From the HedgeStreet e-mail newsletter:
The GDP growth slowed to 1.6% in Q3 2006. Home sales are down 20%, median prices declined again. The Fed should have raised rates a year earlier. Once the inflation hydra was out of the bag, it was impossible to chop its head off without killing the economy. That’s what happened. The Fed inflated the housing bubble, then popped it. Consumer spending, subsidized 8% by housing equity, is bound to slow. Strong business investment may not keep the economy going. Normally, elections do not matter much. However, a Democratic sweep leading to tax cut reversals has the potential to spook stock markets. With both equity and real estate wealth curtailed, we could be looking at a grim scenario. Fortunately, interest rates remain low, consumer confidence high, and economists are 50% right. The 10-year Treasury yield was down 11 bps, to 4.681%, last week. The dollar sold off almost 1%, closing at USD1.2735/Euro and Yen117.58/USD. Oil was up $1.42 to $60.75 as the OPEC production cuts are scheduled to come into effect this week. The stock rally is running out of steam. The Dow was up 87.89 to 12090.26; the Nasdaq closed at 2350.62. On HedgeStreet, natural gas commanded 39% of the volume on Friday; currencies, oil and gold dominated on other days. This week, wholesale gas changes its settlement to RBOB gasoline and the Nonfarm Payrolls binaries end trading on Thursday; the 70K strikes traded last at a bargain price of $79.
Technical Note: Each time the HedgeStreet newsletter is sent by e-mail, its content should be posted on the Web, and the link sent in the e-mail. That way, bloggers could use the permanent link to the cited issue of the newsletter, so that readers can access the full content on the Web, after clicking on the damn link. This is the ABC of Internet publishing.
Addendum: But if we have a Democratic US House and a Republican US Senate, isn’t that good in regard to the reduction of the Federal deficit?
