In the last month, the Dow Jones Industrial Average has fallen
by leaps and bounds. On 05/02/2012, the
Dow Jones closed at 13,268. Today, on
06/01/2012, slightly after the opening bell, the Dow Jones is at 12,165, which
is over a 1,100 point drop.
Disappointing job data was released today, accelerating our
unemployment rate to 8.2%. New employees
hired in the US (nonfarm jobs) came in over 80,000 jobs short of economist projections. From a housing standpoint, nationwide home
values continue to suffer. It was
released this week that 26% of all home sales in the US were foreclosed
properties, which are almost always purchased at significant price deductions. The deteriorating economy has caused the 15
year fixed mortgage to dip below 3%, making this the lowest 15 year fixed rate
of all time. US Growth also
decreased. The first quarter US growth
rate dropped to 1.9%, down from a projected growth of 2.2%. At the end of the 4th quarter of
2011, the growth rate was at 3%.
Unfortunately, this trend is likely to continue.
Internationally, the Euro nations continue to suffer. Greece polls suggest that the majority of the
citizens favor anti-bailout measures, which is a change from the previous week.
The fear of Greece abandoning the Euro
is, now more than ever, becoming a harsh reality. The
combined unemployment of the Euro nations is at a record high of 11%. Furthermore, Spain is facing a banking
crisis. Earlier this week the European
Central Bank (ECB) denied one of Spain’s main banks a bailout of over 19
billion dollars (US dollars). Over the
next couple of weeks I feel Spain’s financial woes will take up more of the
spotlight.
Most experts believe that volatility will continue
forward. Because of this, investors are
fleeing to US Treasuries, which has caused a back to back record low for the 10
year US treasury bonds to fall below 1.656%.
This surge to US bonds has caused the strength of the US dollar to temporarily
increase in value.
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