Initial jobless claims were lower this week but consumer sentiment was also lower. So most Americans have jobs, but they do not feel very good about the economy. This sentiment was validated later in the week as stocks lost 600 points on the Dow. This a result of Wachovia’s $1.1 billion loss attributed to collateralized debt obligations (CDO’s). CDO’s are investments, a part of which are sub-prime mortgages, whose value has decreased significantly in the last two quarters. Other companies also reported losses due to the same circumstances and this trend should continue for the near future according to economists.
This week the producer pricing index report and the retail sales report will be released on Wednesday, and the consumer pricing index report and the initial jobless claims report will be released on Thursday. These reports should give further insight into short and long term interest rates as well as how many Americans will be out of work for the holidays and which direction the economy is headed for the near term.
The bond market will be closed Monday in honor of Vetaren’s Day. As a former member of the military my most sincere thanks go out to those who have served and those who continue to serve our military and provide us with the liberties and freedoms we enjoy. Best wishes and godspeed to our troops stationed throughout the world.