Market Soapbox 06/25/07
MON, DJIA -8 on average volume with lousy internals. All DOWN cept DJTA, DJUA, XMI.
Bonds up, 10 yr yield -5 bps 5.08, $ up vs 1.3464E & down vs 123.675Y, WTI crude up $69.18, gold down $654.7
Afterhours volume surge FRI: NAZ 2.1B; AMEX 258M. DJIA up 42 for 62; 48 record closes since Oct.; 26 YTD; and on a parallel with 1989 Nikkei 225: the DJIA is now 49 for 73.
THUR: "breech of DJUA 485 on bond selling means more downside." FRI: "DJUA fell through 120DMA to hit 485."
Friday: "Whats that sound? Printing presses cranking out Yen for more carry trade. Higher bond yields and a plunging Yen mean more Japanese bond & stock purchases?"
Today $7.25B in Fed reanimation; DJIA was up +128, then gave it all back, SP500 bouncing from 1502 to 1510, then falling to 1497. DJUA catching support up to 488.
Queen's Walk Investment, a UK hedge fund investing in MBS CDO's, today reported a net loss of $91M on the slump in the U.S. subprime market.
Bear Stearns may put up $1.6 B, rather than $3.2 B to rescue one of its money losing hedge funds.
The 50% reduction was made possible as BS found buyers for some assets and creditors sold others.
So BS won't have to tie up as much capital to salvage the fund from bad bets on subprime mortgage bonds and collateralized debt obligations. BS stock dropped 7.6% on the news.
Christoph Rieger, fixed-income strategist at Dresdner Kleinwort in Frankfurt:
"The U.S. housing market isn't out of the doldrums yet and will continue to be a drag on U.S. growth. We see the Fed lowering rates by the end of the year, so lower yields should also be in store."
Ethan Harris, chief U.S. economist at Lehman Brothers: "The inventory adjustment is going to be slow and painful. This means we're in for more pressure on prices and more pressure on construction."
According to a Harvard University study, housing accounts not only for 75% of new jobs since 2001, but also for 23% of the U.S. economy, when taking into account purchases of furniture, appliances and items for new homes.
The Nattering one expects bonds to continue rallying with the carry trade "Yen reload". The bond market will telegraph an economic decline and lower interest rate expectations.
The Japanese amongst others should step back into the bond market. Why? Allowing the 10 year above 5.35 would push 30 yr fixed mortgages above 7%,a torpedo that could swiftly sink every ship in the fleet.
More housing bad news should push SP500 toward 1480 75 DMA. Often wrong, but never in doubt, this is the Nattering Naybob and your not!
Bonds up, 10 yr yield -5 bps 5.08, $ up vs 1.3464E & down vs 123.675Y, WTI crude up $69.18, gold down $654.7
Afterhours volume surge FRI: NAZ 2.1B; AMEX 258M. DJIA up 42 for 62; 48 record closes since Oct.; 26 YTD; and on a parallel with 1989 Nikkei 225: the DJIA is now 49 for 73.
THUR: "breech of DJUA 485 on bond selling means more downside." FRI: "DJUA fell through 120DMA to hit 485."
Friday: "Whats that sound? Printing presses cranking out Yen for more carry trade. Higher bond yields and a plunging Yen mean more Japanese bond & stock purchases?"
Today $7.25B in Fed reanimation; DJIA was up +128, then gave it all back, SP500 bouncing from 1502 to 1510, then falling to 1497. DJUA catching support up to 488.
Queen's Walk Investment, a UK hedge fund investing in MBS CDO's, today reported a net loss of $91M on the slump in the U.S. subprime market.
Bear Stearns may put up $1.6 B, rather than $3.2 B to rescue one of its money losing hedge funds.
The 50% reduction was made possible as BS found buyers for some assets and creditors sold others.
So BS won't have to tie up as much capital to salvage the fund from bad bets on subprime mortgage bonds and collateralized debt obligations. BS stock dropped 7.6% on the news.
Christoph Rieger, fixed-income strategist at Dresdner Kleinwort in Frankfurt:
"The U.S. housing market isn't out of the doldrums yet and will continue to be a drag on U.S. growth. We see the Fed lowering rates by the end of the year, so lower yields should also be in store."
Ethan Harris, chief U.S. economist at Lehman Brothers: "The inventory adjustment is going to be slow and painful. This means we're in for more pressure on prices and more pressure on construction."
According to a Harvard University study, housing accounts not only for 75% of new jobs since 2001, but also for 23% of the U.S. economy, when taking into account purchases of furniture, appliances and items for new homes.
The Nattering one expects bonds to continue rallying with the carry trade "Yen reload". The bond market will telegraph an economic decline and lower interest rate expectations.
The Japanese amongst others should step back into the bond market. Why? Allowing the 10 year above 5.35 would push 30 yr fixed mortgages above 7%,a torpedo that could swiftly sink every ship in the fleet.
More housing bad news should push SP500 toward 1480 75 DMA. Often wrong, but never in doubt, this is the Nattering Naybob and your not!
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