What went down: The Financial Times reported that China was thinking about ditching their European debt, which would be a huge blow for Europe’s economy. However, China denied these rumors, and reassured investors. Essentially, they stayed the course and singlehandedly turned stocks around. Not bad for doing nothing.
1.7%the increase in the Dow Jones Industrial this morning
2%the leap in
the broader S&P 500
after the news
2.3%the leap in the tech-heavy Nasdaq 500 on the news source
41.9%of personal income comes from private wages and salaries
17.9%of personal income comes from government programs source
» What this means: Simply put, it’s an unsustainable trend. The government raises money through taxes on wages and salaries, and with many people out of work and benefits making up a larger share of personal income, the government is on the hook for more of people’s collective personal incomes. Part of this, yes, is due to the stimulus. Once the economy gets back in tip-top shape, will the numbers go up? Maybe. But the numbers were going down even before the recession due to the increase in benefits.
7.6%boost in previously-owned home sales in April source
» Why the leap? Simply put, there was a homebuyer tax credit that was about to expire at the end of April, and it led to a leap in sales to their highest levels since November. Now if only those sales were happening without, you know, big tax credits.
376the Dow Jones’s loss today, the biggest this year source
» Is it a correction? Yes, yes it is. The Dow has fallen 10 percent since its April highs, meaning, by any technical definition, that it’s a correction. source
People aren’t getting laid off, but jobs aren’t getting created. With a decrease in new jobless claims by less than 4,000 (there were 444,000 new jobless claims this week) against a backdrop of increasing payrolls, many are wondering why job growth isn’t faster. Some are suggesting it’s tied to the high unemployment rate. “There are more jobs being created, but the general trend is that businesses are still reluctant to hire,” said analyst Gary Shilling of A. Gary Shilling & Co. The data show that the issue is more a lack of hiring and not people getting laid off.” source