The euro is falling. This of course revives the talk of its demise. The currency dipped below 1.30 this morning, and off we go. It reminds me of late spring in 2010 when the euro fell hard. In June of that year, the euro hit a low-water mark of 1.19. The talk back then immediately ran to parity, the euro would drop to a one-to-one ratio with the U.S. dollar. A low rumble out there is vibrating similar energy today. Granted, the state of Europe is further along the negative path today than it was in June 2010, but, and as well, since the problem is more acute, Europe is further down the positive path toward a potential solution. Is the latter the reason the euro is not breaking 1.20 level? Something is keeping it up, as Europe looks over the edge deep into the abyss, a position it was not in back in June of 2010. Something to ponder …
As for me, personally and selfishly, other than leading the way toward a currency collapse in Europe, I don’t mind watching the euro drop. In eight weeks, I am off to Spain for a few months, so a lower euro against the U.S. dollar is a good thing, but this is just selfishness talking. Besides, who knows what the euro will be doing in two, three, or four months.
And speaking of not knowing, and speaking of the past, last January Meredith Whitney, the renowned analyst, predicted the collapse of the U.S. municipal-bond market in 2011. That very public pronouncement from one such as she caused a bit of panic in the bond market. Well, just to catch up on that prediction late in 2011, here is an update.
Refuting Whitney’s forecast, which helped send borrowing costs to two-year highs in January, the $3.7 trillion municipal-bond market rebounded this year, generating an average total return of 10 percent through Dec. 12, better than U.S. Treasuries and corporate bonds. Munis also trounced equities as the Standard & Poor’s 500 Index lost (SPX) 0.6 percent in the same period.
This is good news for many 401k programs, seniors, and anyone else who had the fortitude to go against such a bold and certain call. Those who gambled got paid, and paid well. Is it such a good investment now? I guess that depends on what you want, but one thing is certain, the attraction to municipal bonds is strong.
Even after Alabama’s Jefferson County became the biggest government bankruptcy in the nation’s history and some defaults surged, the annual average 10-year borrowing cost for top-rated states and local governments dropped to 2.37 percent Dec. 12 and remained there.
A flight to safety is what we see, and that then speaks to investor belief, a positive perception of the municipal-bond market. For now, that will work for all of us, so until we have something more exciting to talk about, let’s turn to a reader’s question.
I favor the stock RAYS. Do you have any thoughts on this stock?
Yes, I do. What is the attraction to a stock sporting an operating margin of -28,573.00% and showing an operating cash flow of -43.68K? Even for a penny stock, this is bad news. Now, here is some good news.
U.S. businesses increased their stockpiles in October after slowing inventory growth in the previous month. The buildup in inventories should help the economy grow modestly in the final months of the year.
Trade in the day – Invest in your life …
