Tag Archive: economy

It used to be easy to know the amount of money circulating in the US economy: look into the US money supply. Today, it’s not that straightforward anymore. It is also difficult to measure the effects of the Federal Reserve monetary policies as well as those of the other central banks as well. In the 1980s, it was easy to understand the explanations of Milton Friedman on how inflation and economic fluctuations are affected by money supply. But it’s different today.

The reason why it’s too difficult to learn about the effects of money supply is that banks altered their way of doing business. It became difficult to monitor the movements of money. In the 1960s, bank deposits like savings, time, and checking make up 95% of the credit market of credit unions, savings and loan associations, and commercial banks. In the 1990s, such deposits only make up 72% of the said credit market. In 2007, the percentage dwindled to 55%. When the financial crisis began in 2008, there was a significant rise in the percentage primarily because people no longer want to risk their hard-earned cash.

It is also interesting to note that there are non-banking institutions which have started lending and borrowing which were once the domains of banks. According to Deloitte, the estimated amount of this shadow-banking system is about $10 trillion while the Financial Stability Board estimated it to be about $24 trillion in 2010. The measurement is only available after 3 months of each quarter. With the latest move by the Federal Reserve to buy bonds plus the financial-stress index which includes bank stock market prices, options prices, and credit spreads, the US economy may be seeing a better tomorrow for the next months.

Along with the moves to control the monetary policy, the stock market has also reached a new high in about 5 years. However, investors are not really jumping into the bandwagon. The primary reason is that they are afraid that they won’t generate profit from the attempt. Some investors would want to wait until next year or when the presidential election is over. Some investors may also be waiting for some bills to be passed by Congress. However, according to Nicole Seghetti of The Motley Fool, there are only 2 reasons why people shouldn’t try investing in the stock market. One, they have no money. Two, they can’t leave the money for a long time in the stock market.

So, how do you know if you have the money for the stock market? Normally, you must have saved many months of living expenses in a savings account. You must also have saved for any short term financial goal or for emergencies. If you’ve saved for both living expenses and emergencies and you still have excess money then it’s time to invest the excess in the stock market. If you have any midterm or long-term financial goals, you must invest in the stock market because no other investment schemes will be able to outpace inflation in a period of time.

With the encouraging development in the monetary policy, investors shouldn’t be afraid investing in the stock market. Outside forces may be able to pull down the stock market temporarily but it will eventually right itself. What matters most is that investors have the money which they can leave in the stock market for a long time.

The Stock Market Rallies and we go over 12k

First off, I apologize for disappearing for a few weeks. I have been extremely busy and haven’t had much time to follow the stock market, let alone write an article about it. But now that I am back and I am happy to announce that yesterday, the Dow Jones finally went over the 12,000 mark like I had originally predicted several months ago. The picture above is what was shown yesterday. The Dow Jones is thankfully doing a lot better today. Although it didn’t rally today, it added onto the huge 3% rally from yesterday.

The Dow Jones currently sits at 12,231. It’s up almost 600 points since I last reported on October 14th. This is great news because it is a sign that the economy is doing better. We haven’t seen the 12,000 figure for months. The last time it was doing well, we were heading towards the 13,000 mark and currently that’s our goal. Our current objective is to stay over the 12,000 mark as we head to 13k.

The NASDAQ is also doing better than when I last reported. Although it dropped just under 1.5 points, it is still doing great. Currently the NASDAQ is at 2,737.  The S&P is also up, currently at 1,285, heading towards the 1,300 mark itself. And finally, the NYSE is at 7,803, almost a 500 point increase from October 14th.

The past two weeks have been great for the stock market. I do regret missing out on most of it but what can you do, life happens.

Before my small break, I was keeping an eye on Netflix. Two days ago, Netflix (NFLX) stocks dropped over 35% after they reported losing over 800,000 subscribers due to their company changes. That’s a huge drop. It hit a new low that day of $74.25 per share. Over the past two days, it has been recovering, but very slowly. Currently Netflix stocks cost $84.14 a share. It’s very surprising to see what was once a $300 stock to lose this much in this little time. Netflix has no one else to blame but itself for this.

So what’s happened to gold over the past 2 weeks?

It seems that Gold has been prospering too. I thought the price of gold would keep going down as the economy improved and the stock market went up, but it seems that gold has been riding along. Gold now costs $1,743 an ounce, compared to $1,680. It’s not a huge increase but an increase nonetheless.

Quite a bit has happened in my absence, I have tried to follow as much as I could but my schedule made it difficult. I am sorry for not bringing you more updates sooner. I will try to bring you as many updates as possible in the near future. Today is the end of the week and next week, the market will open into Halloween. Lets hope the issues in Europe continue to get better and the stock market’s momentum from this week moves over to the next. We could definitely use a big break as we head towards the Holidays.

So how was your two weeks? Are you happy with how the stock market has turned out in its rallies? Where do you think we will go from here?

Jobs Data sends stock market to finish lower

by Jeroen van Oostrom

Earlier today, the US Jobs Data was released for September 2011. We needed some good news after the terrible job report from August which didn’t create any jobs at all. For September, everyone expected around 50,000 jobs to be created. But the report was better than expected.

The report stated that 103,000 jobs were created in September. Sure you may think that it’s great, but a large portion of the number is Verizon workers going back to work in September after the strike that we saw over the summer. This is actually not great news. It’s decent news that we are actually creating jobs in the economy, but it’s no where close to getting us out of the high unemployment rate that we seem to be stuck on.

August 2011′s job data was also revised. The number went from 0 jobs created to 57,000 jobs created. Although that’s good news, it’s still no where close to getting us out of the 9.1% unemployment rate that we have been stuck on for months.

The Congressional Budget Office is predicting that the number will get better by the end of the Fourth Quarter of 2011. They are expecting it to drop to 8.9%. It’s not a huge drop but still, it’s below 9%, something we haven’t seen for a very long time.

This will be a big challenge for President Obama when it comes to his reelection. By the 2012 elections, the unemployment rate will still be very high, estimated to be around 8.5%. If President Obama is reelected, it will be pretty historical because it has never been done while the unemployment rate is so high. But we will have to see how things go. If things start turning around this quarter or the beginning of 2012, President Obama may have a good chance of being reelected. But it’s still to early to assume anything.

You would expect the stock market to do some rallying after the better than expected jobs data earlier today. But it wasn’t the case. The mixed jobs report actually sent the stocks finishing lower than yesterday. The economy in Italy and Spain were also downgraded today which added to the reasons for the drop today.

Today, the Dow Jones dropped 20 points, finishing at just over the 11,103 mark. The NASDAQ Composite lost over 27 points finishing at 2,479. The S&P 500 dropped just over 9.5 points, finishing at 1,155. And the NYSE dropped more than 71 points, finishing at 6,925.

Apple recently announced it’s iPhone 4s. But the death of Steve Jobs has left a small impact on the value of the Apple (AAPL) stock.  The value of Apple dropped just over 2% or $7.57 a share. it’s not a big drop and they will bounce back soon. Because of Steve Jobs, Apple is one of the strongest companies in the world and it won’t be going anywhere. It is the legacy Steve Jobs left behind and it will be around for a while. So right now, the 2% drop means nothing for its future.

Sprint (S) suffered a huge loss after announcing financial issues. They dropped nearly 20% today, or $0.60 per share. They finished at $2.41 a share.

Clearwire Corporation (CLWR) suffered a bigger loss when Sprint announced that they will no longer be selling phones that work on the Clearwire network. Their stocks dropped $0.66 per share, or 32%.  And MetroPCS Communications (PCS) also suffered a loss of 7.8% or $0.67 per share finishing at $7.93.

The telecommunication industry took a pretty big hit today. But this would also be a great opportunity for investors to jump in to buy these stocks at a low price. If that happens, it should send all three stocks back up. I believe that we need Sprint to stick around to be able to compete with the two big names of AT&T (T) and Verizon (VZ).

Today was the end of the first week of the last quarter. We are finally back over the 11,000 mark with the Dow thanks to three days of rallying. Although the jobs data today wasn’t great, it was still better than expected. I hope that things do turn out better in the near future. We already have Greece in trouble, hopefully Italy and Spain won’t go the same way.

Today was not a very good day for the stock market. Today was the official first day of the last quarter of 2011 and we started out in the red. It added to the losses we already experienced at the end of the last quarter (just 3 days ago).

Most of what we have seen today is due to worries from Greece again. It’s kind of amazing how volatile the market has been all because of speculation about how Greece is doing with their economy. We still haven’t received anything solid but investors are selling and buying based on what they think, or feel, will happen with Greece. If they believe that Greece will come out of it soon and have a steady economy again, the markets are likely to rally. If they believe Greece is close to defaulting, then everything will plunge. Most of the rallies and plunges over the past few weeks have been revolving around Greece and its issues.

Today, the Dow Jones fell more than 258 points. It finished at 10,655 points. We are very far from our 12,000 point mark. I do hope that we can get back over the 11,000 mark soon.

The NASDAQ Composite lost more than 79 points or almost 3.3%. The NASDAQ finished off at 2,335. The S&P 500 fell more than 32 points or 2.85% finishing off at 1,099. And finally, the NYSE dropped more than 217 points or a 3.2% drop, finishing off at 6,574 points.

On Friday, we saw Eastman Kodak (EK) plummet to $0.78 per share. Today they bounced back gaining more than 71%. Currently, Eastman Kodak sits at $1.34 per share after an increase of more than $0.56.

This may mean that Kodak may be bouncing back, but it could also be investors jumping on the opportunity to buy a stock at an extremely low price. Remember that at one point, Kodak stocks were worth over $80 a share. If things look better for Kodak again, these investors will be very happy. But it’s still very volatile, nothing dramatic has happened to help Kodak out of its financial crisis. Any investment now would still be considered very risky. Any stock that gains so much in a short period of time is always in danger of dropping even more the days following from massive sellouts of investors cashing in on their profits.

Today was not a good day for the stock market. Tomorrow will hopefully be better. We are at a very low point in the market and the new from Greece definitely isn’t helping. I hope that everything turns around for the rest of the week and we head back over the 11,000 mark. I also hope that what Eastman Kodak saw today wasn’t just investors buying the stock low, I hope it keeps increasing because Kodak could sure use a surge in investors right about now.

Share your thoughts on the plunge today and what you think will happen with Kodak stocks in the coming days and weeks.

General Stock Market Graph

by Vlado

Today was the third consecutive day the Stock market has seen gains. Today was another rally for the market as investors are hopeful that the worries in Greece will come to an end soon. The keyword there is ‘hopeful.’ Kind of scary isn’t it? Our entire global economy seems to be riding on hope.

The Greece issue has been in the news for weeks and nothing conclusive has been said besides the fact that Greece may be nearing default soon. But other than that, nothing really happened. We don’t know how the talks are going or what’s exactly happening, nothing is concluded but yet, worries have risen several times, as well as hope has risen. I don’t know about you, but I wouldn’t really count ‘hope’ or ‘worry’ to be factors in deciding how our market runs. But apparently, that’s what seems to be happening. When people are hopeful, the stock market rises, and when they are worried, everything sinks several hundred points.

The Dow Jones today was on the good side today, seeing a gain of over 146 points, falling just 10 points short of the 11,200 mark AGAIN. We have seen that mark several times and it seems every time it tries to head for the 12,000 mark, ‘worries’ about Europe increases and the stocks plummet.

The NASDAQ Composite gained just over 30 points. The S&P 500 gained just over 12 points. And the NYSE gained over a 102 points, going over the 7,000 mark once again (7,043 to be exact).

The official news for now is that Greece is close to finding a way out of its debt crisis. Hopefully it’s true. There is that word again, hope. I do hope a lot when it comes to the stock market but it’s usually always hope. I don’t sell all my stocks when I ‘feel’ that something bad is going to happen in Europe and I don’t buy mass amounts of stocks when I ‘feel’ everything will rise. Sometimes it feels as if some people are just manipulating the news to keep the markets very volatile for their own profits. But of course, proving it is another thing. For now, I am thankful that everything is on the positive end.

So what’s going on with Gold?

Gold seems to be acting a little weird. It has been going down when the stock market plummets and today it actually went up with the stock market’s rally. It is unusual but not too much. Current price of gold is $1,654. Just over $30 more than what it was yesterday. Gold was almost $1,600 an ounce today, a price we haven’t seen in some time. But I have no doubt that it will once again see that price, and go even lower. I think investors should stop investing in commodities like Gold and Silver and start investing in businesses and encourage job growth. That’s where they should see bigger returns.

Today was a good day for the Stock Market. Lets hope it keeps up for the rest of the week. We still have to bounce back to where we were early last week, we’re still a few hundred points below the level.