"THE" MARKET WRAP WITH PERCEPTIONS!!!

[jarrett1]

THE ECONOMY LAST WEEK

The housing market was a big part of last week’s economic data, and the overall results were surprisingly good.

Despite the recent increase in mortgage interest rates, home buying (and selling) was strong, as shown below:

• New home sales gained +8.3% in June, and were up +38% from a year ago.
• Existing home sales were up +15.2% over the past year, though they slipped 1.2% in June.
• Housing inventory remains tight at just 5.2 months of supply in June.
• Median existing-home price was $214,200 in June, an increase of 13.5% from a year ago.

All told, the housing recovery continues to be an important driver of overall economic activity. The key question is whether it can continue in the face of sharply higher interest rates.

Most of the activity in June occurred before rates spiked in the past several weeks. A conventional 30-year mortgage is now about one full percentage point higher than it was at the beginning of 2013

  Will higher rates snuff out the housing boom?

Durable goods orders, products that are expected to have a useful life of more than three years, were also strong. Nondefense aircraft, autos, and machinery moved up, giving manufacturing firms a boost.

THE ECONOMY THIS WEEK

Keep an eye on two key reports in the week ahead.
These are:

1. The Fed’s FOMC Committee meets Tuesday and Wednesday. I doubt that there will be any major announcements because Mr. Bernanke is not scheduled to make a presentation after this meeting. If the Fed is going to alter its QE bond-buying program, that announcement is more likely to come after the September meeting.

2. Friday’s jobs report will be watched carefully to see if the recent strength in hiring can continue in the face of relatively weak GDP growth.

THE MARKETS

The markets took a breather this week, essentially marching in place waiting for next week’s Fed meeting and Friday’s jobs report.

The Dow [+0.10%; +18.73%] barely moved upward, the S & P 500 [-0.03%; +18.61%] was almost even, and the NASDAQ Composite [+0.71%; +19.66%] was higher due to a boost from Facebook (FB).

Speaking of Facebook, the company surprised Wall Street and most analysts with strong earnings and revenue gains. Even more significant was the source of those increases. The company reported sharply higher numbers for mobile devices compared with desktop usage.

Their forward guidance indicated that they expect mobile revenues to soon exceed those from desktops.

Rates on Treasury securities and mortgages moved in opposite directions, but the moves were small in both cases. T-bonds were slightly higher, with the key 10-year rate closing the week at 2.56%. Just three months ago (4/27/13), that rate was just 1.66%, and increase of seventy basis points. As you know, rising rates mean falling prices for bonds.

As I’ve said in previous posts, I think the markets overreacted to the possible tapering off or even the end of the Fed’s quantitative easing program. Nonetheless, the reaction shows how much importance the markets attach to the Fed’s activities.

Even the potential for higher rates in the future is probably taking money from the bond market and putting it into equities.

At the same time, little attention seems to be paid to the significant improvement in the federal deficit and the government’s financing needs. Based on reports from the Congressional Budget Office (CBO), the federal deficit this year is likely to be just half of what is was a couple of years ago.

If the Fed maintains its current level of purchases, it will be buying a much higher percentage of the new federal debt; not a good idea, in my opinion.

Mortgage rates didn’t move much either, but did continue to slip lower after the spike due to Mr. Bernanke’s comments a month or so ago. As noted above, we won’t know for another month or two whether the jump in mortgage rates will suffocate the rally in housing. We already know that it’s dramatically reduced the refinancing of existing home mortgages.

Petroleum prices were a few dollars lower, closing the week at $105.49 per barrel for West Texas Intermediate (WTI). Even so, that figure is probably about ten dollars a barrel higher than it ought to be, and shows the significance of the chaos in Egypt, Syria, and the Middle East in general.

FINANCIAL FACT OF THE WEEK

Detroit’s recent filing for bankruptcy protection put a spotlight on the woes of municipal governments across the country. A recent report in The Economist magazine (www.economist.com) noted that just “the total pension gap for the states is $2.7 trillion, or 17% of GDP. That understates the mess, because it omits both the unfunded pension figure for cities and the health-care promises made to retired government workers of all sorts.”

[Deleted]

Oy vey

[jarrett1]

Hey what can "I" say old people can't see small type...are you stalking me

[Deleted]

I like big bats and I cannot lie.............

[jarrett1]

HAAAAA HAAAAA HAAAAA HAAAAA
LOVE IT!!!

[jarrett1]

You very well may see a 10%-20% correction as this market looks for direction...while may people think this is a reflection of the markets.

Look for this movement sometime between now...and the end of September...before resuming the move up...and posting new highs before the end of this year and into 2014!

[jarrett1]

Consumer confidence up...and that makes me confident!

[damnotagain]

It's like super fed watch but different. I guess we will see what M2V looks like in the a few months. Everything else is pretty much bullshitium. 5 quarters of nothing but drop?
Come on man? Vlad good to see you. 

[damnotagain]

My guess is you bought the boards. 

[jarrett1]

Which markets are you looking at?..."I" am looking at all new...all record highs...youz takes youz markets wheres youz find 'em...and er yeah vlad to see ya...wouldn't want to be ya!

[damnotagain]

M2V ?  Lol 

[jarrett1]

2013:Q1: 1.530 Ratio...lets see what Q2 brings but based on the historical...I'd say its time for a reversal

[usaone]

2013:Q2: 1.575

[damnotagain]

Home > FRED® Economic Data > Sources > Federal Reserve Bank of St. Louis > Money Velocity

Velocity of M2 Money Stock (M2V)

2013:Q2: 1.575 Ratio Hide Last 5 Observations
2013:Q1: 1.583
2012:Q4: 1.591
2012:Q3: 1.622
2012:Q2: 1.637
Quarterly, Seasonally Adjusted, Updated: 2013-07-31 9:36 AM CDT

1.53 ? Looks like its been revised and has dropped. 

research.stlouisfed.org/fred2/series/M2V?rid=193&soid=4

[usaone]

Onward and upward from here.

[Aman A.K.A. Ahamburger]

At the same time, little attention seems to be paid to the significant improvement in the federal deficit and the government’s financing needs. Based on reports from the Congressional Budget Office (CBO), the federal deficit this year is likely to be just half of what is was a couple of years ago.

If the Fed maintains its current level of purchases, it will be buying a much higher percentage of the new federal debt; not a good idea, in my opinion.

 Of course little attention is being paid to the fact that the US deficit is dropping.  If you're a Republican you can't possibly admit that the economy is doing better than some want to think because we all hate Obama. If you're a democrat you don't want to admit this because that means we don't need govt to get us out of this, and God forbid business get us out of this mess.    

If you're like me and have accepted that all the Govt had done is divided us, accepting WHAT IS seems to be a lot easier..  FREE ENTERPRISE FTW!!!   

[jarrett1]

Why thank you sir!

[Aman A.K.A. Ahamburger]

No, no, it's more like this... 

[jarrett1]

yes...yes you're right!

[frankq]

Onward and upward from here.

Well, I have to say that we've done pretty well so far. And now that a noted Doomer is back, the DG&C Index is calling for an upward move.....

[jarrett1]

Doomer is a good guy an LIKES to invest...he's no D&G

[frankq]

Hey Jarrett, looks like a record 40 billion in July is indicating that retail investors are returning to some extent. A lot of pros say that they see that as a sell signal. Is a correction far behind?

[sunrnr]

Aug 5, 2013 18:58:37 GMT -5 frankq said:

Hey Jarrett, looks like a record 40 billion in July is indicating that retail investors are returning to some extent. A lot of pros say that they see that as a sell signal. Is a correction far behind?

The voices in my head are telling me they'll tank at the end of the month or early September. 

[usaone]

When the debt ceiling nonsense starts, we will see a correction. Repeat of 2011.

[jarrett1]

Think....in the fall (time of year) the markets will correct (fall)

"Reply #5 posted Jul 29, 2013 at 9:43am  
Post by jarrett1 on Jul 29, 2013 at 9:43am

You very well may see a 10%-20% correction as this market looks for direction...while may people think this is a reflection of the markets.

Look for this movement sometime between now...and the end of September...before resuming the move up...and posting new highs before the end of this year and into 2014!"

see that? 

[damnotagain]

This market should be up 300 points. The fed heads continue to buy 40 billion in MBS and 45 billion in treasures. The only thing I find surprising in the Feds statement is they might lower their expectations for unemployment ? Employment you mean that part time job.

 The VIX is down good time to be long XIV . 

Looks like good news for the metals 

[damnotagain]

Jul 31, 2013 10:18:42 GMT -5 damnotagain said:

Home > FRED® Economic Data > Sources > Federal Reserve Bank of St. Louis > Money Velocity

Velocity of M2 Money Stock (M2V)

2013:Q2: 1.575 Ratio Hide Last 5 Observations
2013:Q1: 1.583
2012:Q4: 1.591
2012:Q3: 1.622
2012:Q2: 1.637
Quarterly, Seasonally Adjusted, Updated: 2013-07-31 9:36 AM CDT

1.53 ? Looks like its been revised and has dropped. 

research.stlouisfed.org/fred2/series/M2V?rid=193&soid=4
research.stlouisfed.org/fred2/series/M1V
research.stlouisfed.org/fred2/series/MZMV

looking at the link above and comparing the three charts from the St. Louis fed click on each charts last 5 observations . All I see is down 

[frankq]

Looks like good news for the metals

Wow....pretty profound call now that you've ridden gold down to 1200. The metals couldn't have been damaged much more....And those REITs? Yeah.....right.....If you're making a call, how about some specifics? To all you guys that bought $1900+ gold, hang in there......just a few more years....

[damnotagain]

Sure Q, old screen name (jarhead1976) anyway ,


Lets start with gold, rode it up to 1200 , wish I had the stomach to ride it to 1900 didn't do it. My loss. Like I said then when the commercials come on I started looking for an exit ,  duffs advice on silver was right on. Those positions you can find on other threads. 

That REIT was posted on wxyz thread, if memory serves me right Aham made a comment on it. DWS RREEF . went in 2011 , out last posting about it. Ill never mention any position on here till I am out of it.

 I just exited XIV I think the VIX will start to rise. Like everybody else . Just holding physical and cash. Some energy stock. 

Vectorvest. 
 

[frankq]

Sure you did. I don't give you any cred for anything you say. The REIT you posted was months after the fact. I believe your quote was "pick one". By all means, don't mention any positions you hold....it wouldn't be right to influence the market like you do. At any rate, 2 hours ago you wanted to be long XIV, now you just got out? That's quite the long position call there Buckwheat. Looks like you should have gotten out at the time that you were calling to be long since it dropped a buck.....oooops....

investing.money.msn.com/investments/charts?symbol=US:XIV#{"zRange":"1","startDate":"2013-8-21","endDate":"2013-8-21","chartStyle":"mountain","chartCursor":"1","scaleType":"0","yaxisAlign":"right","mode":"pan"}