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Friday, July 24, 2009

Morning Market Report

The bulls just finished up in Pamplona and they appear to have moved to the U.S. markets. The NASDAQ experienced its twelfth straight up day. The Dow crossed 9000 for the first time since January 6th. All three indices were up over two percent yesterday. The driver yesterday was a positive June housing sales report.

According to a Thursday announcement by the National Association of Realtors, the existing home sales in the US jumped 3.6 percent in June to a seasonally-adjusted annual rate of 4.89 million units, from the May figures of 4.77-million-unit annualized rate.

Sustained by the sale of low-cost and foreclosed houses, the rise in home sales - which marked the third monthly rise - is a small yet optimistic trend, depicting that the four-year slump in the housing sector, that gave impetus to the financial downturn, is likely coming to an end.

Anecdotally, I haven't seen anything but a tightening of credit. I don't know how much of this is from short sales and sales of foreclosed homes. It is the third straight rise in a row and that speaks for itself.

Markets are down just slightly at the open and so we'll see. There's breaking news. Warren Buffett just said that "inflation is a very real threat". That's really not breaking news. All you need to do is look at the yield spread between 2 and 10 year U.S. Treasury bonds. They are currently at 2.63%. The record in June was 2.75%. This is an extraordinary spread and points to the sort of fear that Buffett was speaking about.

World markets were mostly up today. The Far East was up all around. The Hang Seng in China was up .83%, the NIKKEI in Japan was up1.55% and the Straits Time Index in Singapore was up 1.95%. Europe was slightly more mixed. The FTSE in London was .48%, while the DAX in Germany was down .14%, and the Spanish index was up .69%.

Crude oil is now pushing $67 a barrel at $66.85 and it has gained about ten percent now in about a month. The Ten Year U.S. Treasury is at 3.67% and all bonds around the world saw their rates go up just slightly anywhere between two and four basis points.

AMEX, Amazon, and Microsoft all reported earnings after the bell yesterday and they all disappointed.

My analysis:

What I've seen of the mortgage market tells me nothing of what these housing numbers say. Still, they are what they are. I don't believe in green shots. So, the most important number is the jobs number coming out August 7th. We'll see how that looks.


Everything in this space should be taken as information only. All opinions are my own only and should NOT be taken as an endorsement or investment strategy. I am not a licensed investment advisor and nothing here should be taken as investment advice.

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