Friday, July 31, 2009
The Duke Returns, Recession Heads for the Backdoor
It is 5:44 AM, the coffee is hot and I just turned off the television. Now what the heck is the ole Colonel doing watching the boob tube before the chickens are up? Washington just released their GDP number for this Spring as reported by CNBC's morning business show, "Squawk Box". I'm sure you've got better things to do, so the Colonel watches this for you. He also thinks co-host Becky Quick is kind of cute, so does Warren Buffet.
GDP or Gross Domestic Product acts as a scoreboard for the economy by measuring all goods and services produced and here is when bad news is good (or at least better). The new number showed a contraction in the economy of 1.0% giving us the fourth consecutive quarter of negative GDP, a record since the government propeller heads started tracking it after World War II. How is this good? The experts were expecting a negative 1.5% so 1.0% is better and a whole lot better than the declines of 6.4% for the first quarter and 5.4% in the fourth quarter, at the pit of the recession. Buckaroos, things are looking up; The Big R is heading for the backdoor.
And who just came through the swinging door? It's the Duke! Yes folks, the Duke returns the last day of each month to check up on all these eco-scalawags. The Report started this check in the blog, Where's The Duke When We Need Him?. We report key consumer interest rates so you can track where we're going as time marches on. Here are today's national averages compared to last month's numbers (WSJ Market Data, 7/31/09):
10-yr Treasury Note 3.56% vs 3.47%, up
Money Market 1.21% vs 1.29%, down (52-wk low, 1.20%)
5-year Bank CD 2.65% vs 2.65%, unchanged (52-wk low, 2.59%)
30-yr mortgage, fixed 5.55% vs 5.68%, down (52-wk low, 5.06%)
15-yr mortgage, fixed 4.86% vs 5.04%, down (52-wk low, 4.69%)
New-car loan, 48-month 7.28% vs 7.30%, down (52-wk low, 6.45%)
Home-equity LOC, $30K 5.78% vs 5.81%, up (52-wk low, 5.03%)
There is a some good news in these numbers too. CD rates may have bottomed and will hopefully start inching up. Mortgage rates are back down after a scare last month that they could be heading north. If you're fixing to buy that new F-250, new-car loans are ever so slightly better but the "Cash-for-Clunkers" just ran out of money (up to $4500 for Old Faithful). After blowing a billion, Congress may squirt in a few more billion in to nab the old timers. They ain't getting mine, I love my '72 F-250 and '67 half-ton Chevy. They still run and I can still fix'em! My dear dad bought me the Chevy 42 years ago.
The Duke is in the house, let's walk the walk:
Oil is down $0.02 to $66.92 in early trading (September contract); Gold is up $3.8 to $941.1 (December contract, most active); Silver is down $0.055 to $13.430(September contract); Copper is down $0.0355 to $2.5995 (September contract); Molybdenum is lazy-dazy at $15.
The DOW is up 31.06 points to 9185.52; the S&P 500, up 1.63 points to 988.83. The miners are happy today:
Barrick (ABX) $34.11 up 0.77%
Newmont (NEM) $40.47 up 1.66%
General Moly (Eureka Moly, LLC) (GMO) $2.77 up 1.47%
Freeport McMoran (FCX) $58.51 up 0.17% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are mixed today, POSCO breaks $100 (a "tell" for General Moly):
Nucor (NUE) $44.00 up 0.16% - domestic steel manufacturing
ArcelorMittal (MT) $35.81 down 0.14% - global steel producer
POSCO (PKX) $100.60 up 3.26%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up 0.82% to $1,078,378.72