In the wake of public wrangling over when to get out of the financial meddling business, the Fed suffocated the ongoing pop in the general markets by just CONSIDERING pulling the plug on bond buying, let alone pin in the bubble called artificially low interest rates. One esoteric issue cost the market two percent, in two days, and they want joesixpac back in the market? Can you say fuggeddaboudit boys and girls.
Which perversely means the dragging out for the pop heard round the world. Gold flagged, and silver has to rest on its industrial use, not its currency use. The drop last week is being converted to a pop this morning half way back.
Housing may be recovering if you twist the past into the future and point to moving averages to avoid the sickening thud that popped 30 year rates means to the market. Nuriel Rubaloobie says don't worry, any pops in the irates will not exceet 1/4 point every six weeks, mirroring the change on the way down, with a path on the way up. That's 2.5% in about a year, so that isn't junk--but he's wrong. It probably will be about once every other meeting--otherwise, the market will discount the entire trek back to 5.75% in the first quarter. We've been down this path of discussion before.
In the meantime, the market must recover and pierce the old high to keep moving, and frankly it's getting harder to see it. I would suggest that it is about 7% from the drop last week for the new high to roll over.
But the sequester is coming for sure, the parties as gridlocked as they were before the reelection of Oblammer. That is the bomb waiting at the end of the week. The market will actually think this is a good thing, but the reality is, you don't take blood away from the patient, no matter what the condition of the blood bank. Now's not the time. But the market has it wrong, and that is in investor favor.
My guess is just that. I think we have another seven percent in the Russell. Seeing is believing, so--Good luck to all.
Feb 26 9:00 AM Case-Shiller 20-city Index Dec - 6.0% 6.5% 5.5% -
Feb 26 9:00 AM FHFA Housing Price Index Dec - NA NA 0.6% -
Feb 26 10:00 AM New Home Sales Jan - 375K 385K 369K -
Feb 26 10:00 AM Consumer Confidence Feb - 62.5 62.0 58.6 -
Feb 27 7:00 AM MBA Mortgage Index 02/23 - NA NA -1.7% -
Feb 27 8:30 AM Durable Orders Jan - -5.0% -4.0% 4.3% 4.6%
Feb 27 8:30 AM Durable Goods -ex transportation Jan - -0.5% 0.2% 1.0% 1.3%
Feb 27 10:00 AM Pending Home Sales Jan - 1.0% 1.0% -4.3% -
Feb 27 10:30 AM Crude Inventories 02/23 - NA NA 4.143M -
Feb 28 8:30 AM Initial Claims 02/23 - 365K 360K 362K -
Feb 28 8:30 AM Continuing Claims 02/16 - 3150K 3150K 3148K -
Feb 28 8:30 AM GDP - Second Estimate Q4 - 0.1% 0.5% -0.1% -
Feb 28 8:30 AM GDP Deflator - Second Estimate Q4 - 0.6% 0.6% 0.6% -
Feb 28 9:45 AM Chicago PMI Feb - 54.0 54.0 55.6 -
Feb 28 10:30 AM Natural Gas Inventories 02/23 - NA NA -127 bcf -
Mar 1 8:30 AM Personal Income Jan - -2.4% -2.4% 2.6% -
Mar 1 8:30 AM Personal Spending Jan - 0.1% 0.2% 0.2% -
Mar 1 8:30 AM PCE Prices - Core Jan - 0.2% 0.2% 0.0% -
Mar 1 9:55 AM Michigan Sentiment - Final Feb - 75.0 76.3 76.3 -
Mar 1 10:00 AM ISM Index Feb - 52.0 52.4 53.1 -
Mar 1 10:00 AM Construction Spending Jan - 0.2% 0.5% 0.9% -
Mar 1 2:00 PM Auto Sales Feb - NA NA 5.6M -
Mar 1 2:00 PM Truck Sales Feb - NA NA 6.5M -
The battle over the sequestration of funds is nothing more than political theatre. It serves to have the people believe that there is some sort of battle afoot to "Save America" when in reality the abundance of largesse and bailouts, known as welfare, both corporate and individual, has entirely undermined the system weaving like a drunk at 1:00 AM.
Where's YDM? Today the trucks and autos will carry the market forward afternoon, personal spending will be neutral to uppish in the wake of the few who have jobs peeking their turtle necks out for a post XMAS buying spree--I would think new cars and trucks will carry the day, as they are the substitute for housing, and the font of all that available cash that refuses to get burned in a house buy.
At least you know your money in a car is going into the toilet in five years.
Auto sales carried Friday, but silver is ratioing away from gold inexplicably, since silver has half its value stuck in the industrial world. VALE acquisition shows even SLW diversifying, if not, it's a pending sale to the gold bugs, of which SLW has a counterpart. Time will tell, but "stability" in the marketplace, as the little guy reenters (shudder) shows about $100B of $4Trillion deployed from the little guy, and about 18 months to froth up this market further. We shall see, but the easy money is over.