Daily Investment Interpretations
August 31, 2010
The markets ended the day
essentially unchanged. The NASDAQ Composite moved
to 2,114.03. The Dow rose 4.99
at 10,014.72, and the S&P 500
to end at 1,049.33. Oil closed at $71.79 a barrel,
while Gold ended the day at $1,249. The VIX dropped
The markets began the day moving up on good news: U.S. home prices rise and August consumer confidence rises to 53.5, but then sagged when the minutes from the last Fed meeting were released: Reinvestment plan sparks FOMC debate, minutes reveal.
Brett Arends observes that many of Ben Bernanke's predictions have proven false: Bernanke's tiresome schtick: "On forecasts, the Fed chairman is about as useful as a New England weatherman.". He goes on to day, "Bernanke keeps talking about bank lending and consumer confidence. But how can anyone look at the most indebted nation in the history of the world and say it is suffering from a lack of credit? And why on earth should consumer confidence miraculously pick up when those consumers are broke and out of work? Is he suggesting we start handing out Vicodin? Should we legalize pot? ...look at the numbers. American families, according to the Federal Reserve itself, already owe $13.5 trillion. That is twice what they owed ten years ago, and four times what they owed twenty years ago. For all the talk of people repairing their balance sheets, that figure has fallen by a grand total of 2.7% from its all-time peak in 2008.
He also addresses the unemployment situation. He notes that: "25% of men of prime working age in America, one in four, today lacks a full-time job. Nearly one in five lacks any job at all. This is unprecedented in American history."
Death of equities exaggerated. The author says, "In fact, rather than leaving stocks behind, evidence suggests that investors are ditching U.S. stock mutual-fund managers and putting money into index funds that track established U.S. stock benchmarks as well as international stock funds."
Stock market future are up about ⅔ % tonight.