and is spurring speculation the Federal Reserve will start another stimulus program. Japan’s move to sell the yen, which this week neared a postwar record, follows efforts by the Swiss central bank to curb the franc’s gains. The Bank of Japan also expanded its asset-purchase fund and kept rates near zero today, while the ECB resumed bond purchases and offered banks more cash to stem the spread of the debt crisis.
Tighten your seat belts people, it’s going to be a bumpy ride!
John Broussard
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
Ph: 225-342-0013
Fx: 225-342-9721
Email: jbroussard@treasusry.state.la.us
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