10% Stock Market Correction: Just The Beginning?
After a positive Monday a week ago the stock market went four straight days with big losses — almost 800 points on Thursday and Friday alone.
Signals Markets Are Sending
The first negative sign was commodities. Commodities investors’ use financial trades rather than physically taking delivery of the product with physical trades over about 50 major markets.
In most cases they are betting prices are going up or down but rarely take delivery of the product.
Soft commodities would be things like wheat, coffee, cocoa and sugar. Hard commodities are manufactured products like gold or oil.
Both oil and gold were down compared to their yearly highs. In fact gold peaked around $1,900 an ounce back in 2011 just four years later it’s priced at $1,156.50 as of last Friday. Oil closed at $40.45 after briefly dipping to $39 and change.
The Strength of The Dollar
The value of the dollar has been rising but has dropped to its lowest point since June. (See Chart) The decreasing dollar could be helpful because the higher the value of the dollar goes the more expensive our goods and services are overseas.
So a dollar going down could be a bright spot depending on where it finally settles.
Signals The Economy Is Sending
While the official unemployment figures are in the five percent range most everyone knows those figures don’t really tell the whole story.
Food stamps are at the highest level ever, workforce participation is down; wages have been stagnant for months, and median household income is lower than it was five years ago.
The price of gas is about the only bright spot on the economic horizon with oil being cheaper.
Eighteen percent of American children were living in poverty in 2008. This year that figure has risen to 22 percent. Not exactly the sign of a growing economy.
Montana is #31 in states with the worst child poverty. Mississippi, California, New Mexico, Louisiana, and Nevada are the top five.
And, the national debt has gone from $9 trillion at the start of the last recession to over $18 trillion today.
Some Final Thoughts
Sorry to be the deliverer of gloom and doom, but things are not as rosy as those in Washington would like us to believe.
On August 15th Dr. Wayne Winegarden talked about the cost of regulations that are contributing to the slowest recovery from any recession we’ve ever experienced.
One of the main reasons is that government is not making business or consumers feel positive about their future.
And to compound things we have politicians from both parties that are reinforcing that message to feather their own nests next November.
Americans are tired and frustrated with the lack of support from our elected officials on both sides of the aisle. Where are the jobs bills we were promised?
Where are all the “shovel ready” projects that were supposed to be funded?
If that money was dispensed and used it certainly didn’t move the needle much. I wish I had the answer to our dilemma. In the past business and government worked together to get the economy moving again.
Even the K Street crowd is unable to get anyone moving from our current congressional gridlock.
No wonder non-politicians are attracting so much attention from voters. What are your thoughts? Comments Below.