During the economic down turn, Warren Buffet is looking to cash in on the frugal consumer! In the latest quarter, Berkshire Hathaway increased its’ stake in Walmart the discount retailer from 19.9 million shares as of June 30th to 37.84 million shares.
Sprint plans to cut up to 2,500 jobs by the end of 2009 to try and save more then $350 million in annual labor costs. This amount is in addition to the 8,000 jobs Sprint cut in the beginning of 2009 to save over $1.1 billion in labor costs. The combined total should save them $1.5 billion in labor costs annually.
While the recession had officially ended. You can see by the continued job cuts that unemployment won’t be dropping anytime soon.
Most people were predicting 10% unemployment before the end of the year, but the 10.2% unemployment rate at the end of October was worse than most had predicted as some are now predicting 10.5% - 11% sometime next year.
For investment purposes remember that unemployment is a will continue to rise until about a year after the recession has ended. That isn’t very comforting to the newly unemployed, but for those who have investment funds, the economy will continue to get better before unemployment gets better. Remember to invest with your head, not your heart. By the time unemployment starts to decline, this market will be higher than it is now. Like the end of most recessions, this will continue to be a jobless recovery.
Unfortunately for the CD investors, rates will continue to be horrible. Until jobs start to come back, the fed will continue to keep rates at the lowest they have ever been to try and continue stimulating the economy.
Mortgage rates which are not tied to the Fed funds rate are signaling for future US economic growth. Mortgage rates fluctuate daily depending on sentiment on how the US economy will be in the future, unlike short term rates that are fixed by the Fed. As the economy gets worse, the mortgage rates drop, while currently the rates have increased with bullish predictions for the 6 months to a year in the future. Current 30-Year rates are around 6.3%, where they were only 6.06% last week and below 6% two weeks ago.
The Dow continues it’s march down as it’s almost below the 12,000 point mark. Oil prices continue to rebound from a quick drop. Every time oil drops a little, it keeps moving to higher highs in this oil bull market. Dow stocks are starting to look very good to value investors. While the economy might keep them down for a few years, stocks like General Electric (GE) are paying investors 4% dividends while continuing to increase earnings during the tough part of the economic cycle.
The Federal Reserve reported that consumers increased their borrowing at an annual rate of 7.2%, well above the 3.1% rate in February. The gain was larger than expected and shows an increase in borrowing on credit cards and auto loans. The credit card increases show distressed borrowing by consumers who need cash.
The DOW has broken through the crucial 13,000 points. A better than expected round of 1st quarter earnings has given investers a reason to be optimistic about the future of the economy. The better than expected economic data flowing out has also helped the US dollar jump back up from it’s current long term decline.
The commerce department reported that the sale of new homes dropped 8.5 percent in March, the lowest sales pace since October of 1991. The median new home price dropped by 13.3 percent compaired to the year ago prices. This data continues to show the slump the housing market is going through since the bursting of the housing bubble. The perfect economic storm continues as the housing market, upcomming recession, and tough credit crunch are continuing to destroy the current US economy.
The Dow continues to rise as it has for the past couple weeks. Posting a huge 3.19% gain yesterday. While 30 Year Mortgage rates have started increasing again. Average 30 Year rates are currently 5.75% up from 5.72% last week and 15 Year rates are currently 5.29% up from 5.22% last week. Mortgage rates while up lately are still around historic lows.
