Economics Update

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Retail Sales, Courtesy Calculated Risk


DJIA Since Late 1998

As much as I think that the crossing of arbitrary numbers is bullsh#@, and I think that covering the daily swings of the market is bullsh#@, and I think that the Dow Jones is perhaps an even bigger load of bullsh#@, the fact that the DJIA topped 10,000 today is the obvious lede in today's economics news.

The Dow closed at 10015.86, the highest number in over a year.

It should also be noted this makes the return on the Dow Jones Industrial Average over the past 10 years roughly 0%.

I still think that this is a dead cat bounce, fueled largely by the Federal Reserve printing money and laundering it into the stock market through the banks.

It appears that the Federal Reserve is similarly dubious about the meaning of the recent rally, as the newly released FOMC Minutes make notes about "Considerable Uncertainty" about the strength of the recovery, once the stimulus package wraps up.

When one looks at things like falling retail sales in September with the expiration of "cash for clunkers", (though the number did beat expectations) and US business inventories falling in August, there is little sign that all this money doing anything but creating an equities bubble.

In real estate, we are seeing mortgage applications fall again as rates for the 30 year fixed mortgage head back above 5%.

The energy and currency markets are ecstatic about breaking the 10K barrier, which drove oil above $75/bbl for the first time in almost exactly a year, and because people are optimistic, and hence no longer looking for a safe haven, the Dollar weakened to $1.4924:€1.0000, the lowest number in 14 months.