On the heels of last week’s surprise 75-basis-point cut, the Federal Reserve complied with the market’s wishes and cut the federal funds target rate another 50 basis points. Stocks rose immediately after the news but gave back all gains and more, due to bearish news from the bond insurer sector. Rumors are floating that Ambac Financial (-16.1 percent) and MBIA Inc. (-12.6 percent) will receive downgrades as an indirect result of the sub-prime mortgage meltdown. Investors’ reactions to fourth-quarter earnings results helped push Boeing Co. (+2.4 percent) higher, while weighing on pharmaceutical giant Merck & Co. (-2.7 percent).
The possible downgrades for the insurers like ABK and MBI could spell another leg down. There seems to be some support around the 12,000 level on the DOW. I think we will retest that low before moving up again. When decent earnings (YHOO, AMZN, SBUX) are met with the kind of selling these stocks have had the last two days we need to hang on for more volatility.
You’re not thinking outside the box here. The market proved today that rates aren’t going to save the economy. Why do you still think we are due for an upturn based on technical charts alone?
Housing will be the leading indicator. If prices come down enough to spur buying and the backlog starts to clear, THEN and ONLY then will we see an upturn. Foreclosures will have to be stable as well which looks like it will get even worse in the next 6 months.
Of course, if the government steps in and bails out the bond insurers, I expect we will see a strong rally.
if housing is the leading indicator then it will be a while before we see an upturn. most think housing will not bottom until the end of this year or possibly into 2009.
Maybe my box is different than yours
I think we are in for a housing slump for a few years…
1st of all, we got to get people spending $$$…
2nd, the bond insurers will need help…
3rd, jobs are going to have to pick up and that will likely be helped if
the housing industry gets and earlier kick.
4th, it wouldn’t hurt to have the US automakers finally seeing a profit,
5th, this frickin’ presidential campaign needs to come to an end cause
none of them, bar Romney, has a real snowball’s chance in Hades of
making it better…
Fred W.
Romans 1:16
“I’d like to see Congress subject to random drug tests!!” -Sir Skirtchaser
I think we are in for a housing slump for a few years…
1st of all, we got to get people spending $$$…
2nd, the bond insurers will need help…
3rd, jobs are going to have to pick up and that will likely be helped if
the housing industry gets and earlier kick.
4th, it wouldn’t hurt to have the US automakers finally seeing a profit,
5th, this frickin’ presidential campaign needs to come to an end cause
none of them, bar Romney, has a real snowball’s chance in Hades of
making it better…
The most important reason is that there are TOO MANY HOUSES!!
Basic economics. Supply greatly outweighs demand.
Who wants to talk about condos?