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Friday, November 20, 2009

Morning Market Report

The three quiet days ended yesterday with the Dow down 93.87 points and both the S&P 500 and the NASDAQ down over 1.5%. More troubling, the inverse relationship between the strength of the dollar and the weakness in equities continues. The equities weakness came again at the expense if you will of the weakness in equities. The Dow and the other two indices are showing weakness this morning. The Dow futures are down about 60 points and the NASDAQ and S&P are showing similar weakness.

Meanwhile, bonds are holding steady at 3.34%. The yield spread between the two and ten year bond has extended to2.67%, the highest it's been in aboutsix weeks. Crude oil took a tumble on the strengthening dollar. It's down to $76.66, whereas it was near $80 a barrel yesterday. Gold is down slightly as well to $1137 an ounce.

It was a relatively dour day in the markets world wide. In the Far East, the Hang Seng was down .83%, the NIKKEI in Japan was down .54%, and the Straits Time Index in Singapore was up .1%. In Europe, the FTSE in London was down .35%, the Dax in Germany was down .51%, and the Spanish index was down .72%.

The Dollar is showing strength again this morning. It's up .72% against the Euro, up 1.02% against the British Pound, and up .1% against the Yen.

Also, a new report says that the housing market is on "life support" and that a recovery won't happen until 2010.

A recovery in U.S. housing will have to wait at least until next year.

The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.

“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s, said in a telephone interview. “I think we’re going to see another leg down.”

I won't weigh in on the merits of the report. Rather, this report shows how fickle everyone is about each and every piece of economic data. This latest report comes in response to the most recent housing starts number from October. That showed a drop of 10%. Interest rates continue to be low and we still don't know what the long term effect of the first time home buyer's credit is, and yet the analysis is already in.

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