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Wednesday, November 18, 2009

Morning Market Report

It was another relatively quiet day in the markets yesterday. All three major indices were up which means the Dow set another record for the year. It closed at 10437.42 and each of the three indices were up less than .3%.

Producer Price Index came out yesterday and that was time. This morning it was turn for Consumer Price Index. Those numbers just came out and they were similarly tame.

The Labor Department said its Consumer Price Index jumped 0.3 percent on a
seasonally adjusted basis—more than the 0.2 percent increase analysts polled by
Reuters had anticipated—after rising an unrevised 0.2 percent in September.

Core prices, which exclude food and energy, rose a more moderate 0.2 percent.

There was also a double whammy of bad news in housing. First, housing starts unexpectedly fell in October by over 10%.

The Commerce Department said housing starts dropped 10.6 percent to a seasonally
adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January. Analysts polled by Reuters had expected housing starts to rise to 600,000 units. September's housing starts were revised upwards to 592,000 units from the previously reported 590,000 units.

At the same time, mortgage applications fell despite near record low interest rates.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 2.5 percent to 611.7 for the week ended Nov. 13.

Meanwhile, bonds continue to show good news. The Ten Year U.S. Treasury dropped another one basis point yesterday to 3.32%. It's slightly worse this morning to3.35% but it's still at low end of a two month range. The yield spread between the two and ten year is steady at 2.67%. Oil is pushing $80 a barrel again at $79.57. Gold is at $1146 an ounce and near a record again.

Meanwhile, the dollar is weaker by .35% against the Euro, up .1 against the British Pound and even currently against the Yen.

Also, the president said in a Fox News interview that the growing debt could lead to a double dip recession. We'll see if the market takes notice to an admission that most of us already knew.

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