Things are moving on Thursday, but in different directions: moving up – used car prices and tariffs on Chinese solar products; moving down – the stock market and McDonald’s hamburger sales; moving out – Treasury Secretary Geithner.
No Champagne on Wall St.
While most of the country seemed happy and relieved that the long campaign season finally ended on Tuesday night, there was no euphoria on Wall Street Wednesday morning.
Stocks fell precipitously on Wednesday, with the Dow Jones Industrial average plummeting 313 points, or 2.3 percent, and the S&P index contracting by a similar 2.4 percent.
Investors are worried over how President Obama and Congress will deal with the “fiscal cliff,” and Europe’s debt crisis continues. This combination brought out the bears who pushed the markets to three-month lows.
Stiff Tariffs on Chinese Solar Products
The U.S. International Trade Commission (ITC) voted unanimously on Wednesday to slap high tariffs on solar energy products imported by the U.S. from China, the world’s leading supplier.
U.S. solar companies have long complained that Beijing’s financial support has allowed Chinese solar companies to sell their products in the U.S. at unfairly low prices. In 2011, the United States bought $3.1 billion worth of Chinese solar cells and panels.
The ITC decision will allow the U.S. Commerce Department to begin imposing duties on hundreds of Chinese producers.
Meanwhile, some fear that this is the opening round in a new trade war between the two countries and that China may be prompted to retaliate.
Speculation Over Treasury Chief
Speculation continues to grow over a potential replacement for Treasury Secretary Timothy Geithner, who was appointed by President Obama in 2008.
Second-term presidents often change some Cabinet Secretaries after their re-election, and Geithner himself has stated that he plans to leave his post as the nation’s chief financial officer, once the President’s new term begins.
Frequently mentioned as possible successors are White House Chief of Staff Jack Lew and former Clinton White House Chief of Staff Erskine Bowles.
Prices Rising on Used Cars
Superstorm Sandy destroyed approximately 250,000 cars as it tore through the Northeast, creating a sudden and widespread need for replacements vehicles. And that means that prices for them are likely to rise.
The National Automobile Dealers Association expects that low inventories of and high demands for used cars in good condition will push used car prices up by 0.5 to 1.5 percent, adding $50 to $175 per car. Edmunds.com, the auto information company, pegs the anticipated price increase to be somewhat higher, estimating an additional $700 to $1,000 per vehicle.
Dealers believe that buying will be heavy between December 2012 and February 2013 as more storm victims collect payments from their insurance companies and begin to go shopping.
Fast Food Giant Sees Slow Decline
McDonald’s reported a monthly drop in a key sales figure for the first time in almost a decade. Global revenue at company-owned and franchised restaurants open at least 13 months fell 1.8 percent in October.
Stiff competition from rival chains Burger King and Wendy’s, plus weak consumer demand in Europe, where McDonald’s does 40 percent of its business, as well as in the U.S. and Asia, are the likely causes of the fast food giant’s recent slowdown in sales.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].