The market broke out and then flamed out. Financial shares are up 3% but the NASDAQ is down. The short term is uncertain but, historically, bank shares lead the way out of recessions.
The price of gasoline is dropping quickly but it has a long way to go before making people happy. A year ago, the average price was around $2.75 and 6 years ago it was around $1.25. This morning, the average price is down to $3.12 and it is headed to $2.60 in a couple of weeks. The decline from the peak to the current price represents a savings of $4.33 per day for each man, woman and child in the USA. This $1,600 per person per year is much bigger than the $1,000 welfare checks proposed by Obama.
It is impossible to predict the future but it is reasonable to expect lower fuel prices, already coming down the pipe, to have a positive effect on consumer spending. The recession will put 2% of the people out of work temporarily but these people will draw unemployment insurance. The savings of the masses will be larger than the losses of the few.
Tuesday, October 14, 2008
Financial Stocks Up
Posted by Courtney at 10/14/2008 10:20:00 AM
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