Munchin’ on the Numbers – by Max Whitmore

12-14-09

MUNCHIN’ ON THE NUMBERS

How can you tell Christmas is just around the corner if you work on Wall Street? Just look in all the empty offices. Most of Wall Street is where it is warm, sunny, beautiful, miles from a meeting room, and where the evenings are filled with island music, filled bars, and fancy foods. But, those that went paid for it with smaller bank accounts than several years ago and are glad to get away from the heat of “What’s next?” being the morning’s mantra.

Hey, we are all here, just as always. But, I do need to fess up. Truth be told, I was by the ocean several months ago to do my “getting away.” Has a great time and beat the crowds of Christmas visitors. I felt that keeping the doors open when almost everyone else is gone might be a better approach this year.

But, enough of that. Today’s action on the exchanges everywhere was light, at best. I would expect that this will likely be the case until after New Year’s Day football games. There was some overnight buying that was supported by those that did trade today, buying caused by the move made by Abu Dhabi to extend a $10 billion loan to help out strapped neighbor Dubai. Many had been hoping that some sort of help might come and it did. How much more is the big question, but many believe that there will be several more such moves before it is all over and Dubai is reduced to a shadow of its former self.

To illustrate how much of a non-news day it was, the fact that the S&P will be adding five new stocks to its 500 index and dropping five stocks made headlines some places. The stocks coming on are quit solid performers, while the ones being dropped are rather weather—beaten. You likely know by now that this is how the S&P Index continues to grow. Out with the old single digit losers and in with the double digit coming on strong companies. Don’t mean to demean S&P, of course, but they do the same thing with the Dow 30, if you ever noticed. Usually this kind of thing gets little if any attention. This time, “big news.” Oh, me.

Happy to report that bonds did steady out today and actually gained 6/32nds. As I said in the Weekly Report, this is good news. The dollar was off a bit, influenced more by news that Citibank is planning to try and exit its government involvement by paying back its TARP advance. Traders that were around felt maybe some move to the currency sidelines might be a good tactic. We will see.

Gold dropped just $5.00, but mostly in response to the selling of the dollar. No real hard news to account for any strength or weakness in the gold sector today. Copper advanced a tad, but in a quiet market, no way to know if it was inflation related or not. After the first of the year we will get a better reading on that.

Oil seems to have found some support in the $69-70 area today. Some reports hitting the wires are bearish long term the oil contracts. But, all it would take to change all that would be a flare up in the Middle East. I suspect until a better handle is gotten on how the current excess oil inventories are to be worked off, we will continue to see weakness here. May take 3-5 weeks to begin to get a handle on that, I believe.

Other than those notes, not much news to report that moved the market at all. Just a normal as usual business day during the Christmas season trading day.

So, until tomorrow, I do hope your day was a profitable one. Will be back here tomorrow, the Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SIX MAJOR IMPACTS ON THE MARKET TODAY

1. Abu Dhabi gives a partial bail out to Dubai. The market lets out a sigh of relief – for now.

2. The move to the yen as the “carry trade” choice picks up some more momentum today.

3. S&P shifts their holdings again. Out with the bad, in with the good. New guys stocks all higher.

4. British Airways employees announce 12-day strike. Funny, it coincides exactly with Christmas travel.

5. House passes a $1.1 Trillion spending bill for current needs. Do they call that pocket change now?

6. NASA launches satellite to seek out asteroids that threaten Earth. Do we really want to know?

I was more interested in the NASA announcement than anything else. But then, I am a science buff. Even if they find one, how do we stop it? And hope that neither you nor family members affected by the British Airways well timed strike. The English have a way about them, don’t they. And finally, why didn’t anyone tell us what the $1.1 trillion was for? Did you see anything that laid out the use? Hummmmmm.

DAILY CHANGES

Closes as of Mon. 12-14-09 CHANGE (cash) KEYLINE# ABV/BLW

DOW INDU. 10,501.05 +29.55 points 9,846.19 ABV +655

S&P 1,108.10 +4.90 points 1,059.55 ABV +48

NASDAQ 2,190.31 +21.79 points 2076.12 ABV +114

30 YR BONDS 118 1/32 +6/32 115 24/32 ABV + 2 9/32

GOLD $1,127.50 -$5.00 $1,044.50 ABV $83.00

OIL $69.50 -$.01 $83.21 BLW $13.71

DOLLAR INDEX 76.32 -.25 79.92 BLW 3.60

COPPER $3.1525 +$.0195 $2.8873 ABV +.2552

*The name Super Chart Keyline is a registered Trademark of Max Whitmore.

Munching on the Numbers – by Max Whitmore

12-10-09

MUNCHING ON THE NUMBERS

This was “rollover” day for the major futures contracts, meaning that the futures numbers that will apply to most (but not all) futures contracts will be March 2010. Oh my gosh, how can it be 2010!!! It was just 2000! Well, one must adjust to such things. But, believe me when you are over 70, it seems the years don’t fly by anymore, they hit the afterburner!

But, enough of that. It was a better day for the bulls today. They saw the Dow climb another +68 points. If you are a bear, the sweat has to be breaking out on the neck and forehead about now. But, to really claim the resumption of the rally, we need to see the S&P climb over the 1,130-40 level and stay there for 3-4 days. Not yet. So, the bears will fight it out in here for a bit longer. Understand, I am not calling it a victory for the bulls in here, but it is getting tough to be a bear.

Oh, yes. I wanted to pass this along to you, too. A friend of mine in the business sent this along. Go to this web site: http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html. It is a full color graphic showing how the unemployment from 2007 until today has changed for the whole country. It uses a “rolling graphic” to do it and it is astounding how it chronicles the Jan 2007 4.6% level month by month to the 8.8% in October. Of course, the current 10% is higher, but the graphic will surely put things in perspective for you, and quick.

I have also added copper to my closing prices list today (seebelow), as I want to give you a handle on the commodities without going to the more complex indices that are used for the commodity market. Note that this is a Daily chart.

For years, folks have use copper as a great surrogate for the whole commodity complex. Many call it “Dr. Copper.” What the chart I have attached shows is that since the beginning of this year the price of copper has doubled from about $1.50 a lb. to over $3 and is well above the Keyline. That folks is one of the best inflation indicators you will find anywhere. More on copper in the next few Weekly columns.

But, the bottom line for the day to me is that the bulls are still in the driver’s seat, the bears still backseat drivers, but being listened to less and less. Still need S&P 1,145-50 for a few days, but we just might see it if the bulls can hang on like they have so far. How can you not love this business!! It’s the greats show on earth! A new act everyday!

Well, until tomorrow, hope your investing day was a good one. Will be here again tomorrow, Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SIX MAJOR IMPACTS ON THE MARKET TODAY

1. Trade deficit fell $3.5 billion on higher export lower oil imports. Overall year down $158 B– incredible.

2. Bond yields rise on poor $13 B 30-yr bond auction –markets fear next 12 mo. refunding needs too big.

3. Americans Net Worth rose $2.7 Trillion (T) last quarter (+2%) to $53.4 T (was $65.3 T 2^nd 2007).

4. Foreclosures fell 8% from Oct. to Nov. (RealtyTrac), but still 20% higher than 12 months ago.

5. Only weekly #, but new unemploy. claims up by 10,000. Continuing claims fell by 300,000, however.

6. Gold UP, Dollar DOWN, Bonds DOWN, Oil DOWN,

Hard to figure the rise in American net worth, but that is the report. Hummmmm. And the foreclosure news remains disturbing. I’m sure your friends will agree. And #6 says inflation is still a worry. Oh me.

Closes as of Thur 12-10-09 CHANGE (cash index prices)

DOW INDU. 10,405.83 +68.78 points

S&P 1,102.35 +6.40 points

NASDAQ 2,190.86 +7.13

30 YR BONDS 118 14/32 -27/32

GOLD 1,132.50 +$2.00

OIL 70.48 -$.36

COPPER $3.102 -$.0215

Munching on the Numbers – by Max Whitmore

Posting has been light today – tied up in meetings.   But Max has had some time to throw together some thoughts.   Enjoy!

Tom

12-9-09

MUNCHING ON THE NUMBERS

Well, another day of battle closes and the winner was …. well, there is still no winner in this test of the market’s supports. But then, no winner, no loser either. For the moment, the rally folks have held their gains and not flinched. Will they prevail in the end? Can’t tell you for sure, but the longer they hold their ground and the longer the bears fail to get the momentum to break the rally gains, the more the S&P 1220-40 target grows brighter. We finished the day about 5 point up on the S&P from yesterday’s close and still about 45 points above the all important Keyline on the Super Chart.

The market overall was a slight favorite to the bull when you note that oil was down, gold up, and bonds eased only a tad. All told, if this were the Battle of the Bulge (I guess only you old timers would remember that one) this is the lull before the final assault, as I see it. It may be a few more days, but the bears, at least for the moment, need to prepare for an all out assault or go to the sidelines while the market climbs to new, higher levels.

Will the bears win out here? Low volume, dollar troubles, and general worries about consumers coming to the rescue are to their favor. But the bulls have held their ground, knocked down oil prices, and had a really unexpected gift in last Friday’s employment report. I don’t know when the current battle will be over, but it is not far off as see it. I like the bull’s situation – 45 points above the Keyline.

Well, cutting this short today, as I have a church meeting to attend and have to leave shortly. But, kept this thought in the back of your mind. We are a basically a people of a sound character and faith. We might get hit now and then, but we do not give up. The rally the last seven months is a combination of a lot of men and women striving to recover – not giving up. Let it be a testament that despite the “formidable headwinds,” we have prevailed so far. Keep at it! Just keep at it!

Until tomorrow, hope your investing day was a good one. Will be here again tomorrow, Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SIX REASONS THE MARKET WAS FLAT TODAY

1. Obama wants a second stimulus. Oh, me.

2. The U.S. Treasury wants to extend the TARP. Investors are not so certain that is a good idea.

3. Deloitte LP says their Consumer Spending Index (predicts future spending) is at a 5-year high. No joke.

4. Thing s to come? Bond 10-year auction – weak results. Could higher rates be needed next quarter?

5. So you know: Assets per citizen $242,466; Liability per citizen $345,551 (per USDebtclock.org)

6. Tiger Woods favorable rating continues to fall. Really? Hummmmmmmm.

That last one is the one most likely to get a rise out of your family, friends, whatever. But, #4 is the real one to worry about.

Closes as of Wed. 12-9-09 CHANGE (cash index prices)

DOW Indu. 10,337.05 +51.08 points

S&P 1,095.30 +5.30 points

NASDAQ 2,183.73 +10.74

30 YR BONDS 120 5/32 +15/32

GOLD 1,130.50 +$1.00

OIL 70.84 -$1.80

Munching on the Numbers – by Max Whitmore

12-8-09

MUNCHING ON THE NUMBERS

It was anything but a normal day today in the stock market. It began in Japan last night, migrated to Asia, then to Europe and finally here. There are a whole basket full of reason (see some of the bigger ones below), but the bottom line is fear. Bernanke called it a “formidable headwind” and that was enough for a lot of investors.

Now despite how Congress is raking Mr. Bernanke over the coals this week, he has done a very credible job keeping the world’s financial system knitted together. Maybe it isn’t to the liking of some the way he has done it, but so far it has worked. He forged ahead in a storm that has never occurred before. He made some mistakes here and there (wouldn’t you) and he admits it. But overall, we are still in one piece, albeit a bit shaky, but one piece.

Some are sure it will all fall apart yet. How do they know? I don’t know how the coming down from the huge flood of money will play out and neither does anyone else. But, I am convinced that if someone has to step us down without going into a deflationary spin that becomes a depression, I can’t think of anyone better equipped to try and get it done.

God forbid a senator or congressman takes on the job. There is no one, I mean no one, in DC that has a clue of what to do. It is totally uncharted waters. It won’t be easy, but Bernanke is my choice to try it.

Well, got that off my shoulders. Now let’s see, oh yes, the market. We are still 30 points above the Super Chat Keyline, a considerable distance, but this is a sharp test of the recent 7 month rally and we need to be very alert this week to see if it winds up just a test, or it becomes a waterfall. Right now, 1080 S&P is an important support number. Bonds rallied a bit as a haven for money today – many, many investors sold stocks bought bonds until the weather either improves or the rains come. We will see.

When I looked at my chart monitor this morning, I knew it would be a tough trading day. It was. I trade futures every day and when we open to a big down or up morning, it is always tough as investors look for supports and resistance. The best I can say for today is that we ended the day just about where we were when the bell opened trading. That is itself is an accomplishment.

Well, not much else today, except gold is correcting in here and I again, like I do so often, tell you to be sure to be buying gold. Your portfolio should be at least 15-20% gold now. Coins are my preference, as they can be sold much easier than the bullion.

So let’s see what tomorrow brings. Love that about this business. It is never the same. Each day is so different from the last. Never a dull moment!

So, until tomorrow, hope your investing day was a good one. Will be here again tomorrow, Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SEVEN REASONS THE MARKET WAS FLAT TODAY

1. Bernanke’s comments yesterday DID give us the results we see as world markets close.

2. The “carriage trade” continues to cover their past borrowing and the dollar climbs higher.

3. A Senate Committee approved for debate an increase in diesel fuel (+4 gal). We all pay for it.

4. Some corporate earnings continue to dribble in, but no big winners to move the markets.

5. Did you know? Senate asked to raise debt limit again – to $13.6 TRILLION this time. Hummm.

6. Told you so stuff – Copenhagen talks a front. Final Agreement leaked even as talks continue.

Likely the least talked about will be the diesel tax, yet it is the one that will hit us all in the pocket for higher food and goods prices. Go figure. Maybe it will get a rise out of some of your family or friends. Try it as a conversation opener and see. (Or not).

Closes as of Tuesday 12-8-09 CHANGE (cash index prices)

DOW Indu. 10,285.97 -104.14 points

S&P 1,090.50 – 13.20 points

NASDAQ 2,172.99 – 16.62 points

30 YR BONDS 119 22/32 +21/32

GOLD 1,129.50 -$13.90

OIL 72.62 NO CHANGE

Do you remember back in September and October?

How it felt like the economy and the financial markets kind of came to a screeching halt?  Well, check out this chart and you’ll see that it did……

Markets

CNNMoney.com Market Report – Nov. 6, 2008

- Stocks slumped for a second straight session Thursday, bringing the Dow’s losses to 929 points since Election Day, as fears of a prolonged recession sent investors running for the exits.

The Dow Jones industrial average (INDU) lost around 443 points, or 4.9%. The two-session decline of 929 points, or 9.7%, marked the biggest two-session point loss ever and the biggest two-session percentage decline in 21 years, according to Dow Jones.

CNNMoney.com Market Report – Nov. 6, 2008.

So I ask you,

What has changed in the economic picture this week?

I’ll have some thoughts on that tomorrow in my Mortgage Market Week in Revew newsletter.   If you want to read it, sign up by filling in the form on the left.

Thanks!

Tom Vanderwell

The State of the Markets – A Guest Post by Sean Purcell

Sean is a fellow writer with me over at the Bloodhound Blog.    Between him and Michael Cook, they have had a very good and very educational discussion of the current state of the markets.   I’m taking the liberty of reposting Sean’s entire post, but I encourage you to go over to Bloodhound and read more.

Sean and I have a unique relationship.   We’ve never met, never even actually had a phone conversation, but have had lots of very good discussions about the real estate market, the credit crisis, and mortgage lending.  I have a LOT of respect for Sean and his ideas.

Here it is:

Michael Cook wrote a thought provoking post earlier entitled What Happens to the Early Worm.  So thought provoking that I found my comments drifting to post length.  So how about a little point/counter-point?

Michael, a very detailed and thoughtful post. I would not disagree with you that cautiousness is a safe strategy (although not always a profitable one) and I certainly do not disagree with your assessment of the people here on BHB.  But I do have some other questions:

The income / price equation did not get out of whack overnight, so buyers and sellers should not expect it to correct itself overnight either.

All real estate is local and that is never more true than now. In some areas we have seen real estate go through the support level of fundamental value (that value which would allow an investor to purchase a property and cash flow). This is no different than the Dow last week. It was oversold and many companies could be purchased below their fundamental value. So are you suggesting that rents are going to decrease in these areas?  Otherwise, the correction has already occurred in some areas.

You are looking at some of the best real estate agents in the business here. So when they write that their business has not dropped off, it might lead the casual reader to believe that the real estate market is not in a tailspin or even that real estate is close to a bottom. Do not be lulled into a false sense of optimism. This group is adaptable, smart and most of all well above average.

Michael, to whom are are you writing this post?  If it is agents then I suggest the new market has caused an industry-wide house cleaning.  Those that do not belong have seen business disappear and those that do have been rewarded; but this does not necessarily reflect a worsening real estate market.  If, on the other hand, you are writing to consumers then I suggest they read you closely when you say that the top agents have found “their business has not dropped off.”  It has not dropped off for a reason and would behoove those buyers and sellers to search out the agents that remain busy; again, because the market does not seem to be as bad for them.

Consumer spending is down – Much of it fear-based
Manufacturing is down and declining – As the credit crunch alleviates, this should soften
Jobless claims are up and rising – DEFINITELY A STAT TO WATCH
Housing remains weak – This begs the question
Housing inventory remains well above average – But dropping in many areas.  Plus, programs like Hope for Homeowners may put a significant dent in the rate of increase of REOs
Dow Jones has dropped nearly 40% over the past six months – This is significant, as you said. But may be good for real estate. The markets can go to zero but a house is still a place to live

…decline in the stock market. This represents a decline in confidence in the global economy. This level says that investors believe business could be in for sustained economic distress

There are a couple of great article addressing this over on Coyote Blog.  Don’t Panic discusses what stock pricing represents and how it does not often address company value (especially in the comments). There is also a great graph in Good News, Really and the the summary: “(i)n fact, the current level of the stock market is screaming normalcy.”

housing still has room to decline because the historical ratio of median housing prices to median income is still too high

Past is not always prologue.  I find problems with the affordability index and have discussed it here.

In the end I agree that people should not try to “catch the knife” (I was wondering if you would make use of that colorful term from the equities market).  But neither should people try to time the market.  I have asked this before but I will ask it here:

What do you fear more: buying now at $350,000 and seeing in six months that you could have paid $325,000 OR waiting six months for the price to reach $325,000 and finding interest rates have moved up two points and you can’t afford any home?

Interest rates negatively affect affordability much more than pricing.  If you are making a long term investment (which is what real estate should generally be) then buying now makes great sense in the areas that are fundamentally sound.  Just make sure to work with someone as “adaptable, smart and … above average” as the agents found here.

One last thought for the day…..

Have the stock markets had a rough week?   Absolutely.

Will it be over next week?  Probably not.

Will the world come to an end because of the stock market?   Nope

DOES ANY OF THIS HAVE ANYTHING TO DO WITH THE HOUSING AND MORTGAGE MARKET?  Nope

The fundamentals of the housing and mortgage markets haven’t changed at all this week.

Call me if you need me, I’m off to do some fundraising for God’s Littlest Angels, an orphanage in Haiti.

I’ll probably be online later this weekend.

Tom Vanderwell

Paul Kedrosky: Banking Losses to Hit $1.6-Trillion

If this is true, then the banking world is going to look significantly different when it’s all done.