
(photo: GQ)
The markets may be in turmoil. The economic outlook is grim. But not all the
news is bad. From Kiplinger.com - No. 9 being our favorite.
No. 1: Oil Loses Its Swagger
With the U.S. and global economy hurting, oil prices have dropped 50% in just
three months, from $147 a barrel in July to the $70 range. Remember $80-$100
fill-ups at the pump? The national average for a gallon of gasoline is down to
$3.00, from $4.11 in March, and should stay in the $3.00-$3.50 range through
next year. Prices for home heating oil and natural gas are also headed lower
this winter than last.
No. 2: A Tipping Point For the Auto Industry
After years of talk and false starts, finally, all the major car makers are
furiously developing hybrid and alternative-fuel vehicles that could lessen our
dependence on foreign oil. Meanwhile, desperate dealers are offering unheard-of
incentives on new, gas-fired models. For example, Toyota is offering $1,000 cash
back and 0% financing on the 2009 Camry, the most popular car in America. Don't
drive much? If you've always wanted an SUV or truck, the discounting on some
models is extraordinary.
No. 3: Interest Rates AreLow and Headed Lower
The prime rate is at 4.5%, which is driving down interest rates on
home-equity lines of credit and some consumer loans. The interest rate on a
traditional 30-year fixed-rate mortgage is averaging 6.5%, the highest it's been
since the summer of '07, but still not too far from the historic low of 5.8%
reached in '03-05 and '63-65. And although credit-card companies are cutting
personal spending limits, rates are dropping, too. The average rate on
credit-card purchases fell to 11.89% in the first week of October, down from
12.13% in September, according to LowCards.com.
No. 4: Homes Are More Affordable
Real estate, which was overpriced during the housing bubble, has returned to
earth. That's especially good news for first-time home buyers who were priced
out of the market. While scare stories persist of credit drying up, the reality
is more a return to traditional lending standards that had been thrown
overboard-recklessly in many cases-by lenders. That means to qualify you usually
need a 20% down payment, sufficient annual income, good credit and a tolerable
load of debt.
No. 5: Your Bank Savings Have Never Been Safer
The $700-billion federal rescue plan more than doubles the amount of federal
deposit insurance on individual bank accounts, to $250,000 from $100,000. Uncle
Sam sweetened the pot further on October 14 by providing unlimited FDIC
insurance on non-interest-bearing accounts. That will provide more coverage for
the nation's small businesses, which use these accounts. Plus, a new temporary
federal insurance program covers the full value if your money-market-fund shares
fall below a net asset value of $1.00 (called "breaking the buck").
No. 6: Stocks on Sale/Many Bonds Offer Yields
The current bear market is approaching the '73-74 and '00-02 downturns, the
two worst retreats since WWII. The good news: individual blue chips are selling
at bargain prices. For example, shares of AT&T sell for about eight times
estimated '09 earnings and yield 6%. Networking giant Cisco Systems sells for
only ten times earnings estimates for its July '09 fiscal year. Google is going
for less than 15 times estimates. Triple-A-rated tax-free bonds, an
extraordinarily safe investment, are paying 5%-plus for ten years and 6% for 20.
That's more than the Treasury offers for bonds of the same maturity.
No. 7: Technological Innovation Continues
Been to Best Buy, Sam's or Costco lately? For $799, you can now buy a
42-inch, high-definition flat-panel TV that will knock your socks off. Throw in
another $200, and you can get a surround-sound system to truly transform your
den into a home theater. A top-of-the-line PC with more memory than you'll ever
use now costs $1,000; high-end laptops with all the bells and whistles go for
$1,200, down from $2,000-$4,000 five years ago. And giant leaps in handheld
devices, such as Apple's new iPhone, have revolutionized the way people interact
with the world.
No. 8: Prosperity Reigns In the Heartland
The fall harvest is shaping up as one of the best ever, despite the
destructive weather and floods in the Mississippi River corridor since last
spring. Exports of U.S. farm products will increase more than 40% by value this
year. And recent years of high profits have allowed farmers to pay down debt so
low that it accounts for a measly 9% of their assets -- providing all the credit
they'll need for 2009 operations. At home, while food prices jumped sharply
earlier this year, the weak economy is now expected to slow further price
increases.
No. 9: A New Tone and Direction in Washington
Whether it's Barack Obama or John McCain who enters the White House in
January, election of a new chief executive should provide at least 100 days of
galvanizing certainty for markets, and a new direction and sense of purpose for
the country.
No. 10: Great Gift Buys This Holiday Season
Retailers depend on robust end-of-year sales to turn a profit, but for 2008,
the National Federation of Retailers forecasts holiday spending will increase
only 2.2% from last year. That won't even beat inflation. It's good news for
bargain hunters, though. Both brick-and-mortar and online retailers are gearing
up to offer huge discounts to boost sales. For example, Deal News predicts a
DUAL Core Intel Laptop will go for as low as $299 on Black Friday, the day after
Thanksgiving, and a Canon PowerShot SD1100 will go for a very low $139.