Speculation surrounding the Chinese Yuan has been mounting for months, beginning with a sudden halt to the currency's appreciation and continuing with the insinuation of the Obama administration that China is a currency manipulator. In the context of falling exports and a sagging economy, meanwhile, the Chinese Ministry of Finance has issued a research report encouraging the Central Bank to allow the currency to appreciate. Despite the Central Bank's insistence that it wants a "stable" currency, futures prices indicate a mean expectation that in fact, the Yuan will be nudged downward over the next twelve months. On the other side of the equation are financial analysts, who collectively forecast a slightly stronger Yuan, with one bullish analyst projecting a 3.5% appreciation in 2009, on the basis of selectively culled economic data. Bloomberg News reports:

“The consensus around China has been weak growth and falling reserves. The recent data challenges both views. Lending looks good, money supply looks good, and the PMI balanced to slightly bad from very bad levels.”

Read More: Citigroup Is Bullish on Yuan, Bets for 6.60 Year-End

An overview of the Dow Jones Industrial Average

Most investors that I speak with are very aware of the Dow Jones Industrial Average. After all, you can’t turn on the tv nowadays without seeing the familiar gyrations of the index listed somewhere on the screen. However, many do not have further insight into the Dow Jones Average, and more importantly, how it works. I have put together a brief explanation, along with a list of the DJIA companies currently included..

The Dow Jones Industrial Average index - (DJIA)

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Is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including American Express Co. and American Telephone and Telegraph Co. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators.

The components, which change from time to time, represent between 15% and 20% of the market value of NYSE stocks. The DJIA is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars.

Companies included in the DJIA

The Dow Jones Industrial Average consists of the following 30 companies:

3M Co. (MMM)
Alcoa Inc. (AA)
American Express Co. (AXP)
AT&T (T)
Bank of America (BAC)
Boeing Co. (BA)
Caterpillar Inc. (CAT)
Chevron (CVX)
Citigroup Inc. (C)
Coca-Cola Co. (KO)
Walt Disney Co. (DIS)
DuPont (DD)
Exxon Mobil Corp. (XOM)
General Electric Co. (GE)
General Motors Corp. (GM)
Hewlett-Packard Co. (HPQ)
Home Depot Inc. (HD)
Honeywell International Inc. (HON)
Intel Corp. (INTC)
International Business Machines Corp. (IBM)
Johnson & Johnson (JNJ)
JPMorgan Chase & Co. (JPM)
Kraft Foods (KFT)
McDonald’s Corp. (MCD)
Merck & Co. Inc. (MRK )
Microsoft Corp. (MSFT)
Pfizer Inc. (PFE)
Procter & Gamble Co. (PG)
United Technologies Corp. (UTX)
Verizon Communications Inc. (VZ)
Wal-Mart Stores Inc. (WMT)

Dow Jones Industrial Average Critics

With the current inclusion of only 30 stocks, critics argue that the DJIA is not a very accurate representation of the overall market performance even though it is the most cited and most widely recognized of the stock market indices.

Additionally, the DJIA is criticized for being a price-weighted average, which gives relatively higher-priced stocks more influence over the average than their lower-priced counterparts, but takes no account of the relative size or market capitalization of the components. For example, a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change.

In addition, a $1 move in the smallest component of the DJIA has the same effect as a $1 move in the largest component of the index. As of February 2009, IBM is the highest priced stock in the index and therefore has the greatest influence on it. Many critics of the DJIA recommend the float-adjusted market-value weighted S&P 500 or the Dow Jones Wilshire 5000, the latter of which includes all U.S. securities with readily available prices, as better indicators of the U.S. market.

Hopefully this answers some questions that you may have about the Dow Jones Industrial Average, its components, and how it works.

New Obama Housing Plan attempts to stem Foreclosures

Article body contributed by Reuters, read original here

President Obama unveiled his much-anticipated housing plan Wednesday to fight the real estate crisis, pledging up to $275 billion to help stem a wave of foreclosures sweeping the country.

“All of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen—a crisis which is unraveling homeownership, the middle class, and the American Dream itself,” Obama said in prepared remarks released on Wednesday about his housing plan.

Obama, who on Tuesday signed a landmark $787 billion economic stimulus bill aimed at jolting the U.S. economy out of recession, was to formally unveil his housing plan at 12:15 p.m. EST in Mesa, Ariz.

The housing crisis has played a central role in the financial and credit turmoil now spread across the globe, with many homeowners saddled with mortgages they cannot pay.

At the end of last year, just over 9 percent of all home loans in the United States were in arrears or already in foreclosure, the Mortgage Bankers Association has said.

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Read Obama’s speech on his $275 Billion Housing Plan

A total of 8.1 million U.S. homes, or 16 percent of all households with mortgages, could fall into foreclosure by 2012, according to a report by Credit Suisse.

An Obama administration official said the total plan commits up to $275 billion for housing, including $50 billion from funds already committed in the country’s financial sector bailout. It aims to help up to 9 million American families under the housing plan.

Home Buyers Kicking Tires?

Mindful of critics who might charge that the scheme would help people who just took on far more debt than they could afford, Obama said his housing plan was aimed at “rescuing families who have played by the rules and acted responsibly,” refinancing traditional mortgages for up 5 million homeowners who now are close to owing more than their homes are worth.

It will also establish a $75 billion fund to reduce monthly payments for another 3 million to 4 million homeowners “stuck in sub-prime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune,” Obama said.

The Obama administration’s summary of the housing plan said the plan could offer a buffer of up to $6,000 against value declines on the average home.

British Pound: It’s All Relative
Since the inception of the credit crisis, perhaps no currency has been beaten down more than the British Pound, with analysts bitterly divided about whether the currency will fall further. A lot depends on whether the British efforts to save its devastated banking sector are successful. The government has already moved […]