Let’s see Existing Home Sales 10AM the coming Friday
Although sometimes amused by things like “three representations”, I as a day trader actually start everyday with “two representations”: I have to try to listen to both bears and bulls, and see if I can get a few work-orders from each of them, short or long. To do my job well and to have my rice bowl filled at the end of day, I better not to be biased, and not to have any "gaps".
Today’s Fed statement is indeed a bullish FA piece for bulls, but just how bullish?
Yes, Fed seemed to have switched to neutral from a “tightening bias”, after acknowledging that "Recent indicators have been mixed and the adjustment in the housing sector is ongoing."
From bear’s point of view:
1. Fed is just acknowledging that housing slowing down is “ongoing”, and where is bottom?
2. With a slowing housing, GDP and earning growth are going to slow down. How much slowing down has to be seen by Fed to ease, and if easing, how many cuts?
Before that, why “carry” stocks?
Today, after Fed’s statement, “The yield on two-year notes, more sensitive to changes in interest-rate policy than longer-maturity debt, fell below 10- year note yields for the first time since August as speculation increased the central bank is more willing to cut interest rates as housing slows economic growth.” (Bloomberg.com)
So, there is still a lot of money going to Treasuries, particularly the short end, and I would think most of them would be institutional money.
Not only that, Fed’s today statement even sounds familiar.
072006
“Bernanke's testimony indicated that the Fed expects inflation to cool in the months ahead and that the core PCE is better inflation measure and thus a more important policy determinant. Apparently, the Fed is concerned about the economic slowdown and will not move aggressively in response to short-term inflation data. This is very good news for the stock market.”(Bloomberg.com).
Except that there was no housing issue back then.
Speaking of housing, Greenie not long ago said “the worst” is over, he just has not found the “confirmation” anywhere in the chart, and now he is saying that subprime may spread out. I think Greenie has been honest.
More difference: that time there was no CAF for me to “safe heaven” into, and there is CAF now, and HSI and N225 seem in steps more with Shanghai Index than with Dow.
Also, less cries from
Let’s see Existing Home Sales 10AM the coming Friday.
marketreflections.com
