Gold futures closed Tuesday at a record high as reported by both the Financial Times and the Wall Street Journal. Gold has become a safe investment due to the unrest in the Mideast which many believe could disrupt the economic recovery. With other "safe" investments paying relatively low rates, it is not surprising that gold has become the popular investment. Silver is also close to record highs.
The Associated Press also predicts that stocks are headed for some gains today as the international markets were able to hold oil prices steady.
The Washington Post reports that February was one of the strongest months for auto sales in the past year. Sales improved 20% from a year ago selling a million cars more than in February 2010. GM was the big winner with a 46% sales increase due probably to strong incentives. Ford was up 14% and was especially strong with small non-gas guzzling car sales.
Bloomberg reports that two former Feds currently serving as Chief Economist at Credit Suisse predicts that unemployment will be at 7% by year end 2011. The White House predicts 8.2%.
The credit rating of Portugal and Greece are predicted to fall again, according to the Associated Press. Standard and Poor's is awaiting the decision of the EU in finalizing its formal bailout mechanism. Dependent upon the outcome, each of the forenamed countries could be taken down two notches. Portugal, currently at an A- rating would still be investment grade but Greece is already considered junk.
The Associated Press also reports that investors are moving cash out of China and India. The unrest is the Middle East raises fears of similar unrest in other developing countries. Fund tracker EPFR Global states that investors have taken $5.45 billion from emerging markets funds since the second week of February. Since the beginning of the year $1 billion have been taken from the Chinese market. The stock markets of many of the emerging countries are down with the India Sensex down 10% YTD and the Brazil Bovespa down 4.4%. The Shanghai Composite, however, is up 4%.
Banking regulators are pushing for a law that will require 20% down for home mortgages in the future. The Federal Reserve, FDIC and OCC are all behind a bill that will require substantial down payments for loans to be considered "qualified residential mortgages" and thus able to be traded by banks. The Wall Street Journal reports that Tim Geithner is trying to slow the decision down to ensure that there is a balance against the requirements and the ability for individuals to qualify for the loans.
Nouriel Roubini, an economist that also predicted the 2008 financial demise, predicts that there will be $100 billion of municipal bond defaults in the next 5 years. According to the Wall Street Journal these predictions are not as dire as the predictions of Meredith Whitney, an independent analyst, that caused the municipal bond markets to struggle a few months ago. Roubini's predictions are that most defaults will be among bonds issued for special government projects (ie. highways, bridges, etc.) The S&P/InvestTools reported that $2.65 billion of municipal bonds were in default in 2010 compared to $2.9 billion in 2009.
One of the big Wall Street bankers has finally been indicted, according the to Wall Street Journal, but the story will probably not be for the type of scandal taxpayers are seeking. Mr. Rajat Gupta, formerly the head of Goldman Sachs, is being charged with passing insider information to his close friend, the Chairman of Proctor and Gamble.
The Associated Press reports that the richest man in China, who made his money distributing and creating carbonated drinks, is now in talks to open 100 department stores. The name of the beverage, similar to our soda pops, is named Wahaha. That means "Laughing Child" in Chinese.