By Rick Glaze
The Nasdaq fell a slight 0.04 percent for the week aided by Friday’s marked decline. The tech-heavy index has slowed after an 11 percent rise from its April low. The S&P 500 gained a modest 0.02 percent and the small company S&P 600 climbed 0.08 percent. The 10-year U.S. Treasury note boosted its yield 10 basis points or one tenth of a percent to settle just above 4 percent.
Rates tend to rise when investors perceive faster growth and fall when they see a slowdown in growth and a subsequent rise in inflation. Alan Greenspan spoke before Congress on Thursday and said growth is steady and “measured” increases in interest rates would likely continue.
The dollar is still strong, which is welcomed by some but it makes U.S manufactured goods more expensive. The trade deficit widened, worrying all those reporters at the New York Times and many of their casual readers. A deficit simply means our country buys more goods than it sells. Is that inherently bad? I took an informal, unscientific survey and nobody knew. Well, here it is in plain English. Our economy is growing. More people have a job than any other time in history. Personal income is growing, and our fellow citizens like to buy things with their money. Many of the things we buy come from outside the country. As reported last week, other parts of the world including Europe have slow to no growth so they aren’t very good customers for us right now. Our exports though smaller than imports, still grew 3 percent in April versus 6.3 percent for imports. Things are simply not that bad.
The education budget in California will rise about $3 billion this year, but the billboards and the mainstream media claim the governor is cutting education spending. I guess it’s the new math. Of the $60 billion spent on education, less than half goes to the classroom. Separately, we are driving on roads and bridges that Jerry Brown’s father built yet the California Legislature spent hours recently debating whether textbooks should be limited to 200 pages. Reports are that this kind of high-level work is regular fare in Sacramento.
